The pension crisis has become a major threat to public safety. The WSJ profiles serious trouble brewing in Memphis, where state efforts to manage the pension problem has prompted police officers and firefighters to skip work—or quit altogether. Memphis has decided to phase out defined benefit plans and move to a 401k system, and employees aren’t happy:
Memphis is particularly notable because workers have moved beyond rhetoric and into action. More than 250 police and firefighters have quit and new recruits are proving difficult to attract, after Memphis opted to end its traditional defined-benefit pension and cycle a portion of retirement benefits for many current employees next year into a 401(k)-style account […]Longtime workers have often been spared from some of the most drastic cuts as government officials took the easier path of cutting benefits for workers yet to be hired or suspending retiree cost-of-living bumps. But state and local governments that face pressure to act more aggressively are increasingly shifting more responsibility to current employees.
If large chunks of a city’s police force and firefighters quit and replacements can’t be found, that’s very bad news for the city’s residents. Especially in deeply indebted, poorer cities, potential consequences include slower responses to fires, and, with fewer cops on the street, more crime. Some signs indicate that the pension crisis could get worse and if it does we’re likely to see more cities follow Memphis’ lead in spreading cuts to cops and firefighters. That would be a particularly nasty way for the pension crisis to end: a more sustainable budget but seriously imperiled public safety.Here we have a case of the blue model’s chickens coming home to roost. In the choice between financial collapse and underpopulated police and firefighter corps, there is no attractive option. But irresponsible pension systems have forced this dilemma on cities. One way or another, residents are in for a rough ride.