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Let's Get the Facts Straight About Public Employee Pensions

There is a fiscal crisis and it is real. According to a recent article in the Washington Post, total state revenue dropped 30.8 percent between 2008 and 2009, leaving states with massive budget deficits and growing demand for services like healthcare, unemployment insurance and housing assistance.

States are now faced with the painful task of cutting services and raising taxes to balance their budgets. No one—including the AFT and other public employee unions—will be exempt from the solutions necessary to bring the states into fiscal balance. In fact, at this time of severe budget austerity, the AFT and other unions are working to come up with cost savings and efficiencies to meet the fiscal realities we face. We are looking at ideas like finding ways to cut costs in the public education system, and investing pension funds in national infrastructure projects to help spur job creation. We will be on the playing field—not sitting on the sidelines—in helping come up with smart solutions to address the problem.

But before we get too far into the debate, it is important that we establish a threshold of truth—a foundation of facts that will help guide us toward smart and productive solutions.

  • There's a big lie being told. Public employees do not earn more than their private sector counterparts, according the Manhattan Institute, a conservative think tank. And public employees are not fat cats or members of the privileged class, as some argue. They are teachers, nurses, sanitation workers, janitors, cops and firemen. These are people who deliver essential public services—the very services that taxpayers expect to receive in return for their tax dollars. Of the 7.7 million retired state and local government workers in 2008, the average retirement benefit was $22,653. (http://www.census.gov/govs/retire)
  • Public employees are contributing substantial amounts to their pension funds. In 2008, the 14 million state and local government workers contributed $37 billion to their pension funds. The average contribution was $2,512 per active employee. It is worth noting that taxpayers are directly responsible for only about 14 percent of public retirement benefits. (http://www.census.gov/govs/qpr/)
  • Public pensions mean that households with retired public workers use less public assistance than other retirees' households, saving the nation $7.9 billion per year in healthcare spending. Many public employees are not covered by Social Security and so rely even more on their pensions. (AFT calculation using Table 6 http://www.nirsonline.org/storage/nirs/documents/pension_factor_web.pdf and http://www.census.gov/govs/retire/2008ret05a.html)
  • The irony should be lost on no one that the very people who seek to deprive public employees of their federally protected right to organize, and to deny them a portion of their health and pension benefits, are the ones who have championed giving tax cuts to millionaires, further exacerbating the fiscal crisis. Requiring sacrifices from working people but not from the very wealthy is not a viable solution.

It's not surprising that public employees are under attack given the economic insecurity that stalks millions of American families. Much of this attitude also comes from years of Republicans' pent-up animosity against labor unions that had the audacity to seek economic and retirement security—a goal that all Americans aspire to and that is commonly known as the American dream.

The twisted facts and false arguments need to be addressed head on. Perhaps the most glaring of these is that bargaining rights for public employees have caused state deficits to skyrocket. In fact, there is little or no correlation. Some states like North Carolina and Arizona—which deny employee bargaining rights—are running deficits greater than 30 percent of spending. Other states like Massachusetts, New Mexico and Montana—which allow employee bargaining rights—have deficits less than 10 percent.

The AFT is making a serious commitment to be active partners in solving the fiscal crisis that threatens us all. But a dose of intellectual honesty and a set of facts must be introduced before serious solutions are considered. A good place to start is by reading Robert Reich's recent Huffington Post blog posting.