Saturday, January 02, 2010
States face pension tsunami with unfillable promises to public employees
The Washington Post on Sat. Jan. 2 runs a “pension tsunami” editorial, “state and local pension plans are on a path to failure,” link here. The editorial points out that local politicians “promise now, pay later” in dealing with employees’ unions. So some states, including California, Illinois and New Jersey, are in particular straits. Virginia and Maryland are said to be “responsible” in managing public employee pensions but are still in difficulty. This is one of the reasons for state budget cuts, even in Medicaid and for teachers.
Public employees generally have better pensions that in private industry, where the average defined benefit pension right now is $7692 a year, whereas the median for “9 of 10 public sector” employees in 2005 was $17,640.
I remember the battles over pensions as covered in the newspapers as far back as the 1970s, when new York City has its financial crisis while I lived there, and the teacher’s union helped bail the city out at the last minute (after the notorious “Ford to City: Drop Dead” headline).