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Pension Crisis
An American Dream on the Public Dime

Most Americans want the sort of jobs that public employees have—stable and with good benefits—but they’re not willing to pay for others to enjoy the privilege. That’s one takeaway from a recent poll by Reason/Rupe, in which around 70 percent of respondents worry that their state and local governments can’t afford their pension obligations. Americans don’t necessarily want to infringe on the benefits promised to workers and retirees, but if fulfilling that promise involves higher property taxes and reduced services, most will approve pension reforms—as did 80 percent of this poll’s respondents. As for expensive health care and defined benefit plans, the public says that current government workers should pay more toward their health care, and that future employees should make their way into 401(k)s just like the private sector did.

But the American dream, however elusive it is outside the halls of government, is still that steady job. Most people care more about job security and benefits than a bigger paycheck:

Retirement and health care benefits are highly valued by Americans. When considering whether to take a new job or stay at their existing job, 30 percent of Americans say benefits such as health care and 401(k) savings are the most important factor, followed by how interesting the work is (20 percent), earning the highest pay possible (17 percent), making a difference in society (13 percent), a pension (nine percent), and a flexible work schedule (seven percent).

When asked to choose, 65 percent of Americans would rather take a job with a lower salary but more health and retirement benefits, while 33 percent would rather take a job with a higher salary but fewer health and retirement benefits.

As Megan McArdle recently wrote, these are the jobs we are fast losing, though young workers still want them. As she puts it, millennials are looking for security at exactly the time when the economy is shifting to a model that depends more on individualization and piecework. If taxpayers today aren’t eager to fund the expensive promises made to public employees in better times, how much less so will frustrated millennials be once they’re the backbone of the workforce?

Even in government, one of the last sanctuaries of a Depression-era dream, these features of the old economy will soon start to die out. Let’s hope McArdle’s cautious optimism about the new economy (which we share) is well-placed.

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  • Anthony

    Economic growth and lack thereof affects people’s attitudes (am I moving or falling economically; how are those around me living and are they better off – public union employees perhaps). Now in the midst of a breakdown of an older economic model (industrialization), the American Dream is being recast perhaps; or, perhaps the individualization and piece work model becomes basis for redefining the American Dream (whatever it truly means). Individualization and piece work are components of post-crisis economy (monetizing the desperation of people and calling it a new model for the new economy). But in actuality, the model is not so new: the phenomenon has roots in the 1990s (individualism and techno-utopianism). I surmise the question for many Americans centers less on meaning of the American Dream than on you may not have a stable job but you’ll have an ever more complex income stream in this individualized and market driven economy (Task Rabbit anyone?). So, combining attitudes (general) prevalent in stagnant economy with shifting model educes poll numbers cited by Reason/Rupe. No surprise there.

  • FriendlyGoat

    1) With respect to last sentence of next-to-last paragraph, we must remember that millennials did not spring from a vacuum. Even though they may resent the elders having more security as a generation, most of them have living parents and grandparents and are not going to be eager to see their elder family members’ benefits docked. Not everyone worked for government, of course, but most everyone uses Social Security and Medicare and “most” of those would not be leaving the kids anything without those programs.

    2) Somebody in the millennial generation needs to figure out how a few decades of high-end tax cuts have contributed to them having fewer jobs with security and tell the others. Once upon a time CEO’s and shareholders paid through the nose for taking maximum advantage of workers, and, as a result, we had a culture where the “top” was forced to maintain greater respect for the “middle”. Until millennials learn why and how they are being squeezed, they and their progeny will be increasingly squeezed.

  • Anthony

    The optimism that Professor Mead and Mrs. McArdle show for unstable employment might be appropriate for single people, but it will be more difficult for families. If people have very little security, it makes sense for them to not have children. It much easier to keep your lifestyle “lean and mean,” when you are childless. No?

    Who knows, maybe this a good thing? Childless people might be able to focus more on work.

    • Anthony

      Anthony, the sharing economy (unstable employment) – the rise of peer-to-peer networks, decentering of everything (disintermediation), and flattening of old hierarchies in world of work – may also not be a good thing (single or nuclear family).

      • Anthony

        Maybe the old stable nuclear family will become a kind of luxury item?

    • FriendlyGoat

      There are several good reasons for a young man today to think seriously about whether he should father any children, whether already married or not yet married. The top one is what you have described. Raising kids correctly not only “ain’t cheap”, it is already literally beyond the economic prospects of many, many guys over a future 20-year period starting in today’s economy, whether they know it yet or not
      The next risk is the considerable possibility of “losing” a child to drugs, crime, and/or other social hazards in our modern culture.
      These risks always seem to go up, not down, and a tragic drama is more possible than most people think.

      • Anthony

        I read in a newspaper recently that 50 percent of American children are impoverished. I know things are bad, but I did not know they were that bad. Statistics like that do not bode well for the future of this country.

        • matt

          Its not, they are just being funny with statistics.
          SEF report if that’s the one your referencing Washington Post had article using it.
          Report says “percent of low income students in public schools: 51%”

          The qualification they were using is children eligible for reduced-price lunches, that is below 185% of poverty rate. A family of 4 qualifies if they make less than $44,123, and since the median household income is $52,250 nationally (lower than $44,000 in 11 states) it is not too surprising that around 50% of children are in households below the (almost 85%)median household income.

          Yes it is a little bit off from a fully even distribution, but between empty nesters, aging workforce, private schools, and childless big career types on one side and single mother households and larger than average immigrant families the other, it is within the range of expectations. The increase is very likely just another artifact of bad generalizations, changing demographics(boomers) and former social norms(family structure/size).

          Calling all of them ‘impoverished’ is pure hyperbole (with bonus points since measurement is pre-assistance).

  • Corlyss

    The result has been the same for 30 years, a consequence of the public employees unions’ success in poor mouthing as well as the natural result of the school system’s failure to teach basic economics. No wonder the vast majority believes in soaking the rich while searching for their own standardless, good-paying haven in which to burrow for their working lives.

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