Thread: 3 Reasons Public Sector Employees are Killing the Economy

3 Reasons Public Sector Employees are Killing the Economy

http://www.youtube.com/watch?v=9LWNTUK8 ... r_embedded

Thursday, April 01, 2010

Three Reasons Public Sector Workers Are Killing The Economy; Pittsburgh's Pension Liability Hits $1 Billion; Pittsburgh Is Bankrupt

With thanks to the Business Insider http://www.businessinsider.com/public-s ... omy-2010-3 who says "pass it on" here are Three Reasons Public Sector Workers Are Killing The Economy.

Three Reasons

1. Public sector employees cost too much.
2. We can't fire them no matter how bad they are
3. They are a permanent lobby

Because public workers get money from taxpayers, everything it gains means less money for the rest of us!

Please play the video, it is short, entertaining, and educational.

Pittsburgh's Pension Liability Hits $1 Billion

Please consider Pittsburgh's pension liability hits $1 billion http://www.pittsburghlive.com/x/pittsbu ... 74173.html

Pittsburgh's multimillion-dollar pension liability is set to balloon to $1.04 billion today, when city officials must comply with a state requirement to report retirement obligations to police, firefighters and other city workers.

With $296 million on hand in February, the city has about 30 cents for every dollar required to cover pension promises to about 3,200 employees and thousands of pensioners.

Mayor Luke Ravenstahl wants to avoid a state takeover of the pension funds looming at year's end by depositing at least $200 million from a controversial plan to lease city parking garages and meters for 50 years to a private firm.

"They're going to have to be very liberal in their assumptions, if they think that $200 million is going to bring them to 50 percent," said James McAneny, director of the Pennsylvania Employee Retirement Commission. "They're going to have to assume really good earnings and that nobody is going to be able to get a pay raise."

"It's one of the worst pension funds I've heard of," said Edward Siedle, president of Florida-based Benchmark Financial Services, Inc.

"Eight percent is an extraordinarily high expected return. Most funds are in the sevens," he said. "If you fail to meet your investment return, your liabilities grow each year. It's like setting an unrealistic bar."
Pittsburgh is bankrupt in my estimation. There is no way it can meet those pension obligations thanks to corrupt politicians getting in bed with greedy unions. The only way out is bankruptcy, hoping to overturn ridiculous promises in court.

Sadly, Mayor Luke Ravenstahl has his head in the sand, hoping to postpone reality with sleight of hand magic. It won't work.

Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot. ... s-are.html

I have to disagree with this Mish on this one. We did a study in the Rocky Mountain Region. Colorado's public sector is very leanly staffed compared to other states, the only reason pay rates seem high is the last decade of bloodbaths in the private sector (we have seen three years without cost of living raises, and 'pay for performance' has only been funded one year out of the 8 that I served). We are having layoffs right now and I am one.

It used to be that people went into "public service" for stability, not wealth, but after the rise of outsourcing and offshoring, the public sector was almost the only place still hiring Americans.

Bad employees can certainly be fired for cause in the public sector: I've seen it happen to several. They just can't be fired on a whim. The only difference is that there is more due process than in the corporate sector. Colorado employees have also been given unpaid furloughs, are being charged more starting this year to strengthen their pension fund, and have a poorer benefits package than their private sector counterparts.

Public employees don't just go to work and hang out: they also do some jobs that benefit everyone such as maintain highways and public transportation, staff some hospitals, administer public libraries and recreation centers, guard prisons, and run many of the schools. Some of the colleges and universities they run are world class research institutions that you regularly read about in the news for some discovery or breakthrough.

If we do away with the public sector, who but the rich will have education, health care, public safety (i.e. gated communities, private guards), as it is in Mexico and other failed states? Nobody wants the poor to have mink coats and cruise vacations, but do we really want to be like nations that don't provide much public service (India, most of Africa, large parts of Central Asia)?

The key is to keep the public sector bureaucracies under control, transparent, and make them accountable to the voters. That's what's missing where the system breaks down.