Pensions

Can Even the Voters Stop the Public Employee Pension Crisis?

Popular reform in San Diego threatened by California labor board.

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I was totally going to, until I saw somebody had put up a sign forbidding it.
Credit: Arenamontanus / photo on flickr

San Diego residents overwhelmingly voted in favor of Proposition B, reforming the city's pension system for city employees, back in 2012. To be more specific, by a two-thirds vote, residents of San Diego voted to essentially close its pension program to new hires (except for police officers). Instead, new employees would be shunted into a 401(k)-style program, where contributions are front-loaded and cities (and more importantly, taxpayers) are not saddled with long-term obligations that cities (and states) often don't adequately fund.

Public sector unions have fought every effort to reform pensions not just in San Diego, but anywhere in California. In San Diego, their opposition has been bolstered by the Public Employment Relations Board (PERB), a government agency that seems to actually serve on the behalf of the employees. They are attempting to order the city to undo the initiative's effects, put the 2,000 employees it has hired since 2012 into a pension fund and pay 7 percent interest as a penalty. The city is resisting.

The city's attorney, Jan Goldsmith, does not seem perturbed. Goldsmith noted to the Los Angeles Times that the city has managed to keep the Public Employment Relations Board from blocking Proposition B from the ballot in the first place, and also managed to get a judge to allow them to implement the measure over the Board's objections. Goldsmith thinks the Board will be smacked down yet again by the courts.

But if PERB is victorious (their argument here is that state law requires cities to engage in good faith negotiations with the unions, which obviously a ballot initiative bypasses), it could cost San Diego a significant amount of money, and they've been counting on these savings in their budgeting. Union heavy Michael Zucchet of the Municipal Employees Association is more than happy point out how much his lawsuits are costing the city as well:

"The city's bill is going to keep accumulating with interest, and it will only get more expensive if they keep filing appeals," said Michael Zucchet, general manager of the Municipal Employees Assn.

Many city budget projections and proposals rely on future pension savings created by Proposition B, so any softening or elimination of the measure could have a significant effect.

Zucchet said the city has hired roughly 2,000 employees without pensions since the cutbacks took effect in July 2012, noting that Tuesday's ruling requires the city to backfill pensions for those workers, pay them 7% interest as a penalty and cover their attorney's fees.

"I don't know whether it's $5 million or $500 million, but if I had to guess I'd say it's somewhere in the $100-million range," Zucchet said.

San Diego's planned expenditures in its 2015 budget were listed as $2.6 billion, so imagine what could happen to the city's finances on the upper end of that calculation.

Read the full story here and marvel at how a largely unaccountable bureaucratic agency is trying to overrule the voters and force those same taxpayers to give more money to city workers against their expressed desires. But there may be a possibility for Californians to push some pension reform via a statewide ballot initiative that would amend the state's constitution. Read more about those efforts here.

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  1. But if PERB is victorious (their argument here is that state law requires cities to engage in good faith negotiations with the unions, which obviously a ballot initiative bypasses),

    Uhm, the city DID negotiate in good faith. Who do you think all those voters were?

    1. The tax serfs forced to pay for the govt equivalent of a mafia?

      We are not the government, much as they would love for us to believe so. Our interests are not their interests.

  2. Read the full story here and marvel at how a largely unaccountable bureaucratic agency is trying to overrule the voters and force those same taxpayers to give more money to city workers against their expressed desires.

    Welcome to the modern pubsec union. It’s their world, we’re just scurrying around in it.

    And lest you think cops have super-special protections that the rest of the pubsec union sphere doesn’t have, think again. A friend of mine just became a Metro bus driver. He forwarded me a YouTube link to a Metro driver clocking a homeless guy over the back of the head with the wheel chocks and when he hit the ground, the driver dragged him to a bus stop bench and proceeded to wail on him for about two minutes.

    He kept his job with full raises and pensions forthcoming. Video evidence is UNUSABLE in driver investigations. Union rules. What are you going to believe, your lying eyes or the carefully crafted statements of the driver via his union representative?

  3. Eliminate Public/Private Unions and fix Social Security so that every American worker receives define benefit that pays no more than the living wage and guaranteed health-care after the age of 60. If a person wishes to work longer, that is fine but they won’t receive the benefit. If an individual has assets that render more than 3 times the median income, they receive no cash benefit but do receive health-care.

    Keep it simple, eliminate all unions, and give the worker the benefits that cops/fireman/congressman/etc. get.

    Can we afford it? We paid $11billion per Month for countless of years killing strange A-rabs in the dessert. Just cut that crap out and let Russia and Israel deal with the middle east. We need this money at home for the American CItizen and not for Conoco-Philips/Halliburton/etc.

    1. “fix Social Security so that every American worker receives define benefit that pays no more than the living wage and guaranteed health-care after the age of 60.”

      That’s hilarious!

      1. Step 3: Profitz!!!!

    2. Yes, let’s turn Social Security into yet another welfare program. The rest worked of those out so well.

      And clearly the problem with Medicare is that it wasn’t expensive enough. Nothing says sound financial principles like “well we wasted money on something else…”

      1. Hate to break it to you bruh, but Social Security is already a welfare program.

        1. Only superficially. It’s a Ponzi scheme and it involves a lot of smoke and mirrors, but to say that EBT and SS are identical is misleading.

          1. I missed Hugh’s post because I can’t be bothered to hit refresh, but I disagree that it’s a “superficial” welfare program.

            In December 2011, just over 9.8 million people received Social Security disability benefits as disabled workers, disabled widow(er)s, or disabled adult children. The majority (87.5 percent) were disabled workers, 10 percent were disabled adult children, and 2.6 percent were disabled widow(er)s.

            I know that 9.8 million may not be a lot in a country of 320 million, but I’d hardly call it superficial.

            1. Fair enough, that’s definitely welfare. For the guy who paid $500,000 over his lifetime and will die before collecting it all back, not so much. Perhaps it would be better to phrase my objection as “let’s not turn Social Security into even more of a welfare program”.

              1. For the guy who paid $500,000 over his lifetime and will die before collecting it all back, not so much.

                I don’t have any handy statistics on how often this happens in reality.

                Depending on how one looks at it, we’ll be negative in 2034.

                1. Well, yes, I did note that it was a Ponzi scheme. Although I wouldn’t be terribly surprised if the disability payments are the driver of that insolvency. Somebody who goes on SS at 40 and lives another 30+ years is going to be a net cost.

            2. Its a Ponzi scheme and a welfare program.

              How do I know its a welfare program? Because it gives people money for nothing in return, and you have no property or other rights whatsoever in the SocSec “trust fund”.

              If its not a welfare program, you need to let me know what essential attributes of a welfare program that it lacks.

              1. If its not a welfare program, you need to let me know what essential attributes of a welfare program that it lacks.

                If you have gainful employment, you make direct payments into it for a while– direct payments which are completely un-tethered to the benefits you may or may not receive.

                1. direct payments which are completely un-tethered to the benefits you may or may not receive

                  This is not true. There is no balance, and you aren’t limited to just collecting as much as you’ve paid in, but the benefit is based upon the payments you made.

                  Here’s a PDF with a table and formula for computing the benefit amount

                  1. But you have no right to those benefits. They can be reduced or eliminated at any time.

                    What you pay in is a tax. It is spent the year it is paid, on either SocSec payments or as general revenue.

                    Having been a taxpayer does not convert your welfare payments to something else. Using those taxes (or anything else) to determine your eligibility or calculate your benefits does not mean your benefits aren’t welfare, either. Eligibility and benefits of any welfare program are always based on external economic factors like earnings, assets, etc.

                    1. Nothing I said contradicts anything you said. Why doesn’t somebody read the fucking thread for context before jumping on a single word?

              2. The principal difference between SS and other welfare programs is that SS payments to retirees are based upon the amount of total earnings that were subject to SS tax during the person’s lifetime. You can’t get anything out if you didn’t pay anything in, you can’t collect the maximum benefits if you didn’t make the maximum payments, and if you didn’t work for at least 35 years, then your benefit is pro-rated accordingly.

                Now, obviously, this doesn’t cover the breadth and depth of the entire SS/OASDI program. However, it does cover a substantial number of people in that program, particularly those who would be affected by Mama La Pinga’s proposal.

                1. How about all of the spouses who never even worked, but are eligible just the same? And their payments do not reduce their spouses who did pay in? That’s welfare isn’t it?

                  1. The secondary point which seems to have eluded so many people is that the form of Social Security most people think of–the retiree benefits–is not identical in character to other welfare systems. Call it welfare, don’t call it welfare. Talking it about in the same breath as TANF or SNAP is disingenuous and a political non-starter.

                    And as yet nobody has bothered to respond to the primary point I was trying to make, which is that all of the “reform” proposals of SS we are likely to see, including this abortion of a thought from Alice Bowie’s sockpuppet, will only make it more like other forms of welfare which will certainly not improve its solvency.

                    Jesus Fucking Christ.

        2. Furthermore, “let’s fuck it up some more because it’s already fucked up” is hardly a compelling argument.

          1. I very much felt this way about gay marriage. Turns out, finding things that are slightly fucked up and fucking them up some more is pretty much how you run a (populist) government.

      2. Yes, let’s turn Social Security into yet another welfare program. The rest worked of those out so well.

        You’re way, way too late.

        SS isn’t just for old people, it’s for anyone with a “disability” and/or who’s homeless.

        1. Yes, I see that.

          But again, to say that we should fuck up the old-age part because of the disability part still seems a bit disingenuous, no?

          1. Maybe to make this even clearer, the “reforms” proposed by “Mama La Pinga” (likelihood of Alice Bowie sock: pretty high) are certainly not going to make the system more solvent.

    3. Wow, a lot was said from the time I wrote this and going to the gym.

      When Reagan (and others including Clinton, to be fair), transferred the SSI Fund into the General Treasury, claims have been made that it is out of money. The fact is the money is in the Treasury.

      As for it being a Ponzi scheme, SS is a pyramid scheme. That is, if there are no young people paying FICA, there’s no money to paid for the retired, the disabled, widows, and their children. The fact is, we’ll have way way more problems if there are no young people to pay. And, it is quite unlikely.

      I know libertarians don’t like to hear it, but life itself, is a pyramid scheme. If a human baby is born with no one to aid it, it will die. As we get older, if others aren’t there for us, we will die. We actually need each other.

      The Cato Institute, the Ayn Rand worshipers, and various others have always boo-hoo’d SSI and other programs for the poor, the disabled, the widows, and orphan children because YOU PEOPLE JUST DON’T GIVE A SHIT. These programs don’t benefit you so why should you pay. Besides, you people were born into a world where you made your own success without the aid existing infrastructure and people around you. You are all self-made people.

      1. Does anyone understand this post?

      2. Does anyone understand this post?

        1. I think they just want everyone to know they want to the gym

      3. YOU PEOPLE JUST DON’T GIVE A SHIT

        You caught me.

        1. Libertarians care, we care a whole lot.

          1. It’s a dirty job, but someone’s gotta do it.

      4. have always boo-hoo’d SSI and other programs for the poor, the disabled, the widows, and orphan children because YOU PEOPLE JUST DON’T GIVE A SHIT.

        Actually, I’m fairly poor now because I’ve been recently laid off. But I’m not collecting unemployment because I hate being unemployed and I feel like just going through the process is a waste of time when I could be doing something productive like looking for work (or being snarky at internet trolls)

        1. and I’m now at 5 interviews scheduled for this week, not counting a meeting for a volunteer opportunity… (and no, it’s not for Save the Kochtopus)

      5. The fact is the money is in the Treasury.

        No, it is not. That’s why we run a deficit every year. Because we *spend more money to run the government than we take in in taxes*. There is no money going into the Treasury that doesn’t run right out and get spent on bills.

        The Cato Institute, the Ayn Rand worshipers, and various others have always boo-hoo’d SSI and other programs for the poor, the disabled, the widows, and orphan children because YOU PEOPLE JUST DON’T GIVE A SHIT. These programs don’t benefit you so why should you pay. Besides, you people were born into a world where you made your own success without the aid existing infrastructure and people around you. You are all self-made people.

        I’m sorry, but the guy who built that infrastructure? He *already* got compensated. He got paid. I don’t owe him jack. The kids – parents *chose* to take on that responsibility, kids don’t owe them jack. You want your kids to take care of you when you’re old and feeble – then you need to give them a better reason than “I created you, YOU OWE ME!”

        1. +1 I owed you that for liking your comment.

      6. Johnson, the Great Welfarer unified the trust funds and the general fund, not Reagan. And yes I am self-made and I don’t give a shit. And all of that infrastructure was built using the wealth created by other self-made people. Or do you really believe that printing money creates wealth?

        But if I did give a shit I would point out that MEDIAN earning couples retiring (not entering the workforce) in 2010 and beyond can expect to get out less from SS than they paid in, so it’s a shitty deal even for all of the people I don’t care about.

      7. After reading this, I wonder if the OP knows what a gym is even.

      8. As we get older, if others aren’t there for us, we will die.

        But if we have money (assets) in our old age, then others are there “for us”. Just the same as others are there “for us” throughout our lives … as long as we pay for them to be there “for us”.

        As far as SSI being a pyramid scheme: look at Singapore’s Central Provident Fund. It is an SSI scheme which is not a pyramid scheme. Admittedly not very libertarian (after all, it is a state-mandated savings plan), but in particular, it avoids the pitfalls of the pyramid scheme SSI.

    4. every American worker receives define benefit that pays no more than the living wage and guaranteed health-care after the age of 60.

      Seriously? This is what we’ve come to?

      What is a ‘living wage’? Is it the same for a 16 year old just starting out, a 30 year old raising a family, and a 60 year old (60 YEARS OLD!) riding around the country in his RV? If so, why? If not, why not?

      Guaranteed health care? How much guaranteed health care? All medications and doctor visits and surgeries, and lab tests all paid for by younger people? How is your plan different from Medicare?

      Why 60 year olds? *All* of them? What about Donald Trump? Bill gates? Hillary Clinton? Should we be paying for their health care and shipping them a ‘living wage’?

  4. their opposition has been bolstered by the Public Employment Relations Board (PERB)

    There just HAS to be a Detroit Employee Relations Panel.

  5. Can Even the Voters Stop the Public Employee Pension Crisis?

    All jokes aside, I would postulate that the voters might be the LAST group that can effective stop a pubsec pension crisis. The voters are constantly being slapped down by the courts.

    1. Haha, nope.

      /courts

      1. *mumbles* read the whole post before replying…

  6. I agree, those pension obligations are sacrosanct because they were signed into a “contract”. And the handful of mid-level government employees who “represented” the city/state in the “negotiations” are definitely on the hook for the full amount. Go get ’em, tiger.

    1. Of course, the contract is only sacred when its signed with the government and as long as its to the government’s advantage.

      Don’t you oil producers think we won’t unilaterally ‘renegotiate’ your royalty rates due to your ‘windfall profits’.

      I have altered the deal, pray I don’t alter it further.

      1. Not to mention the obligations of municipalities to pay their bondholders and other creditors before paying their pensioners. It’s only a common law principle older than this country, why would we adhere to it? Ex-gummint employees gotta get paid, son. But only today; tomorrow, nobody will lend the money to pay them with, because you welched on the deal you fucking idiots.

  7. Let er burn. Where’s my fiddle?

  8. “”The city’s bill is going to keep accumulating with interest, and it will only get more expensive if they keep filing appeals,” said Michael Zucchet, general manager of the Municipal Employees Assn.”

    Way to fuck your fellow residents and the people who pay your salary douchenozzle.

    1. Oh, he doesn’t live in San Diego. He knows that city government is about to collapse so he moved to Alpine.

  9. Just 25 years ago Richard Reardon (R) was the mayor of Los Angeles, Governor Jerry Brown (D) was preceded by George Deukmejian (R) , Pete Wilson (R). and sunny day Arnold Schwarzenegger (r).

    In 2016, California is a one-party state. It happens that fast.

    1. Same thing happened in NY city and state. Yeah, it was Republican-lite but at least there was some lip-service and an occasional bone thrown towards fiscal sanity. Not anymore.

  10. When the notion of unionizing public empoyees was first floated even the communist party in America opposed it because it is a ridiculously bad idea.

    Think about that for a minute.

    1. Didn’t FDR slam the idea too? F. D. R.

      1. So did Stalin and Mussolini. FDR was a thug and a statist but nevertheless a technocrat; unionized government employees are contrary to government efficiency and thus stand in the way of enacting the glorious vision.

    2. Well, the Communists likely opposed it for two reasons:

      1. It would entrench the established power structures.

      2. It would establish an even worse reputation for labor organization.

      They were right!

  11. Even I believe Public Unions are ridiculous.

    But private unions are a result of a Free Market Failure.
    In our Free Market Capitalist system, the business owners wants to pay a little as possible and the laborer wants to make the most money possible. That would work if there was liquidity of opportunity for the workers. The fact is, the liquidity of opportunity didn’t (and even today doesn’t) exist. This gave the business owner an incredible advantage in the so-called level playing field. If workers wanted more or got sick or injured, the business owner could (and did) say FUCK YOU and just hired another slob to replace the first worker. The reason we have weekends and various labor protection is because people died so that we can have these today. If you leave it to a business owner, there be no weekend or sick pay or time off. The first day you took off would be your last.

    I don’t think there will ever be a fix to this. The problem is not the Free Market. The problem is the ASSHOLE character that exists in the human being. And, the wealthier and more powerful one becomes, the bigger the callous asshole one becomes. If we can only fix the ASSHOLE problem.

    1. You say it is a free market failure but yet follow up with saying it isnt free market at all. That is inconsistent.

      Not sure about your weekend and labor protections comment. As people do work weekends.

      Id argue businesses dont like turnover and shy away from hiring slobs.

      And union membership is pretty low today. Sick pay, time off, and no weekends isnt some mandate. Im not in a union and i get all those things. What the fuck are you talking about?

      1. I say that the unions are a result of a Market Failure. However, I don’t blame the market per se. I blame people…the asshole people.

        1. The unions have been going down thru the years. You say it is a market failure but arent blaming market. That makes no sense.

          Saying unions are a result a free market failure is saying it is the root cause

        2. So – then its not a market failure as the existence of unions is there to *solve the asshole problem*.

          1. IOW – the market working as it should.

    2. How would you propose fixing the ass hole problem? How do you think businesses attract and lure away other works these days?

      1. There’s no fixing asshole. Look at the police. If you don’t put cameras on them and watch every move they make and question everything they do, they really really misbehave.

        The PBA and FOP fought tooth-and-nail to keep the cameras out. These police unions wanted to pass laws making it a FELONY for filming police officers on duty.

        Even with Cameras, Assholes remain assholes.

        Once again Frank, there’s no fixing asshole without employing draconian measures.

        1. I agree with the cops part

        2. Why do you need to mandate all this other stuff when it exists today?

    3. If it were not for the fact that the union-controlled public sector always favors union-controlled private-sector third-party vendors, there would be no reason for the average voter to care about private-sector unions.

    4. Bullshit. What is the percentage of Americans in a private sector union today? What was the highest percentage of Americans at any point in time in a union? Your “we only have weekends because unions” is total and complete shite.

    5. But private unions are a result of a Free Market Failure.

      omgomgomgomgOMGOHMYFUCKINGGOD!

      Private unions are an example of the free market working as its supposed to.

      Its not an example of any sort of ‘free market failure’, its an example of how people, in a free market, can route *around* those trying to exploit them.

      ITS A PRIME EXAMPLE OF THE FREE MARKET WORKING!

      FUCKFUCKFUCKFUCKFUCK

    6. That would work if there was liquidity of opportunity for the workers. The fact is, the liquidity of opportunity didn’t (and even today doesn’t) exist.

      And this is complete and utter bullshit.

      Those at the lowest rungs of the economic ladder have the *greatest ability to move from job to job*. The marginal cost of leaving one low-end job for another is nearly nil. Ask any of them. Fire a dude from McDonald’s today and he’ll be working the counter in a gas station inside a week.

      The cost of *hiring* a new low-end worker is an order of magnitude greater.

    7. The whole idea of free markets are that people are assholes, but not idiots. They’ll work to look out for themselves, and in doing so will exchange goods and services with whoever can help them better look out for themselves. “Free markets” doesn’t mean “employers rule with an iron fist”. It means that both employers and employees can make choices to be kind or to be cruel, to work together or to argue, to continue the relationship or terminate it, in whatever way seems best to them. Private unions thus don’t fall outside of the concept of free markets – the ability to band together with other workers to increase the pain that would be caused to an employer by mistreating you (that is, exchanging services with your coworkers instead of your boss, for your mutual benefit) is itself an integral free market concept.

      That is the “basic” union. If there were more basic unions and less government protection rackets (that is, more free markets and less government intervention), I can guarantee you there’d be more union participation.

      1. The lie behind the “asshole problem” is that there are non-assholes out there. Everybody acts in their own self-interest. There is no noble white-knight crusader who will come in and save everybody from the assholes (spoiler alert: he too is an asshole). The only real difference is between people who only act on their immediate self-interest and those who can plan ahead and delay gratification. The latter is still acting in their own self-interest but knows that it is often maximized in the long term by careful, thoughtful action.

        Unsurprisingly, people who favor their immediate self-interest and cannot delay gratification favor government action in the economy and laugh at the “invisible hand”. They are too stupid to recognize an abstract concept, and will gladly take pennies today over dollars tomorrow.

  12. Public sector unions follow Saul Alinsky’s Rule 8: “Keep the pressure on. Never let up.” NOTHING will stand in the way of making sure that union members reap every red cent of any potential salary or benefit from the public coffers. They don’t even are if the town or city etc. is broke — unions want their money first, everyone and everything else comes in second place. And, voters’ wishes are completely irrelevant if they do not coincide with those of the unions.

    1. The worst of it is they are so short-sighted that they will shaft their bondholders. I have to admit that it is ridiculously stupid, even for unionized public employees. How are you going to get paid next year, when nobody will loan money to the city?

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