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Mass Retirements As Panicking Public Employees Seek to Dodge Rule Changes

While the economic crisis has already reshaped the lives of generations of Americans,  it’s most lasting legacy may be the acceleration in the decline of the shaky and ossified Blue Social Model. Our recent economic troubles forced state and local governments to make tough decisions now that would otherwise have been kicked into the future. Public sector workers are feeling the fear and some are taking steps before the hammer comes down. The New York Times reports that 2011 has seen public-sector workers enter retirement in record numbers:

But increasingly workers fear a permanent shift away from the traditional security of government jobs, and they are making plans to get out now, before salaries and retirement benefits retreat further.

“You start to feel like, ‘What will they do next?’ ” said Bob McLinn, 63, a labor union president who left his job with the Wisconsin Department of Corrections in March, earlier than he planned, after political leaders pressed to cut benefits and collective bargaining rights for workers.

“There’s always been this promise that if you came to work and did your job, at the end there would be your reward — a defined retirement. The idea was you could retire with respect and dignity. But that whole idea has been slashed now, and I felt like, ‘What is the point?’ ” […]

Already, the trend is apparent in places where lawmakers have made the clearest calls for decreasing workers’ benefits or increasing their contributions for health care insurance and pension plans. And in the last two years, 41 states have made significant changes to at least one of their retirement plans, the National Conference of State Legislatures found.

Politicians have promised rising wages and big pensions to workers and lots of services at low taxes to voters.  The two sets of promises don’t add up; now the bills are coming due and workers rightly fear that politicians from both parties will throw workers under the bus rather than anger voters.  Hoping to get out before new and more restrictive rules trap older workers and deprive them of benefits they expected, workers are trying to retire before the rules change.

Via Meadia doesn’t think the problem is simply that public employees are overpaid.  Many are not, and compared to the Solyndra executives and the Wall Street geniuses who wrecked the financial system while collecting big bonuses, the average teacher, policeman or firefighter is hardly making out like a bandit.

The core problem is that public unions are too powerful; they get to act both as traditional trade unions and as powerful electoral blocs who elect the people with whom they negotiate.  Given the flaccid character of so many politicians, there is a perverse incentives to give the unions whatever will make them happy and then to kick the fiscal can down the road.

Unfortunately the end of the road is where we are, and there are a lot of cans underfoot.  Dishonesty and false promises were the stock in trade of politicians for the last generation, and we are where we are.  There is enough pain to go around, but it will be impossible for state and local workers to escape their share.

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  • Charles R. Williams

    This is not panic. This is a simple calculation of financial interests. States are cutting early retirement provisions and by retiring sooner people can avoid the cuts. Even if they are grandfathered, the incentives for staying on are much reduced. Let’s say a teacher can retire at 57 at full pay with medical benefits. There is no incentive for staying on when you can work 10 years in a private school and qualify for social security. So maybe they won’t take anything away you are entitled to. There is much less incentive to stay on.

    One reason teachers are leaving who can is the tidal wave of crap coming down from Washington and state departments of education.

  • John Burke

    Good. As the most senior employees decide to retire, states and municipalities can replace them with younger people who have lower salaries and generally are offered less expensive pension deals at lower “tiers” that were in place widely even before the current crisis.

  • Bruno Behrend

    There should be as few new hires as possible.

    State and municipal employment needs to shrink permanently. Remember that 3.1 of the 6.3 million people in K-12 public education are “administration and support.” Losing 30% wouldn’t drop a single IQ, SAT or ACT point in the nation.

    Here in IL, the state could get rid of “Forest Preserve Police,” METRA police (mass transit), and whole slews of needless public employee dross.

    Local government across America has proven it is nearly incapable of making itself efficient. The model is one of building political fiefdoms and hiring along the “friends and family” plan.

    The only discipline capable of working is to freeze local tax levies constitutionally.

    We won’t be out of the woods until costs are cut by about 30%.

  • Greg Q

    This sounds like a win-win to me. First of all we can get rid of a bunch of high senior and greatly overpaid government workers. Some of them will be replaced by younger workers who do a better job and get paid less, others will just have their positions eliminated.

    Then, in a couple of years, we can change the rules on them, and slash the piggish benefits the politicians promised them.

    I will laugh myself sick when that happens.

    And when they whine about their “promises” , I will gleefully point out how often politicians promised to protect the taxpayers when running for office, and how often they screwed us over, to the benefit of the public employees, once they got in to office.

    Defined benefit pensions are an abomination. I look forward to their failure.

    You want to have a retirement? Great! Then support a booming economy, one that’s growing, not shrinking, burdened by government mandates and regulations.

  • Corlyss

    Speaking as a long term government employee, I can assure everyone here that given what government does, i.e., regulate and enforce, there’s few analogues in private industry that do what government employees do. That’s always been at the heart of difficulty in calibrating government employee compensation to that of the private sector. Some genuinely comparable professions, e.g., scientist and mathematicians, were so woefully undercompensated that agencies employing scientists had to get Congressional approval to stray off the government pay reservation to hire people qualified for jobs more complex than washing test tubes. Figuring out a compensation scheme that will attract people who could make more money in private industry without establishing islands of extravagant benefits amidst oceans of sober middle class white collar workers ain’t easy

  • Bruno Behrend


    I don’t focus so much on Federal employees as I do state, and IL is a particular focus, as I live there.

    I also focus on K-12 education, where government employment is all there is (along with some greedy private interests gaming the school codes in all 50 states).

    If all 6.3 million K-12 employees where raptured up to pension heaven tomorrow, we would easily and simply replace them for the same (or better) outcomes, at lower cost.

    For education, money should follow the child to the best options, and let each educator become a professional on the open market.

    You may be right about certain grades and how to effectively compensate, but for state and local governments, state and local in particular, it’s a feather-bedded cesspool of patronage piggery.

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