A couple of years ago, when my father came to know that my faculty salary is nowhere near the stratospheric earnings of the young and the old in the IT industry where every other Indian-American is, he insisted that they return my remittances, now that my parents do not have the cash crunch, but I managed to convince him that I am not in any financial hole.
The logic behind public sector pensions was simple: To reward those opting for public service, where the compensation is far less than what comparably talented people could earn in the private sector. For instance, when I was new to the country, a friend took me along when he visited with a cousin of his, who was a worker in an automobile assembly plant in California. I would never have guessed that the palatial home with shiny cars in the driveway belonged to an auto factory worker who did not have a college degree. Such were the economic possibilities even a couple of decades ago.
The global economic geography has changed. And has changed fast. The well-paying middle class jobs are rapidly vanishing from the American scene. Well, vanishing from the private sector, that is. Meanwhile, the public sector unions became stronger and stronger, and successfully increased the compensation levels. So much so that public sector pensions have now become a nightmare for governments that have to balance their books.
As with many aspects of life, California is a leader in this as well, with its California Public Employees Retirement System, or CalPERS:
The pension fund is more than $139 billion in the red and just reported another awful year of investment returns. The East Bay Times reported last week that CalPERS' retirement debt "averages out to $11,000 for every California household which is relevant because taxpayers, not government workers, must make up the shortfall."That update from Reason--a libertarian outfit, which has been a part of my daily news feed for years now--notes that "Most state pension funds are deep in debt, but CalPERS is among the worst in the nation."
Public sector pension in Oregon was a big story in our local paper too:
Anemic investment returns in recent years have also contributed to the troubles for the system, which now has an unfunded liability of more than $20 billion. When investment returns don’t meet the system’s assumed 7.5 percent annual rate of return, public employers must make up the difference in their budgets. The need to feed ever-greater amounts into PERS is one factor that forces many local Oregon public agencies to trim services or seek tax increases.Now, I don't want you to think that we faculty are draining the state coffers:
Dr. Johnny Delashaw, a former neurosurgeon at Portland’s Oregon Health & Science University, has supplanted former University of Oregon football coach Mike Bellotti as the state’s top public pension recipient.Yep, a football coach used to be most highly paid retiree! Says a lot about what people really, really, want, right?
Delashaw receives an annual benefit of $663,354 a year — $55,279.53 a month — from the Oregon Public Employee Retirement System, the agency’s latest data show. That’s 24 percent higher than Bellotti’s annual benefit of $536,995.
Bellotti had been Oregon’s top PERS beneficiary since the retirement agency first started releasing data in late 2011
Meanwhile, back in India, the unions learnt their lessons from the unions here, but the government did not learn from the experiences here--public sector pension schemes have skyrocketed in India. My father, too, has a tough time understanding how such things are possible.
Full disclosures: In California and in Oregon, my jobs included pension schemes. But, it was never the money that drew me to the teaching profession in the first place; if money were important to me, I would never have quit engineering! And, oh, I have never been a member of a union.