Best way to guarantee a financially stress-free retirement in Wisconsin?
“Work for the government,” writes Kathleen Gallagher of the Milwaukee Journal Sentinel.
Gallagher goes on to note state public employees, such as public school teachers and state and city workers, receive hundreds of dollars per month more (on average) in retirement than higher-paid employees in the private sector, according to a new report from the Wisconsin Policy Research Institute. According to the report, a public employee covered by the Wisconsin Retirement System who earns $48,000 a year would retire with an estimated monthly benefit of $1,712 from the system, while a private sector employee who earned $70,000 a year would get an estimated $1,301 a month in retirement – or $411 less per month than the lower-paid public sector retiree.
While that might seem like a pretty sweet deal for public employees, it’s important to take a deeper look at the numbers. Using the example from the study, public employees earn a total $4,800 more per year in retirement than private sector employees, but the private sector employee will earn $22,000 more per year during the duration of their working careers. During those working years, the private employee made $770,000 MORE in income than the government employee, but if both employees draw retirement for 20 years, the public employee will get an extra $96,000 in retirement. If one does the math, that means the private sector employee will have earned $674,000 more than the public employee, so clearly public employees aren’t “cashing in,” as Gallagher’s article would have readers believe.
The fact is, the vast majority of public employees aren’t getting rich through their work in the public sector. They’re not eating caviar and drinking champagne, and they’re not enjoying summers on their yachts or at their summer homes in Door County. In playing it off as though government employees are getting rich at the expense of taxpayers, WPRI is engaging in class warfare, aimed at envy of middle class workers instead of the rich.
Zach,
Somehow your argument is that it is ok for public employees to earn more in retirement because they make less take home pay? Zach, they deserve less take home pay! My OUTRAGEOUS property taxes pay for the retirement of these people. If they want to make more then let them get a real job and work like the rest of us.
You’re right Kent…..corrections officers, special agents for the state Department of Justice, nurses, doctors, etc….those aren’t “real jobs.”
As for my argument, you completely missed my point, which was to point out how flawed WPRI’s “study” was.
Zach,
Anyone that works for the government makes a choice to make less money. Very few “Doctors” work for the government and those that do are far less productive than private physicians. Government employees should make a living wage but you progressives are always wanting something for nothing. If you want to be successful than no body is stopping you but working for the government CHOICE that will get you their in most cases.
Nice post Zach. You are right that it is often easy to scapegoat state employees by making it seem like they are trying to get away with something. It’s like, if I see a guy in the private sector slacking off on the job, I don’t care, but if I hear a story of a state employee sleeping on the job or reveal that it’s an unnecessary position, I get upset because my tax dollars are being wasted. In some cases, I do believe people in the public sector accept lower pay for the greater benefits. Also, sometimes because of the lower pay you get a lower quality candidate, because the better qualified individual follows the cash to the private sector (i.e. you get what you pay for). Other state employees are perhaps overpaid. My point is that I don’t think they can all be grouped together.
One flaw that you and WPRI accept is the private sector person making $70,000. How many people in Wisconsin actually make that? To use the example, I think most people in private sector Wisconsin are making the $48,000 and NOT getting the fat retirement package or great health benefits. On the other hand, in many small towns it’s the public school teacher making the best salary in town with the nicest house, great health benefits and the retirement package. Don’t forget about the bus drivers in Madison!
forgot, you raise a good point about getting upset when you hear about a public employee wasting tax dollars. Despite the fact that I’m a state employee, there’s a lot I don’t like when it comes to how protected some employees are, even if they’re absolutely worthless.
One other point that I’d like to make is that if you look at some of the highest paid non-executive (i.e. rank and file) state employees, you’ll find that in many cases they’ve earned a lot because of overtime, so the argument could be made that it’s probably more cost efficient to hire more employees to reduce overtime. After all, pensions are determined by the average of an employee’s three highest-earning years, so reducing overtime for all employees will ultimately be more cost-effective when it comes time to hand out pensions.
I dunno that it’s literally a bias against public sector employees – because it’s no different seeing highway workers who are private sector employees, but paid by a government contract and it’s the same thing.
Your point about overtime is a good one to raise – but I’m not completely convinced it’s true. It might be – but by the same means, adding more an additional employee instead of overtime doubles a lot of other fixed sort of costs – benefits, training & certification and the general expenses of hiring & retaining employees. I won’t say your wrong, just that it’s not necessarily a given.
I’d also add, that when you said,
a point of clarification…defined benefit pensions are determined that way, not defined contribution pensions. And of course, public sector is just about the only place defined benefit pensions still exist. Setting aside the whole issue of DB vs. DC, it’s just plain stupid to include overtime in the calculations because it allows blatant to abuse.