Trouble in the Golden State
For anybody interested in politics here in California--and, now that the state is in such a mess, that's nearly everyone who lives here--reading up on the pension crisis is like forcing down Robitussin. You know you've got to do it, but...yuck. Now Mark Paul and Micah Weinberg of the New America Foundation have published a thoughtful, well-written, concise analysis--as un- unpleasant a way of boning up on the subject as I've encountered. A couple of excerpts about the trouble we're in:
California's public pensions are complex and multiple....But one generalization applies: benefits in California are, by almost all measures, the highest in the country....
An average-wage employee who retires from the state at Social Security retirement age (66) with 30 years of service receives a pension equal to 75 percent of final compensation, along with Social Security benefits that replace about 42 percent of career average earnings.
Not that Paul and Weinberg aren't talking here about state employees who perform especially important jobs, running, say, entire state agencies, or who perform especially dangerous or unpleasant jobs, such as, for example, prison guards. They're talking about ordinary joes.
And whereas state employees face cushy retirements, Californians facing retirement in the private sector now have reason to feel the jitters:
In the past, California families counted on the equity in their homes as a key source of retirement saving....[But i]n the first quarter of 2010, 34 percent of all mortgage holders in the state had near zero or negative equity....Sixty-five percent of the mortgages in Stockton were in a negative or near-negative position, 62 percent in Modesto, and 60 percent in Vallejo-Fairfield.
My fellow Californians, read it and weep.
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Comments:
Jun '10
Re: Trouble in the Golden State
Most Californians probably thought that public-sector pension checks come from the same place as the sunny beaches, mountain vistas, cool afternoon breezes, red sunsets, and moonlit seascapes--magic.
Jul '10
Re: Trouble in the Golden State
The political difficulty is that there's always some popular group of workers, a representative of which can be trotted out in front of the cameras to plead with the voters. Often it's nurses. Who hates nurses? They do a difficult and sometimes thankless job, and often receive a lot less professional respect than they deserve—a theme which resonates with nearly anyone who thinks they receive a lot less professional respect than they deserve.
So the unions shift the question and soon we're debating about whether we should "blame the nurses," an argument reformers are doomed to lose.
I fear this will get a lot worse before it gets better. As a Californian, I'd love nothing more than to be proven wrong. If someone has a plausible argument for optimism, I'm all ears.
One slightly encouraging point of date: even here in union-friendly ur-progressive San Francisco, a modest public employee pension reform measure qualified for the ballot. It appears to be a cynical effort by a left-wing pol to position himself centerwards for a run for higher office, but I'll take reform where I can get it.
Jun '10
Re: Trouble in the Golden State
Once the housing market recovers, the California exodus of the productive middle class will begin again in earnest. The only thing keeping most middle class Californians in place is the negative equity in their homes.
I was fortunate to bail out in 2003 and move to Indiana. Wow what a difference! I love it here.