Finally, someone did an analysis reported by the Wall St. Journal that describes what the true differential is between Public and Private Workers, and calls the Public workers on the Gravy Train...
The study was based on California public workers, and also identifies missing components not described in another study from Berkeley.
Here is an overview:
- Actual wages are below private workers in BIG corporations by about 4%, but just about even if you compare all private worker pay (small and large employers).
- Value of defined benefit pensions is about 4% higher for government workers because they are promised SPECIFIC levels based upon 8% earnings vs most corporations use 401k programs where the employee gets maybe 4%, and it is not a promised amount (defined benefit).
- Retiree health benefits - about 90% of public plans offer retiree health benefits while pirvate sector employees rarely get them, AND government workers can start getting them when they retire in their 50's, while private sector plans rarely cover anything until a much later retirement age. State actuarial reports for California indicate the retiree health benefits could another 8% in compensation value.
- Adding the values of the above pension and health care benefits shows that public employees in California receive about 15% more than individuals working for large corporations. (Personal note: I am 67 and never received any vested health benefits from any private employer, and only received 8 years vested retirement from one company that was not available until I became 65.)
- Finally, the study places a value on "security" of employment, and the study places a value of 15% more pay for that factor vs working in the much more volatile private sector. (Personal note: I had three employers all merge or downsize, resulting in my having to seen another employer and start building retirement vesting again...none were long enough except the one mentioned above).
The study was based upon California public workers, and the author estimates that they are paid about 30% more than private sector workers, including the 15% value placed on security.
As for Florida, we know that government workers do not have to contribute to pensions, and primary workers in Schools here in Lake County do not contribute to health insurance. And, few get laid off, even in this economy, so the value of "security" is worth something. How much does that add up to?
Note: Why am I using California numbers? Because they are larger and more good analysis articles are printed by the media. I am looking for similar analysis of Florida pensions and benefits, but even the local government don't analyze the real costs and present it in meetings. When I find sound, objective analysis of Florida data, I will post it in this blog.
vj
from the Wall St. Journal HERE:
http://online.wsj.com/article/SB10001424052748704657704576149941061124736.html?mod=WSJ_Opinion_LEADTop
California has a $59-billion shortfall in their pension program. Their retirement costs have risen from about $2-billion in 2004 to $6-billion in fiscal year 2011-2012. Of course, it is probably worse there than Florida because the state is run by Democrats and unions who have pushed through excessively costly retirement funding formulas for retirement.
vj
