Written by Dennis Persica
Original article in The Advocate
September 12, 2013
One of the more interesting
philosophical flip-flops in the debate over public-employee pensions is how
willing people are to use a level-the-field argument against government
But first, a disclosure: As the
surviving spouse of a former state worker, I get a monthly benefit from LASERS,
the Louisiana State Employees Retirement System.
Back to the discussion: Look at
the comment stream on any online story about retirement benefits for public
workers, and you’re likely to see a certain sentiment expressed. It goes like
this: Defined-benefit pensions are a thing of the past in private industry, so
why should government employees still be entitled to them?
If you raised that “leveling”
argument in any other discussion, though, you’d be shot down promptly, and
probably by the same people.
Tax better-off folks to pay for
government services for the classes below them? Answer: That’s socialism!
Enact affirmative action programs
to ensure that opportunities are spread out to an ethnically diverse corps of
job seekers? Answer: It’s not about race, it’s about finding qualified
But talk about preserving
government pensions, and suddenly we’re fighting like crabs in a barrel, with
people demanding that public pensioners be dragged down to the level of
private-industry workers who have no access to defined-benefit pensions.
There are a few things to
remember about government retirees. For Louisiana state employees, as well as
many other public employees across the country, there is no Social Security to
fall back on. The same once was true of federal workers; they contributed only
to the federal retirement system but not to Social Security. When President
Ronald Reagan and a Democratic Congress decided to try to fix Social Security, they
required federal employees to contribute to it.
People who’ve spent a lifetime in
state or local government service may have only their public pension coming to
them. That’s a major difference between those on a public pension and those on
one provided by private industry. If the private pension program goes belly-up,
the former employee still can draw Social Security.
Another difference between
government-pension systems and private-industry pensions is this irony: If a
private-industry pension program runs into trouble, its retirees wind up on the
equivalent of a government pension, via the Pension Benefit Guaranty Corp. PBGC
works as a kind of insurance company (businesses pay premiums into it) and
takes over pension systems that run into trouble.
It will pay a retiree a maximum
of $57,477 per year in benefits, and that maximum changes every year. So,
someone with a pension from a private system that’s run into trouble can be
assured they’re not going to be living on the street, begging for food. However,
a government employee whose pension plan defaults –— and all eyes are on
Detroit at the moment — has no protection. PBGC does not cover public pensions.
Yes, there have been abuses in
the system, as we saw a few years ago in Jefferson Parish, but that’s no reason
to let public-pension systems wither on the vine. After all, no one’s talking
about shutting down Wall Street just because some people occasionally figure
out ways to cheat investors.
Usually, the pension abusers are
those who have enough political pull to game the system to their advantage.
Most rank-and-file public employees don’t have that, and they would be the
babies thrown out with the bathwater if we decided to let a troubled public
pension system die just because private-industry workers don’t have access to
Dennis Persica is a New
Orleans-area journalist. In his weekly column, he shares his thoughts and
observations about people, places and issues in the New Orleans area. Persica’s
email address is email@example.com.