[quote=CA renter]
Wrong. Public employees are the only ones to take a hit, so far. Many haven’t had a raise in over 6 years…many have had their compensation reduced, some by a large amount. READ what I’ve posted, above, about how employees are having to contribute more to their pensions…and more increases are on the way.
[/quote]

The problem is the total cost of employee isn’t what they see in their pay check. San Diego’s revenue stream has been pretty flat and just growing with GDP/inflation at best. The problem is that things like healthcare benefits and pension issues are growing at a faster rate so somehow the city has to reduce it’s costs. It has done so via pay freezes, laying people off, etc. In some cases the citizens took a hit, your water bill has gone quite a bit over the past 5-6 years correct. In some cases services were reduced. In some cases employee got pay freezes or pay reductions. With all those cuts the pension plan is still underfunded.

Let’s say tomorrow we magically get a 10% increase in city revenues. Are we going to use that money to shore up the pension system or give employees raises who haven’t had a raise in 6 years. My guess is we’ll give raises now and leave the pension system underfunded because that’s a problem in the future. That act of giving employees raises makes the pension problem worse because of how most of these defined benefit pension plans work.

These defined benefit plans just don’t manage the risks properly. They never have. Most of them are going to fail one way or another.

Look at social security. You contribute 13.6% of your salary. If you make 50K per year and wait until 70 to retire you get 50% of your salary. If you retire at 62 you get about 25% of you salary. If you make $100K per year you get 37% of your salary at 70, at 62 you get 20%. So that’s far less of a benefit and even that system is in some trouble.

The problem for the public sector employees is that combined the employee and employer might be putting in 20% max which is more than social security, but the benefit is far higher. Usually something like 60% of your highest salary. Plus you tend to retire earlier. So a social security system that’s in a bit of trouble pays like 20-25% of you salary at 62 but the public sector wants to get 60% at 60 or so. It’s just not going to work. You might be able to do it but you’d need to contribute 30-35% percent of your compensation or assume unrealistic returns and end up unfunded.