Jon Coupal- Columnist
is an attorney and president of the Howard Jarvis Taxpayers
Association -- California's largest taxpayer organization with
offices in Los Angeles and Sacramento. [go to website] [go
to Coupal index]
Fallacies About Government Pensions
The truth is coming out…
[Jon Coupal and Richard Rider] 2/11/05
After years of having their way in the political arena, public
employee union leaders are now on the defensive, victims of their
Since given collective
bargaining rights in the late '70s, these union bosses have
become accustomed to dictating the labor agenda
through their use of union dues to elect lawmakers and local
officials who would toe the union line. Because of scant opposition
to their efforts to guarantee their members "millionaire" pensions
at taxpayers' expense, there was little publicity and voters
have been slow to catch on.
However, the labor bosses overreached. Recent revelations have
exposed that some government entities are approaching the abyss
of bankruptcy because of their inability to fund their pension
obligations. These horror stories, such as San Diego where pension
costs have increased by as much as a thousand percent in just
a few short years, have awakened Californians to the threat to
taxpayers and to public services.
A pension reform initiative
filed by the Howard Jarvis Taxpayers Association and a nearly
identical bill authored by Assemblyman
Keith Richman (R-San Fernando Valley) certainly got the attention
of union leaders. But when the governor announced in his State
of the State address that he would fight the unions on this issue,
union headquarters around the state went to "DefCon 3".
It took the unions but a matter of hours to launch their massive
Are the union bosses correct that this proposal would take away
existing pensions? Hardly. The modest goal of reformers is to
stabilize government budgets by replacing defined pension benefits
(a guaranteed pension amount) with defined contributions (a guaranteed
payment amount toward a worker's pension). Moreover, it applies
only for those taking government jobs after 2007. Current retirees
and employees under defined benefit plans can keep them if they
But that is not the only distortion coming from union leadership.
Here are some of the old canards about public pensions that have
been trotted out by those defending the status quo:
Fallacy 1 - Government employees are driven by some higher calling
to serve the public. Their self-sacrifice should be rewarded.
The Truth - Most public
employees go into government work because it pays quite well,
has great job security and offers a host
of generous benefits. James Buchanan won the Nobel Prize in Economics
in 1986 for his research demonstrating that public employees
and politicians, rather than working for "the public good," work
in their own self-interest -- just like everyone else.
Fallacy 2 - Since government employees are paid far less than
their counterparts in private business, they are entitled to
additional compensation in the form of medical and retirement
benefits that will provide security in their golden years.
The Truth - Several decades ago, public employees generally
were paid less than their private sector counterparts. No longer.
Today, government employees in the vast majority of job classifications
earn considerably more than those in the private sector doing
similar work. They have even better job security than before
and they enjoy many far superior benefits -- including a pension
which can exceed the salary they earned while working.
Fallacy 3 - Generous pension benefits are essential for government
to recruit and retain quality workers.
The Truth - Since
historically few public employees quit government positions
after a few years on the payroll, and most "public
servant" occupations have far too many qualified applicants
per job opening, it is clear that taxpayers are paying government
workers who are already strongly motivated to hold onto their
Fallacy 4 - Generous benefits have helped to eliminate much
of the need for public servants to solicit and receive bribes
and partake in graft.
The Truth - In the U.S., widespread bribery and graft were not
a problem when pay and pensions were modest, and it is not a
problem today with our opulent compensation payouts. Some politicians
and employees still take bribes and graft -- and always will.
Most did not, do not and will not.
Fallacy 5 - Most public employees retire on modest pensions.
The Truth - Some public employees live on modest pensions, particularly
those who retired several years ago. But increasingly, due to
union backed changes in the law over the last seven years, public
employees are retiring on lavish pensions.
Fallacy 6 - By all means, let's discuss ways to improve our
government, but let's not pretend that we can cut government
spending -- or cut the demand on future budgets -- without getting
less in return.
The Truth - Taxpayers can cut future government spending, or
at least the rate of growth, which is taxpayer enemy number one,
and government will still be able to provide good quality essential
services. While state and local government revenue in California
is growing at a rate far in excess of inflation, government spending
is growing even faster. The rate of increase in spending is simply
unsustainable and everyone in Sacramento knows it. Over the long
term, pension reform will help the state balance its budget,
reduce the pressure on taxpayers and provide fair and competitive
benefits to future public workers.
In the coming months, those with a vested interested in the
status quo will use their substantial financial resources to
spread disinformation about pension reform and to instill fear
in the hearts of current retirees and employees. But those of
us who are concerned about the future of California can take
heart. The truth is on our side. CRO
is an attorney and President of the Howard Jarvis Taxpayers
2005 Howard Jarvis Taxpayers association