The myth of the overpaid public employee

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Lots of press -- as there should be  -- on the new UC Berkeley study that debunks the myth of the overpaid public employee. The Chron had a decent story this morning, The Bay Citizen, which has been reporting pretty heavily on high wages and pensions in the public sector, acknowledged the study today. It's a pretty big deal: Since much of the poltics of 2010 seems to be about bashing public employees and complaining about bloated pensions, some hard reality -- backed up with a sophisticated regression analysis -- was badly needed.

And the study is prettty clear: public employee salaries and pensions are not the cause of California's (or San Francisco's) budget problems:

The Great Recession continues to leave a great deal of economic pain and scarring in its wake. But, the
vilification of government workers is sorely misplaced and has left the real culprits of this devastating
downturn off the hook. Compensation received by public sector employees is neither the cause—nor can
it be the solution—to the state’s financial problems. Only an economic recovery can begin to plug the hole
in the state’s budget. Unfortunately, the current budget balancing efforts in California are anti-simulative
and further act to depress demand in an economy already operating way below capacity. Budget cuts have
helped to keep California’s unemployment rate well into the double-digits for over a year and a half—and
there is no end in sight. Thousands of California public employees have lost their jobs and many more
have forgone pay through forced furloughs and their families have experience considerable pain and disruption.
All the workers who have lost their jobs or took cuts in pay or benefits were made to do so not
because of their work performance, or because their services were no longer needed, nor because they were
overpaid. They were simply causalities among a list of millions of hard working innocent victims of a financial
system run amuck. Public sector workers help our communities to thrive and provide services that
make it worthwhile to live in them—it is wrong to blame them for the fallout from the greatest economic
downturn since the Great Depression. 

The study's out in enough time to make a potential difference in the election -- on both the state and the local level, attacks on public employees are driving major campaigns. Meg Whitman is all about tying Jerry Brown to those evil unions, and Prop.B, the measure to cut health care and pensions for city employees, is a wedge issue. A little logic shows that it's not only misleading but factually wrong to blame the public-sector workers for the recession.

Comments

All the study did was compare educational level to income and say that based on their educational levels the public employees are not paid more than the private sector. Having had several highly capable city employees describe the functioning level of the departments they work in as terrible and explain their continued employment by mentioning that nowhere is the private sector paying as well I'm not changing my mind.

What happened the last time Mike Tyson fought?

The Cable Cars were shut down because there were not enough muni workers to run the system. They simply didn't show up as their contract allows. Try that in the private sector.

Posted by Guest john on Oct. 19, 2010 @ 12:53 pm

Agree. Civil servants concluding that civil servants are not overpaid. Who would have thunk it?? This study is clearly an opinion piece. Would a scientist ever write that government workers have been "vilified" in California. Just shows you you can cherry pick any data set (here they picked education level) to get the results you want.

"Public workers in California earn 7 percent less on average than private sector employees, but make about the same amount after benefits and other compensation are factored in, according to a study released Monday."

Oh yes, this is believable: the disparity in benefits is about 7%. I luv the way the authors dismissed the state's $500 billion pension debt as a mere trifle. This study will be thoroughly debunked within six months.

Posted by Guest on Oct. 19, 2010 @ 1:40 pm

picking students by private schools included?

Posted by Guest on Oct. 19, 2010 @ 2:11 pm

Another Example Of Manufactured Worker Benefits 'Crisis'

Yesterday's edition of Democracy Now has a great report/debate on how a fake health benefits 'crisis' was recently manufactured in order to put the U.S. Postal Service into premature and unnecessary debt and thereby break middle class workers and unions, and shove vital pubic services toward corporate privatization.

This story shows, using a distantly related but eerily similar example, how corporate elites are manipulating worker benefits everywhere, in every venue, to undermine unions and the lower classes; exactly as is being done locally with our public employee 'pension crisis'.

Watch/listen at:

http://www.democracynow.org/2011/9/27/shock_doctrine_at_us_postal_service

Posted by Eric Brooks on Sep. 28, 2011 @ 9:24 am

What is needed is to make the state more employer friendly, utilize natural resources and pursue all sources of energy (including nuclear, clean coal, natural gas, etc. Environmental extremism and overbearing regulation must must end and state agencies reduced to more reasonable levels. We cannot afford the overbearing state regulations that penalize companies and send them packing to more friendly states. California does not live in a vacuum and must be run more like a business than a out of control tax and spend bureaucracy.

Posted by Guest on Oct. 19, 2010 @ 1:56 pm

This is just another propaganda before election to swing the voters for the propersitions.

Posted by Guest on Oct. 19, 2010 @ 9:59 pm

"propersitions"?

People who can't spell common words are not likely to understand a statistical study of any significance.

You can lead an idiot to the conclusion, but you can't make it think.

Posted by Guest on Oct. 25, 2010 @ 1:08 pm

grammar troll

People who only reply to blog/news posts, to correct the grammar of other posters.

The grammar troll couldn't defend his side of the argument, all he could do was point out my incorrect "your/you're"

Posted by Eric Brooks on Sep. 28, 2011 @ 9:13 am

This study (by some public-sector employees) was biased in favor of its own.

It never once mentioned the defined-pension schemes that are tearing state (and SF city) finances apart and forcing us to cut Park & Rec, summer school, road maintance each and every year.

Posted by Barton on Oct. 20, 2010 @ 7:24 am

The truth has a progressive bias.

Posted by Greg on Oct. 20, 2010 @ 8:35 am

What separates the way you hold your views from the way a born again Christian does?

I know it is off topic here, but I want to know, how is the way that a "progressive" holds their views of the world any different from a Moral Majority type?

I'm just not seeing how progressives operate on any less of a revealed basis.

Posted by matlock on Oct. 20, 2010 @ 10:12 am

Yes, you are wearing you pinky-tingy-murky-rosey colored glasses.

Posted by Barton on Oct. 20, 2010 @ 12:13 pm

UC Berkeley’s recent elimination of popular sports programs highlighted endemic problems in the university’s management. Chancellor Robert Birgeneau’s eight-year fiscal track record is dismal indeed. He would like to blame the politicians in Sacramento, since they stopped giving him every dollar he has asked for, and the state legislators do share some responsibility for the financial crisis. But not in the sense he means.
A competent chancellor would have been on top of identifying inefficiencies in the system and then crafting a plan to fix them. Competent oversight by the Board of Regents and the legislature would have required him to provide data on problems and on what steps he was taking to solve them. Instead, every year Birgeneau would request a budget increase, the regents would agree to it, and the legislature would provide. The hard questions were avoided by all concerned, and the problems just piled up to $150 million….until there was no money left.
It’s not that Birgeneau was unaware that there were, in fact, waste and inefficiencies in the system. Faculty and staff have raised issues with senior management, but when they failed to see relevant action taken, they stopped. Finally, Birgeneau engaged some expensive ($3 million) consultants, Bain & Company, to tell him what he should have been able to find out from the bright, engaged people in his own organization.
From time to time, a whistleblower would bring some glaring problem to light, but the chancellor’s response was to dig in and defend rather than listen and act. Since UC has been exempted from most whistleblower lawsuits, there are ultimately no negative consequences for maintaining inefficiencies.
In short, there is plenty of blame to go around. But you never want a serious crisis to go to waste. An opportunity now exists for the UC president, Board of Regents, and California legislators to jolt UC Berkeley back to life, applying some simple check-and-balance management principles. Increasing the budget is not enough; transforming senior management is necessary. The faculty, students, staff, academic senate, Cal. alumni, and taxpayers await the transformation.

Posted by GuestMilan Moravec on Oct. 20, 2010 @ 7:52 am

In the UC Berkeley case, I am pleased to see that students are protesting the ballooning pension costs are forcing cuts in programs.

Posted by Barton on Oct. 20, 2010 @ 9:41 am

Today's SF Weekly article (10/20/2010 "Let it Bleed") tells the story regarding San Francisco. It's strange that the SFBG won't write an article or take a position about how pensions and benefits are anchors around the general fund. Consistently taking the position that we need more revenue and/or have a structural deficit rings hollow when the SFBG won't take a stand on what is really sucking the general fund dry...

http://www.sfweekly.com/2010-10-20/news/let-it-bleed/

Posted by The Commish on Oct. 20, 2010 @ 8:27 pm

Commish- agree. SFBG is implicitly advocating for major cuts in City services. Since SFBG waxes poetic about "taxes on billionaires" but has not printed a word about how to reduce employee benefit costs this publication is essentially supporting the default option- major cuts in City services.

This SF Weekly piece rightly paints the doom ahead.

Posted by CJ Flowers on Oct. 20, 2010 @ 11:30 pm

This year, the city is contributing $324 million from the general fund to its pension plan — more than it spends on the Recreation and Parks Department ($127 million) or the fire department ($289 million).

More than 2,000 retired city employees get pensions exceeding $75,000 annually.

VOTE YES ON B.

Posted by Barton on Oct. 20, 2010 @ 10:53 pm

Tim Redmond went into hysterics with either Weiner or Sparks over biased studies noted by the candidate.

"Biased" means not paid for by unions or done by left wing hacks.

Posted by matlock on Oct. 22, 2010 @ 9:59 am

Thank you, CJ Flowers, for directing us to a study funded by right wing business interests (and in this case written by reporters from the Orange County Register) to "debunk" the findings of one of the leading higher education institutions in the world. The earth is not flat, no matter how many times you rant and rave in the comment sections of every online publication in town.

Posted by Hard Working City Employee on Oct. 22, 2010 @ 11:19 am

attached to Cal, perhaps Hoover institute opinion pieces could start attaching the Stanford name to its opinion pieces?

We all know that any statement attached to a University has never been biased. Anyone who doesn't agree is a little Eichman.

Posted by matlock on Oct. 22, 2010 @ 2:23 pm

Thank you, CJ Flowers, for directing us to a study funded by right wing business interests (and in this case written by reporters from the Orange County Register) to "debunk" the findings of one of the leading higher education institutions in the world. The earth is not flat, no matter how many times you rant and rave in the comment sections of every online publication in town.

Posted by Hard Working City Employee on Oct. 22, 2010 @ 11:20 am

So Hard Working City Employee, your position is that a study done by an organization that advocates for Labor speaks the truth, but the reporters' article debunking it can't possibly be accurate because they report for the OC Register? You should read the SF Weekly article "Let it Bleed" in this week's edition. If you think this system is sustainable, you are mistaken. I wouldn't count on your retirement fund being solvent for many more years; the math doesn't work out.

Posted by The Commish on Oct. 24, 2010 @ 11:47 am

...It is was a study done by "The Institute for Research on Labor and Employment"- a left wing advocacy group for Labor. It is not a "UC Berkeley" study. The study did no apples to apples comparisons of occupations. Marcia Fritz, the woman in the article who pointed out all the flaws in calculating retiree benefits, is a Democrat.

....No crime in labor advocates doing their own study but that doesn't pay any of the bills coming due for SF's $800 million increase in pension and health benefits. You'll have a hard time convincing SF residents that at an average of $130,000 (ncluding furloughs) a year in wages and benefits City employees are being paid the same as private sector ones.

Posted by CJ Flowers on Oct. 24, 2010 @ 12:11 pm

Until January 2009, anybody who had worked for the city for as little as five years got "Free" healthcare for life paid for by the taxpayer. And even after the law was changed, city workers got a hefty benefit raise to compensate.

I wish I had worked for the city at some point in my life. I wish I was on the Public-Sector Gravy Train, too.

"But the most cynical manipulation of a real effort to address the city's nightmarish finances came via Prop. B of 2008. That measure finally curtailed the city's ruinous five-year vested health care policy. City employees hired after January 2009 must now work 20 years to enjoy lifetime health care. In the long run, this will save the city billions. Yet in the sausage factory of San Francisco legislation, the proposition also included hefty pension and Cost-of-Living Adjustment increases for city employees — not just for the future employees who would be subject to more modest health care stipulations, but the current workforce, already enjoying the city's generous health provisions."
VOTE YES ON B

Posted by Barton on Oct. 24, 2010 @ 11:50 am

Nice to see that Supe Avalos has awakened and seen the train wreck that public-sector pension costs are causing.

Jake McGoldrich saw it, too, when he was in charge of the finance commitee.

We either reform public-sector pension costs are continue cutting Park & Rec, day care, summer school (already gone), street repairs, etc etc

Posted by Barton on Oct. 24, 2010 @ 11:53 am

Tim, you complain about distortions and a failure of logic on the part of those who are upset with lavish pension plans for public employees and then you refer to Prop B as: "...the measure to cut health care and pensions for city employees." It does nothing of the kind and you likely know that.

Prop B does not cut health care and it does not cut pensions for public employees. Public employees are required to have health coverage and the pensions remain at their current extravagant levels. What Prop B does do is require that all public employees - contribute - to their pensions. That's a very different thing. Currently, half of all City employees, including all of our elected officials, do not contribute a dime to their pensions. After 30 years, City employees can retire at age 62 with a lifetime pension equal to 75% of their highest earning years. While this is already extremely generous, the system can be gamed to inflate the wages used to calculate the pension by accruing large quantities of overtime in the last few years prior to retirement. Firefighters and police officers can retire at 55 years of age, after 30 years of service, with a full 90% of their salary guaranteed for life! These two occupations do not even rate in the Top 10 most hazardous professions (construction laborers have it worse and you don't see anyone arguing for them to get a 90% of pay pension.)

Prop B requires that all employees pay into their pensions: 7.5% for all city employees except firefighters and police officers who will pay 10% because they have a more generous retirement package. Benefits are not reduced, it does not cut benefits for either current or retired city employees. The City charter has allowed for a contribution by employees of up to 10% since 1932.

Prop B does not cut health benefits.
It requires that city employees pay as little as $8/mth for themselves; $240/mth for a single dependent; $480 mth for 2 dependents or more. This is with the Kaiser plan which is a good plan and the least expensive of the 3 plans available to City employees. If the employee opts for one of the more expensive plans, Blue Cross or the City plan, then they will pay more. Prop B will effectively increase premium costs by $240/mth for employees with dependents. A significant increase but not a denial or cut in health benefits. The City continues to pay 50-75% of health care premiums. It would be better if Prop B graduated the increased costs to have those who are paid more, pay more. But as it is, health care premium costs will remain well below that which most taxpayers pay for their health care premiums. I personally pay $6,000 per year with a $10,000 deductible for just myself and my partner at Kaiser. And that's before the annual double-digit increase due this January.

The crisis in the pension system is that it's impossibly underfunded. The City has obligations that will grow into the billions within just a few years. While the economy was going strong and the market was bullish, the pensions made no claim against the City's general fund. Investment returns covered them. With the collapse of the economy pension funds lost between 30-50% of their value. The shortfall must be paid from the general fund and increased contributions by the covered employees, including our elected officials. Tax receipts may be increased only so far before you chase away thems thats got the dough, be thems fat cats or businesses. They leave, jobs leave, tax receipts go down and unemployment costs go up. It's a real bitch.

Prop B will require employees to contribute more to their pensions and to the cost of their health care premiums but less, significantly less, than most tax payers in San Francisco currently pay, those "other workers" who tend to get left out of the equation when fairness gets debated.

Posted by Guest on Oct. 26, 2010 @ 2:36 am

One of the political mailers I've received on Proposition B grouses about how public employee pensions are better than that received in the private sector. Its message is that this is an unfair thing.

But let's flip the statement around. Why aren't private sector pensions as good as public sector pensions nowadays? Shouldn't a private sector employee's retirement monies be less shackled to the vagaries of the stock market? Shouldn't private employers aspire to do better for their employees' old age than extracting as much of their labor as possible and then booting them out the door?
Those are questions I'd love to see answered.

Posted by Peter on Oct. 27, 2010 @ 2:18 pm

The auto industry took a real beating with guaranteed pensions. The private sector can't just raise taxes and hound the general public for money when investments go bad. If there is a powerful union involved, that means votes, so the government helping out with private pensions is a bit more involved in some areas.

A company can't just print more money and raise taxes to pay off it's pensions, another company without the liabilities will come along and sell a cheaper product.

Posted by matlock on Oct. 27, 2010 @ 2:54 pm

Smoke! Please don't buy into the B.S. that status quo for public employees is exorbitant wages and benefits. A credible study, as opposed to this carefully chosen, sound-bite article of the minority earners, makes things much more clear (http://bit.ly/cjrp68 & http://bit.ly/qRIUh5). By the way, public employees in executive positions not only must have the same or higher education as private sector employees, they also have the privilege of dealing with the public and retiring without things such as company stock and profit sharing. If any of you have worked in the public sector, you know that nothing compares in trying your emotional health and wellbeing like dealing with the public and elected officials on a daily basis. Most public emps are worth every penny they get paid and more. Just because we serve the public does that mean we should be undervalued. You all want cheap then cry about poor service! You get what you pay for, damn it!!

Posted by Guest on Sep. 28, 2011 @ 8:38 am

....in the 2011-12 budget, and yes that includes first year rookies and that is before SFFD goes over its overtime budget. So the real number is about $200,000. Yes, they are grossly overpaid - about 50% higher than their Bay Area counterparts.

Posted by Guest on Sep. 28, 2011 @ 9:01 am