Week in Review
Detroit had a massive public sector. Lots of union government jobs. With very generous benefits. Then the city began losing population. As the city shrank the public sector did not. As the city could no longer support the public sector on tax revenue they turned to borrowing. At her bankruptcy her pension obligations were in the billions. And were just unsustainable. With a lot of those retirees going to see huge cuts in their retirement benefits. A first for a public sector union. And one that may set a precedent for other impoverished cities (see Cities where poverty is soaring by Michael B. Sauter and Thomas C. Frohlich, 24WallSt.com, posted 12/16/2013 on Yahoo! Homes).
Many of these cities show a symptom of the regions hit hardest by the recession — a significant decline in real estate value. Nationally, the average home value during the three-year period of 2010-2012 was down by 9% compared to the previous three-year period. In eight of the 10 cities with soaring poverty rates, property values fell by at least 10%. Homes in Eastpointe lost nearly half of their value. In Inkster, Michigan, another city where poverty grew substantially, an average of 43.3% of homes were worth less than $50,000 between 2010 and 2012, compared to just 11.8% of homes during the 2007-2009 period…
Several of these cities were already struggling prior to the recession, in part because of their reliance on manufacturing. The industry had been declining for years, and the recession only made matters worse. In Salisbury, North Carolina, employment in manufacturing fell from 15.5% of all jobs to 8.3%. Goshen, Indiana, another city with a major increase in poverty, is heavily dependent on the auto industry — more than a third of the working population was employed in manufacturing between 2010 and 2012. According to Joe Frank at the Indiana Department of Workforce Development, this dependence had particularly dire consequences during the recession.
The Democrats are all Keynesians. Who believe in government spending. And keeping interest rates artificially low to stimulate the economy. To encourage people to buy big expensive houses. Just because interest rates are low. So people did. With mortgages so cheap everyone was getting them. And as these buyers flooded the market housing prices soared. Creating a great housing bubble. Which collapsed when interest rates rose. Resetting the rates on those subprime adjustable rate mortgages (ARMs). Raising monthly payments. Beyond what some people could afford. Forcing them into bankruptcy. Creating the subprime mortgage crisis. And the collapse of housing prices.
The UAW made American cars so expensive people started buying the less expensive imports. As most people don’t have UAW contracts giving them a fat paycheck and generous benefits. Leaving them to get by on less than UAW workers. Which meant they turned to the less costly imports. Built by companies that didn’t have those great legacy costs of years of overly generous contracts that became unsustainable. Pension costs and health care for retirees (which outnumbered active workers) forced GM and Chrysler to ask for a government bailout to avoid bankruptcy. Asking the taxpayer to help them pay the generous pensions and health care costs of others. Instead of bringing these benefits into line with the rest of America.
Democrats are Keynesians. They believe in government intervention into the private sector economy. And they protect their friends in unions to get their votes. Raising costs for everyone else. These policies, though, are just impoverishing American cities. At least the ones dominated by unions and/or Democrats.
Tags: Bankruptcy, Democrats, Detroit, government spending, interest rates, Keynesians, manufacturing, mortgage, pension, pension obligations, public sector, UAW
Week in Review
Public sector pensions are pushing cities and states to bankruptcy. The Detroit bankruptcy was due in large part to the staggering debt the city took on to meet current pension obligations (and health care cost for retirees). While the pension fund remained woefully underfunded. The Detroit bankruptcy may set a precedent for other debt-laden cities. Who are drowning under the costs of their bloated public sectors. As they’ve run out of room to raise taxes any further. Which wasn’t a problem during the initial surge of public sector growth. But now that those retirement rolls have grown so large cities and states have found those generous pensions to be just unsustainable. Even in Canada (see Alberta Health Services privatizing Edmonton labs posted 12/11/2013 on CBC News).
Alberta Health Services is going ahead with its plan to privatize all of its diagnostic lab services in Edmonton…
The new lab will replace hospital labs operated by AHS and Covenant Health as well as the services provided by DynaLIFE…
No jobs will be lost and all staff positions will be protected by the new employer, AHS says.
The Health Sciences Association of Alberta represents about 75% of the 2,000 workers affected by the changeover.
Even though AHS claims wages won’t change, the union believes pensions will take a hit.
“This is going to a private provider,” said HSAA president Elisabeth Ballermann.
“The private provider by definition cannot participate in the pension plan that our public sector members are currently part of and that’s an enormous loss for those workers.”
A loss perhaps for 2000 workers. But a win for the health care system in Alberta and the people who use it. As the cost savings from privatizing these pension obligations will free up money to spend on health care. Something to think about as Obamacare continues to rollout and destroy the private health insurance industry on its way to establishing national health care. Nationalizing one-sixth of the U.S. economy. Creating a windfall of new public sector workers to vote Democrat. And unsustainable pension costs that will increase the cost of health care. Which will lead to longer wait times and rationing. As well as adding to the deficit and debt. Which will, in time, lead to the same cost-cutting actions like Alberta is taking. Or something a little more painful like they did in Detroit.
Tags: AHS, Alberta, Alberta Health Services, Bankruptcy, debt, Detroit, Obamacare, pension obligations, pensions, privatize, public sector
Week in Review
Some describe the gun violence problem in Chicago as epidemic. Blaming the lack of jobs for young men. And the lure of big money working in the drug trade. Aware of this problem, the mayor of Chicago is focusing his efforts on catching those people running red lights (see New Chicago speed cameras capture more than 200,000 violations in just 45 days by Eric Pfeiffer posted 10/12/2013 on Yahoo! News).
Newly installed speed cameras in Chicago have tallied up some eye-catching numbers, with more than 200,000 violations captured at just four sites ” during the past 45 days…
So far, the city has only been issuing warnings to errant drivers caught on camera. If those warnings had been actual tickets, they would have amounted to $13.9 million in fines in just over a month. Chicago Mayor Rahm Emanuel has said he expects the new speed camera system to generate about $15 million in revenue before the end of the year, once the warning system transitions to issuing actual tickets after October 21.
An analysis from ABC News says that if the violations remain roughly on the same pace through 2014, the program will generate revenue “well above” the $40 to $60 million estimated by Emanuel…
Chicago has said that it plans to use the money generated from its speed cameras to invest in safety initiatives, after school programs, job initiatives and other funding projects.
Really? You would think that he would want to use that $40-$60 million to shrink the $330 million budget deficit. Or to apply to their $19.5 billion in unfunded pension liabilities for city, municipal, police, fire and labor workers. You’d think these were the reasons to install these cameras. Strictly for the revenue. For, let’s face it, once drivers get burnt a few times they’re all going to start driving the speed limit. And that revenue won’t be anywhere near their rosy projections.
Assume they hit their revenue target, though. Is that a good thing? Pulling $40-$60 million of economic activity out of the Chicago economy? I mean, if that money goes to the government no one will be spending it in local businesses. Perhaps causing some businesses to lay off some workers. Or, at the least, preventing businesses from growing and hiring new workers.
Also, those cameras may cause some people to slam on the breaks at yellow lights. Paranoid about getting a ticket. And seeing their insurance rates rise. Which can be a problem for the car behind them. Whose driver is not expecting anyone to slam on the brakes the moment the light turns from green to yellow.
You know what would be a better idea? Balancing their budget. Only promising pensions they can afford to pay. And NOT spending the money in pension trust funds. You do that and you won’t need any revenue-generating camera system. And you don’t have to anger the police union for replacing cops with cameras.
Tags: Chicago, pension, red lights, running red lights, speed cameras
Week in Review
The City of Detroit bankruptcy shows how the massive costs of a city’s public sector are strangling these cities. Promises of generous pensions for a long retirement and free health insurance up until you die are just promises these cities can’t pay for. So some (like Detroit) raised their tax rates so high that people left the city in droves. Further reducing the tax base. While other cities turn to other revenue generating schemes (see Speeders were plentiful in camera test run by David Kidwell and Bill Ruthhart posted 8/12/2013 on the Chicago Tribune).
As Mayor Rahm Emanuel rolls out his long-delayed speed camera plan, new numbers his office released suggest that drivers who speed in Chicago could rack up way more in fines than a cash-starved City Hall initially projected.
The mayor had hoped to bring in $30 million this year. But results from a monthlong test of the automated camera system indicate the city could reap well into the hundreds of millions of dollars in the program’s first year.
City transportation officials argue that estimate is overblown, but the test period statistics the mayor’s office released Friday reinvigorated critics who argue that the program is more of a cash grab than the child safety measure Emanuel sold it as…
City transportation officials put estimated first-year revenues at $40 million to $60 million, arguing that several factors will cut down on the number of tickets actually issued.
For starters, they argue that it’s incorrect to estimate revenues based on the test program. They suggest the money will never reach into the hundreds of millions of dollars because of a number of factors. The most important: the fast learning curve of Chicago drivers…
Ald. Leslie Hairston, 5th, who voted against the speed camera program, said the number of speeders captured on the test cameras supports her insistence that the main motivation is to generate more city revenue.
“I guess this is just going to be a city for wealthy people, that’s where we’re headed,” she said…
The speed camera rollout was scheduled for closer to the start of the year, but it was delayed after City Hall came under scrutiny following Tribune reports of an alleged bribery scandal involving its 10-year-old red light camera program.
Making the streets safer for children is a noble goal. But like their red light camera program it’s all about the Benjamins. The money. And they love cameras because they can rake in the money without having to put more costly public sector workers (i.e., cops) onto the streets. That is, they’re outsourcing these costly union jobs to machines. To minimize their labor costs. Just like corporations try to minimize their labor costs. Because union workers are very, very expensive.
But like every government revenue policy they’ve overstated the expected revenue from these cameras. Just like a higher cigarette tax rate reduces cigarette tax revenue. Taxes, and these revenue cameras, change human behavior. Actually achieving the stated purpose for them (better health if people don’t smoke and safer streets if speeders are punished). Which means though they have a burst of revenue in the beginning it will eventually taper away. Requiring a new revenue generating scheme. And then another one to replace that one. And so on. On and on. Forever and forever. Instead of doing the simpler thing. And the thing that would work best. Forever and forever. Just stop spending so much.
If the public sector union enjoyed pensions and health care benefits like they do in the private sector there would be no Detroits going bankrupt. Because there would be no generational theft. These workers would provide their own pensions—401(k)s—and pay a much larger portion of their health care expense. And they would work into their Sixties (or more) like the rest of America. Instead of retiring in their 40s or 50s. To enjoy a retirement that in some cases lasts longer than their working career. This would solve the budget problems of the big cities. Instead of passing it on to future taxpayers who were not included in those generous contract negotiations that they find themselves stuck paying for.
Tags: Chicago, Detroit, generous pensions, health insurance, labor costs, public sector, red light camera program, revenue, speed camera, speed camera program, tax rate, tax revenue, union jobs, union workers
Week in Review
So who’s to blame for Detroit? The greedy. The greed of the public sector. Who stole as much as they thought possible from future generations. Laughing all the way to the bank. But never did they think that their greed would eclipse the paying-ability of those they were stealing from. Future taxpayers. Which is what happened in Detroit. And will probably happen elsewhere throughout the nation (see The Unsteady States of America posted 7/27/2013 on the Economist).
Nearly half of Detroit’s liabilities stem from promises of pensions and health care to its workers when they retire. American states and cities typically offer their employees defined-benefit pensions based on years of service and final salary. These are supposed to be covered by funds set aside for the purpose. By the states’ own estimates, their pension pots are only 73% funded. That is bad enough, but nearly all states apply an optimistic discount rate to their obligations, making the liabilities seem smaller than they are. If a more sober one is applied, the true ratio is a terrifying 48% (see article). And many states are much worse. The hole in Illinois’s pension pot is equivalent to 241% of its annual tax revenues: for Connecticut, the figure is 190%; for Kentucky, 141%; for New Jersey, 137%.
By one recent estimate, the total pension gap for the states is $2.7 trillion, or 17% of GDP. That understates the mess, because it omits both the unfunded pension figure for cities and the health-care promises made to retired government workers of all sorts. In Detroit’s case, the bill for their medical benefits ($5.7 billion) was even larger than its pension hole ($3.5 billion).
Some of this is the unfortunate side-effect of a happy trend: Americans are living longer, even in Detroit, so promises to pensioners are costlier to keep. But the problem is also political. Governors and mayors have long offered fat pensions to public servants, thus buying votes today and sending the bill to future taxpayers. They have also allowed some startling abuses. Some bureaucrats are promoted just before retirement or allowed to rack up lots of overtime, raising their final-salary pension for the rest of their lives. Or their unions win annual cost-of-living adjustments far above inflation. A watchdog in Rhode Island calculated that a retired local fire chief would be pulling in $800,000 a year if he lived to 100, for example. More than 20,000 retired public servants in California receive pensions of over $100,000.
This is an important point. People say that we must honor these lavish pension and retiree health care benefits because they made a deal. A contract with the city. Or the state. But did they? No. The public sector unions and the cities and states colluded together to steal money from future generations. Who were not a party to those agreements. This amounts to generational theft. And the generous size of those benefits just makes that theft worse. Transforming the public sector into an aristocracy. That cares little for the future taxpayers that they will be bled dry to pay for their long and comfortable retirements.
Detroit is just the first domino to fall. This generational theft is just unsustainable. Something has to be done. But what?
Public employees should retire later. States should accelerate the shift to defined-contribution pension schemes, where what you get out depends on what you put in. (These are the norm in the private sector.) Benefits already accrued should be honoured, but future accruals should be curtailed, where legally possible. The earlier you grapple with the problem, the easier it will be to fix. Nebraska, which stopped offering final-salary pensions to new hires in 1967, is sitting pretty.
In other words our public servants should not live a better life than their masters. Those people paying the bill. There should be no aristocracy in the United States. People in the public sector shouldn’t be able to retire young and live a long life in retirement while someone else is paying the bill. The taxpayer. People who have to work until they drop dead to save for their own retirement. That just isn’t right. If our servants in the public sector want that long and comfortable retirement then they must do what people in the private sector do. Save for it. Make sacrifices. And live more frugally. Because there shouldn’t be two Americas. Where one enslaves the other. While setting up a string of municipal and state bankruptcies because of their greed that threatens the financial wellbeing of the nation.
Tags: aristocracy, cities, Detroit, future generations, future taxpayers, generational theft, greed, Health Care, medical benefits, pensions, public servants, retirement, states, taxpayers, unfunded pension, unions
Week in Review
The problem all our big cities are having is the cost of pension and retiree health care for their public sectors. These cities made ridiculous promises during their contract negotiations with their public sector unions. Promising them generous pension and health care benefits for life for retirees. Benefits a later generation would have to pay for. Which is why these cities are imploding under these costs. And why Detroit filed bankruptcy. These cities never put away the money for these future benefits because they were just too costly. Besides, they no doubt thought, when the bill comes due it will be someone else’s problem. And that’s where we are today.
How bad is it? Really bad. Especially in Detroit. A city that has about half the population it had when it entered into those agreements. And nowhere near the automotive industry it had back then. A race riot in 1967 caused a white flight. And the black middle class would follow years later. As the jobs left Detroit for the suburbs. And the people followed those jobs out of the city. Just decimating the tax base that has to pay those unfunded benefits (see The Retirement Surprise In Detroit’s Bankruptcy by Robert C. Pozen posted 7/25/2013 on Brookings).
When Detroit recently filed for bankruptcy, one number surprised a lot of observers–$6.4 billion in other post-employment benefits (OPEB). OPEB is primarily comprised of unfunded obligations to pay health care costs for municipal employees.
By contrast, the unfunded pension obligations of Detroit were $3 billion–less than half the size of its OPEB…
The Pew Charitable Trust did a study in 2013 of both pension and OPEB shortfalls in the 30 largest cities in the United States. The three cities other than Detroit with the largest pension shortfalls were:
$14,302 per city household in New York City;
$12,170 per city household in Philadelphia; and
$11,389 per city household in Portland, Oregon.
But the shortfalls for OPEB, primarily healthcare obligations, were significantly larger. According to Pew, the three cities other than Detroit with the largest OPEB shortfalls were:
$22,857 per city household in New York City,
$18,962 per city household in Boston
$13,487 per city household in San Francisco.
These numbers are staggering. Based on the U.S. Census, there are about 264,209 households in Detroit. If you divide the total unfunded pension and health care costs by the number of households you get $35,578. That is, to pay this outstanding debt it will cost each household in the city of Detroit $35,578. Which will be very difficult to do when the median household income in Detroit is $27, 862.
Those in the union say these people are owed their retirement and health care benefits. Because they made a deal. But they didn’t make a deal with the people currently paying the taxes. What this amounts to is generational theft. Like all those municipal pensions and health care benefits. For when they made those generous agreements the people who ultimately had to pay them weren’t in the room when they signed those contracts. In fact they weren’t even born yet. The people demanding their benefits now and their union representation apparently had no problem sticking it to future generations. They were the ones in the room when they signed those contracts. And didn’t give the people stuck paying for their benefits a second thought.
All big cities with big public sectors have the same problem. They may not be ‘Detroit’ bad but they have bills that they won’t be able to pay. There are about 100 U.S. cities with a population of a quarter million or more. If each one of them had this problem that’s about $1 trillion in unfunded benefits just in these cities alone. With trillion dollar deficits already, Obamacare coming on line and Social Security and Medicare projected to go broke the federal government just won’t be able to bail these cities out. Perhaps bringing the days of generational theft to an end. Which may be the only good thing to come from a wave of municipal bankruptcies.
Tags: Bankruptcy, Detroit, generational theft, OPEB, pension, public sector, retiree health-care, unfunded benefits
Week in Review
The Democrats hate Wal-Mart. As do unions. Because Wal-Mart stores do not have union labor. Unions hate that. And because Democrats and unions are joined at the hip, Democrats hate what unions hate. Which is why you won’t find Wal-Mart stores in big Democrat cities. Because the Democrats do everything they can to keep them out. Even writing laws specifically targeting Wal-Mart (see Trouble in store: Why Walmart has failed to woo Washington by Rupert Cornwell posted 7/21/2013 on The Independent).
Walmart has been wooing [Washington D.C.] for years, and in 2010 announced plans to open four stores there, a number subsequently raised to six. Everything was going swimmingly, with work already started on three of the sites, until earlier this month, when the council passed its Large Retailer Accountability Act, otherwise known as “Get Walmart”.
Under it, non-unionised stores with a commercial space of 75,000ft or more – ie Walmart – will henceforth have to pay employees at least $12.50 (£8.20) an hour, compared with the city’s existing minimum wage of $8.25, and the national one of just $7.25 an hour. The company retorted by threatening to scrap three of the planned stores at once, and perhaps abandon the three where construction has begun too, causing the loss of up to 1,800 new jobs…
The case for Walmart is strong – that its stores provide working-class Americans (and many wealthier ones too) with good service and a broad selection of goods “at the lowest prices possible”, to use the words of old Sam Walton, who opened his first store in Rogers, Arkansas, in 1962. And it provides jobs: 1.4 million of them in the US alone…
Nor is Washington DC alone in feeling that way. Five of the country’s other largest cities – San Francisco, Detroit, Seattle, Boston and, above all, New York – have also said no. “As long as Walmart’s behaviour remains the same, they’re not welcome in New York City,” says Christine Quinn, the New York City council speaker who may well be the next mayor. “New York isn’t changing. Walmart has to change.”
Not by coincidence all those cities, like DC, are Democratic strongholds where unions are strong. They are liberal, socially “progressive” and, by definition, urban, while Walmart’s genes are southern, conservative and suburban.
Detroit said ‘no’ to Wal-Mart? The city that just filed the largest municipal bankruptcy in history said they don’t need jobs or low prices on food, clothing, pharmacy and household goods? If you’re looking for the answer to why Detroit is in the mess it is in this is your answer. The Democrat stronghold in Detroit got so anti-business that it chased all the jobs out of the city. Once the jobs left the people soon followed. First the whites. Accelerating their ‘white-flight’ following the Detroit riots. While the blacks held on. But after 20 years (1974 – 1994) of Coleman A. Young they gave up, too. For they don’t come further left than Coleman A. Young. And when you’re that far left you’re no friend to business. So businesses stay away. As do their jobs.
The black middle class followed the whites out of Detroit. In pursuit of greener pastures. And jobs. Leaving Detroit with half the population it once had. Impoverished. And more anti-business than ever. Which is why they said ‘no’ to Wal-Mart. Because Wal-Mart isn’t union. And the two largest employers in the city, the City of Detroit and the Detroit Public Schools, are union strongholds. So they protected their high pay and benefit packages. By keeping nonunion jobs out of the city. While thinking nothing of the unemployed masses in the city. Helping to keep the unemployment rate in Detroit well above the national average. While the unemployed masses would have loved to see up to six new Wal-Mart stores (or more) opening in the city. The 1,800 new jobs (or more) that would have came with them. And shelves full of food, clothing, pharmacy and household goods at low prices that their Wal-Mart paycheck could easily afford. But no. Wal-Mart is not union. So the people of Detroit have to stay unemployed. And impoverished.
Tags: Anti-business, Business, clothing, Coleman A. Young, Democrat cities, Democrat stronghold, Democrats, Detroit, food, household goods, jobs, low prices, nonunion jobs, pharmacy, unemployed masses, union jobs, union labor, unions, Wal-Mart, Walmart, Washington D.C.
Week in Review
The United States Postal Service isn’t the only postal service flirting with the idea of privatization. So is the Royal Mail. And, predictably, some are not happy about making government jobs like private sector jobs (see Royal Mail privatisation ‘will lead to soaring prices and job losses while taxpayer keeps debts’ by Graham Hiscott posted 7/11/2013 on the Mirror).
STAMP prices will soar and jobs will be slashed when the Royal Mail is privatised.
The warning came from critics as the Government announced its controversial plan to kick off a £3billion sale.
It is feared the sell-off could see a big chunk of the company snapped up by foreign investors, with investment banks raking in millions in fees.
So while the Treasury pockets a pre-election windfall, the taxpayer will still be paying for Royal Mail’s £12billion pension deficit.
Chuka Umunna, Labour’s Shadow Business Secretary, said it amounted to “nationalising its debts and privatising its profits”.
This pretty much says it all. Pension costs are so out of control that the only way the Royal Mail can survive is with huge government subsidies. And if they cut those subsidies they will have to pay for those pensions with the revenue from stamps. Which means stamp prices will have to rise to replace those lost subsidies. So these government workers can continue to enjoy those generous pensions.
Britain has an aging population. Like most of the developed world. People are living longer. Giving them more time to suffer more diseases. Raising the cost of pensions and health care for retirees. Ponzi schemes like state pensions worked when there was an expanding population growth rate with more people entering the workforce than were leaving it. But those days are long gone. As are the days of defined benefit pension plans. Where today they only result in unfunded pension obligations. And companies like the United States Postal Service and the Royal Mail unable to pay their bills.
The reason why unions resist the privatization is that these business models cannot survive in the private sector. For their labor costs (pay and benefits) far exceed anything available in the private sector. And the only way they can keep those generous pay and benefit packages is by having the taxpayer subsiding their cost. But if they go private and it costs $7.50 to mail a utility payment people aren’t going to mail their utility payments anymore. And people will see the true cost of union labor. Which means either unions must match the pay and benefit packages they have in the private sector. Or they will lose all their union jobs. Because no one is going to pay $7.50 to mail a letter.
Tags: Britain, generous pensions, government subsidies, labor, pay and benefits, pension, pension costs, privatization, Royal Mail, stamp prices, subsidies, unions, United States Postal Service
Week in Review
FDR was pro-union. He was all for tearing businesses a new one when it came to collective bargaining. For he didn’t like those royalists. Greedy businessmen who put their profits ahead of their employees. While making them work in horrible conditions. For long hours. For little pay. The greedy little profit whores they were. But FDR drew a line when it came to government workers. Because taxpayers pay government workers. And it just didn’t look right for government unions to call the taxpayers greedy little profit whores. So FDR opposed unionizing government workers. Because you just can’t have government workers tear the taxpayers a new one to enrich themselves at the taxpayers’ expense. Something was just wrong with that. But that was then. This is now (see San Francisco Bart rail strike ends as contract extended posted 7/5/2013 on BBC News US and Canada).
San Francisco Bay’s transit rail service has resumed after two labour unions called off a strike.
The four-day walkout came to an end after both sides in the Bay Area Rapid Transit (Bart) dispute agreed to a one-month extension of the current contract while bargaining continues…
Talks between the two sides had resumed as early as Tuesday, but key sticking points include salaries, as well as employee costs for pensions and healthcare…
Bart has said workers from the two unions earn on average $71,000 (£47,500) in base salary and $11,000 in overtime annually…
The president of one of the striking unions, the Amalgamated Transit Union, struck a defiant tone.
“We’re not going to let them hijack us and the riding public,” Antonette Bryant said, as she apologised to commuters for the disruption.
So these union workers make $88,000 between base salary and overtime. Being that train schedules are pretty fixed so must that overtime. That’s well above the median household income of about $50,000. Yet on top of that $88,000 they get pension and health care benefits. And some pretty nice ones at that. Which is why everyone wants to get into these unions. While most Americans have to put something aside for their retirement from that median household income. As well as pay a percentage of their health insurance premium. Unlike public sector unions. Who just have to go on strike to get the city to increase taxes on the taxpayers. So the city can afford to pay those generous pay and benefit packages.
Hijack the riding public? By opposing these union demands management is trying to prevent the unions from hijacking the riding public. For when you add in the pension and health care benefits they’re already making about twice what the riding public is earning. Making it difficult to call the taxpayers the greedy little profit whores here. Yet they are because they won’t consent to pay more. Which they can do by only having less in their personal lives. Which certainly isn’t fair. Especially considering that a lot of these people don’t even ride the damn trains.
Tags: Bart, FDR, government workers, greedy little profit whores, healthcare, pensions, San Francisco, taxpayers, union
Week in Review
Nations around the world are suffering financial crises due to the costs of their public sectors. Which they pay for by taxing the private sector. Even though people in the private sector don’t enjoy anywhere near the generous benefits the public sector enjoys (see Government to target public service’s sick days in next round of bargaining by BILL CURRY posted 6/10/2013 on The Globe and Mail).
The Conservative government is putting public-service unions on notice that sick days will be targeted in the next round of collective bargaining.
Treasury Board president Tony Clement said the government wants to move away from the current rules, where workers can use up to 15 paid sick days and five family days a year, in addition to vacation time.
The Minister stopped short of accusing public servants of abusing the system, but questioned why the federal absentee rate is higher than that of other governments and the private sector, where he said the average number of sick days is 6.7.
“Look, I think that the great majority of public servants are, when they take time off, they are sick. But there’s no question that the rate of sick leave, when you’re looking at 18.2 days as an average in a year, is well beyond not only private sector norms but other public-sector norms,” Mr. Clement said Monday at a news conference on Parliament Hill…
Union leaders also took issue with comparisons of public- and private-sector absenteeism, arguing the private sector does not document sick days in the same way as governments do…
“Mental illness, stress, anxiety, depression were not admitted to or acknowledged,” he said. “Cancer was much less treatable than it is today. So the workplace has changed dramatically in the past 40 years, but the disability management system has not. Employees are getting lost or forgotten in the system.”
Yes, we admit and acknowledge those illnesses more today than we used to. And we do treat cancer more than we once did. However, these illnesses do not affect the public sector differently than they affect the private sector. So if the private sector is averaging 8.7 sick days there is no reason why the public sector should be averaging 18.2 sick days. On top of 5 family days. Holidays. And vacation time.
One of the arguments for a single-payer health care system in the United States is that people will be healthier. With access to health care doctors will catch disease early and stop it in its tracks. Now either the Canadians are milking the system or a single-payer health care system doesn’t make people healthier.
If the organization a person works for can get by for a month (after you add together all that paid time off) without that person being there chances are that they can get by the other 11 months of the year without that person being there. Which is why you don’t see 18.2 sick says in the private sector. Because it’s too great a cost burden to pay people for not working. As private sector employers can’t just raise their prices to cover this cost. Whereas the government can raise taxes. Or print money.
But there even is a limit for government, too. As we can see by the Eurozone sovereign debt crisis. And the need to cut back on generous sick pay in Canada. Higher taxes reduce economic activity. Which reduces government revenues. Which they make up with borrowing. Until they suffer a sovereign debt crisis. Like in the Eurozone. Where a country is so deep in debt that no one wants to loan them anymore. For it is unlikely that a nation so deep in debt will ever repay that debt. Which is why these generous public sector benefits are simply not sustainable. When you can no longer tax or borrow you have but one option left. You have to cut costs. And the public sector will have to live more like the private sector. Less exalted and privileged. As public servants should.
Tags: absenteeism, Eurozone, generous benefits, private sector, public sector, public servants, sick days, sovereign debt crisis
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