Regarding: Pensions: Angry populists’ next target
FORTUNE — In these dog days of our Great Recession, no one is feeling especially lenient toward taxpayer-funded fat cats. But what if that “fat cat” isn’t some Wall Street banker (most of whom have paid back government loans with interest) but rather the retired small-town city manager in Northern California living on $261,000 or the 40-year-old former New York City cop who gets to collect $100,000 a year for the rest of his life?
Even as we watch a populist revolt against the risk-taking rich continue to play out this election season, there are seeds of a new rebellion forming — against the generous pensions guaranteed to state and local workers.
Government pensions, built into law and mostly protected from stock market vagaries, are the envy of the private sector. Voters who have lost jobs, taken pay cuts, or watched 401(k)s plummet provide tinder for politicians condemning the excesses of government retirement protections.
At some point in time I think we are likely to see a state or locality see people simply stop paying.
I’ll use myself as the example. I have worked very hard me entire life to build a solid financial foundation for my family. I”ve had ups and downs but over time have seen thing progressively get better for ourselves financially. I pay taxes – a lot of them. And I collect taxes on behalf of the state (through sales tax). I’ve always paid taxes. Outside of the occasional speeding ticket, I’ve always obeyed the law.
My next door neighbor is retired. He worked for the government his whole life (34 years). He’s a nice guy. The final 10 years – yes 10 years! He really didn’t do any work. He was a county manager of some sort. After about three years of him not really doing his job the county hired an assistant county manager to actually do his job. I’d estimate that he worked on average of about 35 hours a week over his career (and that includes the various local government meetings – he was always home of Friday if he went to one of those on a Monday night). He’s getting almost 80% of his FINAL salary. His health care is excellent and he pays about 1000 per YEAR for he and his wife to receive health care. He also receives social security. The government is paying him over 100,000 to putter around his garden.
Now I don’t want to put down my neighbor – he’s a nice guy (though you can argue its easy to be nice with that setup). But when I’m done and retired. I’ll have spent about 40 years working – about 20 of those years working about 12 hours a day, 6 days a week. Another 10 working 12 hours a day, 5 days a week. And another 10 working about 10-12 hours a day 5 days a week. I expect that my investments will generate an income that will be in the same neighborhood of my neighbors :) – around 100K…. of course I’ll have to pay at least a 1000 a MONTH (if not 2000 or more) for some kind of health insurance.
So in essence, my neighbor will actually live just as well in retirement, in the exact same neighborhood, in a similar house and probably with better benefits. He will have worked 6 years less. He will have worked about 45% fewer hours during the years he worked. And have I mentioned that he takes no risks, employs no people, creates no growth. Oh, and our “downtown” area is a ghost town, with most commercial businesses actually 1-2 miles outside of town…… in a different county!!! Think my neighbor produced great results (in fairness to him the mayor is an idiot)!!
Now what exactly has he done to deserve this? i don’t blame him for doing as well as he can – and hey, perhaps I’m just a sucker for slaving away to build a business. But consider that I’ve done well – what about the folks in the private sector that will reach age 50 and 55 and 60 just getting by. Why will they continue to pay their taxes to support my next door neighbor’s lifestyle?? I don’t know!
I must confess that although I’m a red-blooded American through and through, I sometimes daydream about having a little villa near the beach in Thailand just relaxing and jumping in my pool and then having a beer as I enjoy the fresh air!!!