[quote=harvey]Right, organized labor has no political power, they are helpless victims of “wall street.”
Of course compensation is important for retention. That explains why police officers in one nearby community get more than five times the people that they serve:
The average pay and benefits package for a police officer here had been worth $177,203 per year, in a city where the median household income was $31,356 in 2011, according to the Census Bureau. All of this had gone largely unnoticed until becoming the center of debate during the recent municipal election.
Defined benefit pensions make it way too easy for politicians and unions to hide the true cost of services and to defer those costs until long after the politicians are gone. This is why we are seeing a wave of municipal bankruptcies. Politicians and public-sector unions gave themselves a sweet deal years ago, using the arcane pension system to hide the cost, until eventually the day of reckoning comes.
Defined benefit pensions for public employees are a completely unnecessary risk.
Of course there is the alternate explanation: That big, bad wall street “forced” these modest public servants to take their $177K compensation.
Wall street made them do it![/quote]
That’s Desert Hot Springs. They seem incapable of managing their finances, and not just because of pensions.
From your link:
This is not Desert Hot Springs’ first experience with fiscal problems. In 2001, it went bankrupt after losing a $10 million lawsuit brought by a developer who complained that the city was thwarting his efforts to build affordable housing. The city had to borrow to pay the judgment and is still paying off that debt — a struggle for a working-class town.
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Also from your link:
The city, Desert Hot Springs, population 27,000, is slowly edging toward bankruptcy, largely because of police salaries and skyrocketing pension costs, but also because of years of spending and unrealistic revenue estimates. It is mostly the police, though, who have found themselves in the cross hairs recently.
In other words, the other spending that caused the crisis is already spent, so the easy targets are the public employees whose pay is deferred and still under the control of the public entities.
…
And the city council was unwilling to consider options that would fix the problem (the claim that it would only “delay the reckoning” is subjective, and not fact-based).
Mr. Phillips, the police union lawyer, said the current crisis had been driven by the new majority on the City Council — including Mayor Sanchez and Mr. Betts — that was philosophically opposed to tax increases. The union’s own proposal to address the budget shortfall — by cutting the size of the force and filling in with overtime work for which the officers would defer payment for 17 months, as well as raising the local sales tax — was rejected by city officials, who said it would only delay the reckoning.
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Now, there IS a real problem with the changes made to pension benefit formulas under Gray Davis, as mentioned here:
Mr. Adams said that California’s rich police pensions were first offered to prison guards by former Gov. Gray Davis more than a decade ago. The move set off a chain reaction, with the California Highway Patrol soon clamoring for the deal, and then city police officers all over the state.
I have ALWAYS been opposed to these pension changes, long before you were ever aware of how public pensions worked, and long before the “pension crisis” that was 100% caused by Wall Street (and they were also responsible for those pension changes during the internet/stock market bubble in the late 90s…I was there, and I was warning about it back then).
Additionally, while the pension system might be “arcane” to you, it’s perfectly transparent and easy to understand to those who know what they are looking at. All of the numbers are available on the CalPERS website.
I also want to point out that while contribution amounts were raised after the Wall Street crisis, these public employers were paying very little, and usually NOTHING AT ALL during the years of the stock market bubble. That’s what enabled them to enhance the pension formulas…because the pension funds were OVER-funded.
