Some taxpayers feel benefit envy as workers protest cuts
“I don’t think that a federal employee or government employee is worth any more than anybody else who does their job and does it well,” said the Slinger, Wis., woman. She’s been working a couple of bartending jobs since January, when she was laid off from her job at a Harley Davidson plant after almost a decade.
She’s not alone in seeing public servants as public enemies in some ways. For some everyday Americans, it’s a case of pension envy.
For McFarlane, 36, it’s part of a ubiquitous discussion, at the bars where she works and on Facebook. And it’s the center of some of the biggest political battles playing out in state capitals across the country as governors say their states can no longer afford the benefits that public employees have been promised.
Government workers in McFarlane’s state have rallied for weeks against Gov. Scott Walker’s efforts to take away many collective bargaining rights, saying that would amount to killing the middle class.
A USA Today/Gallup poll last month found that Americans largely side with the employees, though about two in five that want government pay and benefits reined in.
Tony Christoff, a 38-year-old stay-at-home dad in Perrysburg, Ohio, said he believes public workers such as police officers and teachers – including his wife – should be rewarded.
“They go over and above and deserve the pay they get,” he said.
That’s not a unanimous view, though.
Barbara Davis, a retiree from Cherry Hill, N.J., has been watching public workers in rallies in Madison, Wis., as well as Trenton.
“I’m sorry, but what they’re doing is telling off the middle class,” said Davis, 76, and a co-chairwoman of the Cherry Hill Area Tea Party. “The middle-class people don’t get all the goodies that they do.”
At its heart, the issue is this: Some public workers get a sweet deal compared with other workers. And it’s taxpayers who pay for it.
That’s set off resentment in a time when economic doldrums have left practically everyone tightening their belts. Many people have found their tax bills rising even if their earnings haven’t.
A half-century ago, industrial jobs at car and steel plants provided high salaries and rich benefits. But as manufacturing moved overseas, many formerly well-paid workers had to take lower-paying jobs. By the end of the recession, the economic order was undeniably changed.
For instance, most non-uniformed public employees who have worked in New Jersey for 30 years with an ending salary of $85,000 can look forward to retiring at 55 with an annual pension of about $46,000. Working until age 60 and a salary of $90,000 can bring a pension of $57,000. And many of the New Jersey’s public-sector retirees have no or low premiums for their health insurance.
For a private-section worker who retires at 55, relying solely on a 401(k) without an employer match, it would take a $100 contribution to a plan every week for 30 years and getting an annual return over 7 percent to get to the same level of pension benefit as the public worker retiring at that age. Those benefits would run out after 25 years for the 401(k) retiree.
To be fair, most public-sector retirees don’t get such rich pensions. New Jersey’s Treasury Department says the average annual pension due state workers who retired between July 2009 and June 2010 was just over $30,000 per year; for local government employees, it was about $20,000.
National data compiled by the U.S. Bureau of Labor Statistics confirms that public-sector workers do better when it comes to pensions and benefits.
Olivia Mitchell, a professor of insurance and risk management at the University of Pennsylvania’s Wharton School, says the data aren’t perfect. They don’t compare workers with the same education or experience levels, and they cover a broad range of jobs. Also, she said, they don’t take into account that about one-fourth of public workers aren’t covered by Social Security.
There’s one clear downside for the public employees: “We also know that the public-sector pensions are in deep trouble financially,” Mitchell said, pointing to studies that suggest that they’re underfunded by a total of $3 trillion, largely because governments have skipped payments. “Exactly what will be done about that, nobody knows.”