The Pension Plan That Ate Fairfax County

For decades smart business people, their accountants, and Republicans have been raising the alarm about the financial liabilities associated with “defined benefit” pension plans.

More than 20 years ago business leaders realized that these plans, which pay a set benefit regardless of contribution or asset growth, were unsustainable and would eventually bankrupt their companies. Any company wishing to survive had to make the tough transition to “defined contribution plans” – most notably the 401k – in order to ensure that funds would be available to pay beneficiaries and that near-certain bankruptcy could be avoided.

In fact, according to Willis Towers Watson, a leading global advisory, broking and solutions company, “[b]etween 1998 and 2015, the percentage of employers still offering a traditional [defined benefit] plan to most newly hired employees fell from roughly half to 5%.”

Over time these leaders, and their employees, began to see the benefits of this transition, often instituted against vigorous resistance from labor unions, both in financial stability for the company and asset accumulation and ownership by the employees.

Your 401k, it must be noted, is your money. You take it with you when you leave the company, and nobody can take it from you because you fail to stay on for 20 or 30 years. In the modern economy, where workers are far less likely to spend an entire career in one organization, these plans make great sense and provide a stable, sustainable, and portable benefit to today’s workforce.

Government leaders have been much slower to make this change, owing to the short term political pain associated with the transition. It is much easier to promise generous benefits today while covering up the future liability, than to buck the employee unions and partisan forces that attack any politician willing to call it as they see it. As Thomas Sowell so famously wrote, “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”

As a result it is estimated that the unfunded pension liability for the combined State governments of the United States may be nearing $6 Trillion (according to 2016 numbers from the American Legislative Exchange Council [ALEC]), with the Federal Government racking up another estimated $3.5 Trillion or more (according to Moody’s). And this is just pensions, total unfunded liabilities for health care, social security, and other programs are much larger than that.

The bottom line: We are massively, almost unimaginably, over-committed, and it is past time that we do something about it.

Fairfax County has unfortunately not been one of those forward-looking entities who have recognized the alarm bells and made changes. In fact, the County pension system is an outdated and ineffective system that fails to recruit, retain, and reward quality employees that has simultaneously amassed an unfunded liability of $2.4 Billion (plus an additional $70.4 Million in other unfunded benefits).

The cost of the system is cutting into both services for the community, with General Fund dollars needed to meet the basic obligations, and the pay for current workers who see monies dedicated to compensation increasingly going to “fringe benefits” (i.e. pensions and retirement benefits). By the year 2025, Fairfax faces the prospect of having more people on pensions than we have employees for the County.

Speaking at the Northern Virginia Republican Business Forum (NVRBF) on July 12, 2017, Springfield Supervisor Pat Herrity raised this alarm once again during his presentation entitled “The Pension Conundrum.” According to Herrity, who serves in his private employment as a Chief Financial Officer and who has taken a leading role in trying to get the County to acknowledge and fix the problem, the Fairfax County pension system is “outdated and financially unsustainable” and a leading cause of the 24% increase in county property taxes in the last four years alone.

Herrity’s presentation outlined some of the more shocking revelations about the County’s defined benefit program, including the “fringe benefit rate” of employee groups within the county. Most private corporations have a fringe benefit rate of between 25-35%, depending on the type of employees, while Fairfax County’s rate is 56%, with the police at 66% and other uniformed personnel at 73%. This is the direct result of a few extremely generous (shocking?) programs within the pension system, including the “Pre-Social Security Supplement” wherein the taxpayers pay a “pre-Social Security” benefit to County retirees until their actual Social Security kicks in.

Herrity believes that Fairfax is the only jurisdiction with such a program, and highlighted that the program is set up so that an employee can retire at 55 years old and receive this benefit until they reach Social Security eligibility, sometimes achieving up to 80% of their active pay in retirement. (The average length of time a retiree receives this benefit is 5.7 years.) Another problem is the paucity of the contribution by the employee, which has remained constant at five percent for years while the County’s contribution has grown to 26%.

According to Jonathan Williams of ALEC, who also presented at the meeting, another problem is “fairytale accounting” whereby localities assume unachievable investment returns on their pension funds, thereby hiding the totality of the financial crisis. Fairfax is guilty of this too, assuming a 7.37% rate of return, year over year, on a risk-adverse portfolio. If a CEO of a private company signed off on such accounting tactics, according to Williams, “they would be in jail.”

The worst thing about this entire problem was articulated by one shocked 35-year-old member of the audience. He noted that future taxpayers are on the hook for this bill, and that it is the younger generation, who will never receive such generous benefits, who are going to be the ones paying it. The exasperated audience member asked, rightly, “How could this happen?”

Some of us older folks in the audience who work in the private sector were equally as upset, not only about the extent of the financial problem, but also at the inequity of it all. How sweet it would be to retire at the tender age of 55 (and that was just raised from 50 in 2015!) with a lifetime paycheck, a Social Security supplement, and guaranteed Cost of Living increases forever. No company could afford to offer such generous guarantees; yet it is the non-recipient, i.e. the taxpayer, who is taking cash out of their wallet, food off their table, and funds from their retirement savings to fund this outrageous political promise made by past elected officials.

Sadly, our elected representatives let this crisis develop in order to appease employees, their union and association representatives, and the sector of the voting population who stood to gain from these unsustainable benefits, and there is little we can do to change the past. Citizens, for our part, have been asleep at the switch, with our eyes glazing over at the mention of “fringe-benefit rates” or “rate of return” or “defined benefit vs. defined contribution” lingo. We cannot be disengaged any longer. The crisis isn’t coming, it is here.

Without action, significant action, our current employees will be poorly served, new employees will be hard to recruit, services will continue to be cut, taxes will rise, and the County’s liability will continue to grow.

First on the list of actions should be the removal of the “Pre-Social Security Supplement,” followed by accounting reform (so that we can honestly see the extent of the problem), a rise in the age when benefits begin, ending the DROP (Deferred Retirement Option Program) program (allows for retirement payments prior to retirement – yes, you read that right!) and an eventual wholesale transition to defined contribution (i.e. 401k-type) plans.

This is not a partisan issue. Nobody wants the county to default, current employees to be under paid, services to be cut, or the taxpayers to be fleeced. Nobody wants Fairfax to go the way of Detroit or Chicago. Together we can make the hard choices to fix this problem, but the time to act is now.

  • MD Russ

    Jay,

    Correction. Scarcity is the Second Law of Economics. The First Law of Economics is TANSTAAFL–There Ain’t No Such Thing As A Free Lunch.

    Your points are very well-taken, however you are hiding the forest behind the trees. Let’s deal with two important aspects of total compensation, for all employees and not just Fairfax County public employees.

    First, retirement is going to be paid for by someone, either the taxpayers or the consumers in the case of goods and services. With the savings rate in the United States hovering around 5%, contributory retirement plans like 401(k) will not provide retirement security for the majority of workers. (I wonder how much your shocked 35-year-old member of the audience has in his 401(k)? I doubt if it is sufficient for him to retire in 30 years.) Since employers have been allowed to convert defined benefit pensions to contributory plans, the pressure has increased exponentially on government entitlements spending such as Social Security and Medicare. Consumers are paying less for products and services as employers keep overhead compensation expenses low. But they are paying for it in taxes needed to meet entitlements spending requirements and to service the national debt. Social Security when created in 1934 was not intended to be a national pension plan, but that is what it has become, thanks to the government allowing private employers to shirk their responsibilities to fully compensate their employees.

    Second, government employees are notoriously underpaid in current salary or wages. School teachers, for example, earn a fraction of what the median college graduate earns in the private sector. However, government is able to attract and retain employees with generous retirement benefits. Eliminate those benefits and government will have to pay higher salaries and wages to attract and retain the same quality of workers. Either way, the taxpayers pay the bill. It is a zero-sum game.

    • Jay McConville

      I do not disagree with your assessment, but would say two things. 1. I never blame the recipients. They were given a promise, and they worked as agreed to. They are not at fault. 2. That we are kidding ourselves about retirement quality of life, given our low investment in those golden years, may be true, but it is not a reason to continue doing it. Fairfax County is not so bad that it cannot be fixed, but I doubt the same is true for the nation. What people SHOULD do (whether they do it or not is an open question) is be more realistic about how much it will cost for them to remain idle for 20-30 years, and what kind of quality of life they expect to have in those years, and save and invest accordingly. The idea that we can bypass this reality for government workers by putting the bill to the taxpayer is just wrong, unfair, and it won’t ultimately work.

      And one more thing on salaries. I would rather pay more to those working currently, than to those NOT working and in retirement. It is unconscionable to me that retirees get a 3 or 4% COLA the same year that current employees get 0% raises.

      So yes, we should pay more competitive salaries, less pension benefits, and insist that people save for their own retirement. As you say, no free lunch.

      • MD Russ

        What retirees get a 3 or 4% COLA? The Federal retiree COLA for 2017 was calculated at 1.6% and that has not been approved by Congress, adding to the estimated 5.3% COLA deficit since 2010. The Social Security COLA increase for 2017 was 0.3%. For me, that was a whopping $5 per month with an increase in Federal income tax withholding and Medicare premiums of $22 per month. Thanks a lot guys. Please don’t give me another raise. At this rate, I can’t afford it.

        Get your facts straight, Jim.

        • Jay McConville

          Fairfax retirees get Washington area CPI, and that can be supplemented by 1.0% up to 4%. So in 2017 it was 1.3%.

          • Jay McConville

            And it’s “automatic” – ie guaranteed.

          • MD Russ

            Come on, Jay. What COLA is automatic or guaranteed?

          • Jay McConville

            Fairfax’s is.

          • notjohnsmosby

            So why did you say retirees got 3-4% COLA when you knew it was 1.3%?

          • Jay McConville

            I should have said “could” – and I didn’t say it in the article, but only my comment.

          • notjohnsmosby

            Could means future. You were describing the last increase. Why did you say that the COLA was 3-4%?

          • Jay McConville

            The article is correct, in my comment I erred in language, although it remains possible, by policy, for such a situation to occur.

          • John DeLong

            Note that the ERFC (FCPS supplemental pension) has a fixed 3% cola provision – every year regardless of CPI. This pension liability is a direct liability of the County and included in Moody’s evaluation of the County liabilities.

          • Jay McConville

            Well, there you go. That’s probably what I heard that informed my comment.

          • Jay McConville

            And that’s shocking btw…3% COLA regardless of CPI. I guess CPI is for the rest of us chumps.

          • Goomba (Goomba)

            The COLA since 2012 have all been less than 2%. The county removed the ad-hoc COLA provision in 2009. No additional COLA can be added. For Jay’s education, not everyone can do the job of a police officer or fire fighter. If they could, the county would not be struggling to hire qualified candidates. By all means Jay, apply, work as an officer and get your retirement. Public safety employees contribute over 8% of salary to retirement. The retirement is calculated solely on base, Holiday and shift differtial pay. No overtime is calculated into the formula. Come join us Jay, you too could go 5 plus years without raises.

          • Jay McConville

            I’m getting my COLA information from the County’s own website, so I stand by my points. I did 12 years in the Army, so I understand the unique requirements of physical service, thank you. I left without a pension after my service. You are however, missing the point. The system doesn’t help recruit, as it hinges everything on 25 years service, bypassing those who don’t see themselves doing that. It doesn’t help retain, because it holds salaries down and pushes dollars into fringe benefits instead. I understand people like the financial benefits, but we can’t afford them.

          • ladybug

            Okay but why penalize someone with over 20 years of service, who has worked hard at a lower salary and under a mutually agreed upon contract, with a last minute bait and switch. Remember, County employees have not been given raises for years which negatively impacts their retirement. Workers with over 20 years of service, with retirement on the horizon, should be grandfathered in if changes are made as they have worked hard under specific expectations that the system needs to honor. The county can then hire replacement staff (or not) and those staff can agree, upon hiring, to the conditions of employment (or not and choose elsewhere). Also, keep in mind that fire/police, school and general employees are all under different systems.

      • Kay Orce

        The recipients are entirely to blame. They elect their union bosses and their union bosses have fought every possible pension reform of this train wreck.

        They are not innocent victims; they are fraudulent co-conspirators. They need to sue their unions; not innocent taxpayers if they want their “fair share”.

      • Buzz Fuzz

        County employees have not been given raises for years which negatively impacts their retirement. Workers with over 20 years of service, with retirement on the horizon, should be grandfathered in if changes are made as they have worked hard under specific expectations that the system needs to honor. The county can then hire replacement staff (or not) and those staff can agree, upon hiring, to the conditions of employment (or not and choose elsewhere).

    • First, retirement is going to be paid for by someone, either the taxpayers or the consumers in the case of goods and services. .. Consumers are paying less for products and services as employers keep overhead compensation expenses low..Second, government employees are notoriously underpaid in current salary or wages. School teachers, for example, earn a fraction of what the median college graduate earns in the private sector. .
      LOL…you used every public employee “talking point” in the book. Let me focus on just a couple. Pubic employees are paid anywhere from 2-20 times more than the private sector for the same skill set. Cop and Firewhiner are prime examples, both GED jobs with OTJ training, which 80%-90% of the general population could do. As for “teachers” being underpaid, please. Teachers are paid at the top step anywhere from $85K-$95K in salary and $40K in benefits. They have a 37 week work year and a 36 hour contracted work week. Now- if you do the math that is $3,600 per week, or $101 an hour. PUBLIC teachers that is. Private teachers make about 1/3 to half of what public school teachers make, and I forgot, private school teachers can actually be fired. So please, take that Liberal Arts degree your typical K-6 teacher has out into the real world and make your millions, or billions. The fact is the private sector earns a small fraction of what the public sector earns, even when comparing private sector jobs requiring a college education to the GED jobs of cop and firewhiner. So, please show us all how much $$$ that Liberal Arts BA makes in real life as compared to the Fantasyland of public employment. Crickets.

      • MD Russ

        The data do not support your assertions, no matter how you try to cheery-pick it. The average starting salary of a teacher in Virginia is $37,848.
        http://www.nea.org/home/2012-2013-average-starting-teacher-salary.html

        On the other hand, the median starting salary of a college graduate is $45,478 with specialized degrees such as engineering reaching $64,891.
        http://247wallst.com/jobs/2015/05/03/new-college-grads-have-median-salary-of-45478/

        No matter how you slice it, teachers get paid far less than their college-educated peers in the private sector. As for police and firefighters, there are additional requirements beyond education known in compensation practice as x-factors. The need to maintain a certain level of physical fitness, exposure to life-threatening dangers, and unusual working hours. BTW, as a retired Army officer I can tell you that 80-90% of the general population cannot meet the physical requirements of being a police officer or firefighter. In a recruiting study I once read they found that less than 20% of 18-22 year old men and women could run 2 miles at any speed without walking. Far fewer could do just five pull-ups or 20 push-ups.

        • The AVERAGE teacher in CA receives $70K salary and $40K benefit package, for a 37 week work year and 36 hour contracted work week, no matter how YOU try to “cherry-pick” the numbers. BTY the “benefits package” in trough feeder land, public teaching, is substantial, a fact you conveniently leave off of your “starting salary” non-comparisons. And an engineer will work 50 weeks per year and most likely 60-100 hours per week. And a Liberal Arts degree is not comparable to an engineering or any other STEM degree. Nice try in your “cherry-picking”. As for LE and firewhiners, it is a GED job, nothing more. I know you hate that, getting your talking points crushed, but the truth is the truth-GED jobs. You receive on the job training. Again, no matter how you “cherry-pick” it those are the facts. Look it up. As a “retired army officer” I am sure you think you know everything about everything, as exhibited by your “entitlement mentality” so prevalent in your comment/s. Thanks for playing champ, you may want to put your “entitlement mentality” in check, or better yet go out into the real world and make the billions you THINK you are “entitled” to.

          • MD Russ

            There you go cherry-picking again. We are talking about Virginia and not California. As for what teachers are contracted to do and what they actually do, you obviously don’t know many teachers. I doubt if there is any teacher who works only 36 hours a week. That statement is either delusionally stupid or an outright lie.

            As for the real world, bub, I’ve been there. Do you think that I stopped working at 47 years old on a military retirement check? I took a job in the private sector and worked my way up to vice president in a Fortune 100 corporation. So don’t lecture me about an entitlements mentality.

            Respond if you want but I won’t read it. It is obvious that your mind is closed to any rational arguments or new information that doesn’t fit with your little worldview.

  • Jim Portugul

    Just like any other local government, Fairfax knows they can always fall back on bankruptcy protection. And then, blame it all on the other guy. Just look at what other local governments did when they could no longer afford to pay pensions.

    Madoff went to jail for ever. Government gets a “get out of jail” card for essentially doing the same thing.

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  • Lawrence Wood

    In the latter part of the 20th century as these benefit programs were seriously beginning to ramp up in local municipalities across the nation one justification you constantly heard was they acted as critical incentives to attract the best people away from the private sector into often difficult to fill and retain public employment requirements. The premise was the public sector was just not able to compete dollar per dollar with the private sector in attracting and retaining good employees so these enhanced benefit and retirement packages were a competitive tool to level the playing field.

    Even back in the late 70′ – 90’s this argument was rather hit and miss depending on what region of the country you were considering but there was at least some underlying data to support the contention. Post 20th century data and employment research has largely blown this rational out of the water to the extent today that in many areas of the nation public employment total compensation is now in effect, as good as, if not better then average private sector averages.

    Also today’s problem is as much political and psychological as strictly financial as once you award a new benefit or pay accelerator to a group of employees it is a slow walk in hell to remove it not even taking into consideration the rapid growth and proliferation of municipal public service unions that you would need to confront head on to effect any significant change.

    Perhaps thinking small as a starting place one might build a labor arbitration case that total compensation packages for public service workers (including any retirement or pension benefits) should NOT exceed public sector total packages for comparable employment positions. In effect tie the trend lines to the public market that is far more responsive to the shifts in the total U.S economy trend lines then what we see today in the economically isolated public employment marketplace.

    Not saying even that would be simple as a labor negotiation position with the likes of the American Federation of State, County and Municipal Employees (AFSCME) union but it would at least be a stake in the ground to attempt to halt any further unwarranted benefit expansion. To deal effectively with the current status quo either short or long term will require taking the public unions on in direct confrontation. This is something the Democrats are NEVER going to do as they are in effect a political funding cash cow for them and that the Republican have shown absolutely no stomach for at any point in recent history. The best we might hope for in today’s political environment is a drawn battle line linking public/private compensation trend lines to overall market based economic performance. I grant it may not be much but it is a start.

    • Jay McConville

      Correct me if I am wrong, but I believe there was a Supreme Court case that found, roughly, that you cannot retroactively cut benefits once work is performed, except in bankruptcy. I tried to find it but failed. I agree with that. So we have to put new programs in place and phase out the bad ones.

      • Kay Orce

        No, there is no SCOTUS case on this matter. There are claims there is a “California Rule” but that is just policy interpretation.

        If the money is not there, it is not there. Expect one massive taxapayer backlash if the greedy public employee unions try to get it.

        If anything, the entire defined-benefit pension plan needs to be thrown out as a Ponzi scheme based upon fraud in the inducement.

      • Lawrence Wood

        I’m not aware of any such ruling precedent.

      • Buzz Fuzz

        County employees have not been given raises for years which negatively impacts their retirement. Workers with over 20 years of service, with retirement on the horizon, should be grandfathered in if changes are made as they have worked hard under specific expectations that the system needs to honor. The county can then hire replacement staff (or not) and those staff can agree, upon hiring, to the conditions of employment (or not and choose elsewhere).

      • ladybug

        County employees have not been given raises for years which negatively impacts their retirement. Workers with over 20 years of service, with retirement on the horizon, should be grandfathered in if changes are made as they have worked hard under specific expectations that the system needs to honor. The county can then hire replacement staff (or not) and those staff can agree, upon hiring, to the conditions of employment (or not and choose elsewhere). Also, keep in mind that fire/police, school and general employees are all under different systems.

        • Jay McConville

          I don’t think anyone is proposing taking away benefits already promised to people already working or retired, and I doubt that would pass legal muster anyway (short of bankruptcy). It may be unfair to only penalize new (younger) workers, but it may also be the reality.

          • ladybug

            New employees (who may or may not be young in age), prior to being hired, are informed of the benefits that come with the job and agree (or not and look elsewhere) to work under the compensation package offered. These workers are not ‘penalized’ per day as this was mutually agreed upon at the time of hire.

    • Kay Orce

      The argument was not intended to “hire the best”. Because most government jobs are generic and fungible. The irony is they wanted to ride the over-heated stock market. You know. Wall Street.

      The very same Wall Street, the public sector unions spend so much time today villifying. Greed is the middle name of public sector unions. No two ways about it.

      Plus the main force trying to take Trump down because he existentially threatens the public union feeding trough.

  • Kay Orce

    Public sector union employee beneficiaries play innocent victims. However, their unions blocked every possible reform of this system from day one. They are not innocent victims at all.

    They are co-conspirators in the biggest tax payer rip-off every devised by “progressive” politicians – Democrats – the party of the public sector unions.

  • Kay Orce

    Defined-benefit government pensions defy every fiduciary principle, and need to be completely taken out of ERISA protections. They are Ponzi schemes; not fiduciary pension instruments.

  • Kay Orce

    Public sector employees are not innocent victims. They elect their union bosses and their union bosses have fought every possible pension reform proposal out there, or intentionally sabotaged them.

    If public sector employee have a problem, they need to sue their unions; not the US taxpayers.

  • Kay Orce

    This pension mess started in 1999 in California. Almost immediately warning signs were issued this was not sustainable.

    For nearly 20 years there have been attempts to reform this union-driven over-reach. For 20 years the same unions have fought or sabotaged every reform attempt.

    Public sector union members are not innocent victims; they are greedy co-conspirators that inflicted this mess on the rest of us. We are not bailing them out.

  • Icarus

    FAKE NEWS. 401K’s ” make great sense and provide a stable, sustainable, and portable benefit to today’s workforce.” Hog wash! Let’s call a spade a spade. 401K’s are horrible pension plans when compared to the ‘old’ defined benefit plans!!!!! In a pension plan, the plan has to set aside money so that EVERYONE has to ‘plan’ on living to 82 years old. Some will go earlier, some later. But the plan only has to set aside money for EVERYONE to last to about 82 and the money will last. If YOU rely on a 401K, YOU have to set aside much MORE money. You have to set aside a nest egg that will survive until you are 95 years old, because you just might live that long!!! The 401K saver has to set aside almost twice what the old pensioner defined benefit plan had to, because he can’t risk outliving his life expectancy.
    FACE IT. The 401k plan was the invention of Wall Street to suck more fees out of YOU! It was not because it was good for you!
    I won’t even go into the assumed returns on invested funds being 7%, in a zero interest rate environment. Pure unadulterated fraud! THAT’S WHERE THE PROBLEM LiES!!! And yes I already lost my pension!

    • Jay McConville

      No question that defined benefit plans are “better” than 401k plans if you define “better” as never running out or shielding individuals from reality. Unfortunately we are all part of the real world, where money is a “scarce resource” that cannot be assumed to never run out…no matter how much you might want that. Yes (here comes reality again) we have to save and invest more if we want to live well for 30+ years after we stop working. Yes, yes, yes.

  • Low_Budget_Dave

    The logic is correct here, but the slant distorts the conclusions.

    ALEC is a hyper-partisan organization dedicated to income redistribution. Specifically, they are interested in taking money from the lower and middle income, and distributing it upward to the millionaires and billionaires that run ALEC.

    Although it is true that defined benefit plans need to be replaced, ALEC would prefer to eliminate all retirement plans, all health insurance, and every other employee benefit in the nation. They would prefer that public (and private) employees not be able to retire at all unless they own their own companies, or inherit the money from someone who did.

    If our politics had not gotten so divided, most people would agree that there has to be something in the middle. Police and firemen do not necessarily need to retire at 55, but they work hard, they take some risks, and they deserve to be able to retire with a pension that reflects their years of service to public safety.

    In most places, if you put aside 10% to 15% of your income into a retirement plan, it will enable you to retire (eventually). Any company that wants to keep good employees (and not watch them starve after they retire) should be willing to foot the bill for all or part of that 10%.

    When an employer switches to defined contribution just to allow themselves to lower that 10% to 3%, then they aren’t doing it for the benefit of their customers, they are doing it to cheat their employees.

    • Jay McConville

      One, your characterization of ALEC is ridiculous and you should do some research, not just swallow propaganda. Two, I doubt you will find a single executive who wants to “cheat” their employees. That shows the kind of complete unawareness of how companies work that is so often exploited by the unions. If an executive gauges contributions on sound financial logic, he or she is not “cheating” anyone, but is instead ensuring the long term viability of the company for this and future generations of employees. Sounds right to me.

      • Low_Budget_Dave

        No, my characterization of ALEC is exactly in line with independent analysis done by, for example, CBPP. Their policies “would cut taxes deeply for wealthy individuals, investors, and corporations; and shift tax burdens substantially from well-to-do to middle- and low-income households.” These are not non-partisan ideas.

        In addition, ALEC is crafting a plan to do away with the 17th Amendment, and have Senators appointed by state legislators rather than by voters. This is not non-partisan either. ALEC has spent considerable time, resources, and energy to try to keep people from voting, and to try to make sure that when they do vote, the results are as heavily gerrymandered as possible.

        If the only way to sell your ideas to the public is to keep people from voting, then your ideas might be terrible. People might just be half-wits, of course, but organized voter disenfranchisement usually is a sign a disingenuous plan brewing.

        The phrase “cheating their employees” is overly broad, of course, but for people to claim that corporations are just trying to be competitive for future generations of employees is clearly false. Last year, the Department of Labor documented over $130 million in wage theft, including $35 million in minimum wage violations. This doesn’t even count “independent contractor” schemes, not paying for on-call time, rounding down, requirements to volunteer, etc…

        I understand that businesses fail all the time, but it is not fair to say that they always fail because employees are paid too much. If your business plan depends on paying employees a sub-minimum wage for an extended period of time, then you have a bad business plan, and you deserve to be put out of business.

        I would be perfectly happy if the fast food restaurants in my neighborhood went out of business. It is silly to suggest that they are doing me or their employees a favor by paying $7.50 an hour for years at a time. Their employees make so little that they qualify for welfare and food stamps. It would be cheaper to me and the rest of the taxpayers if they just paid $15 an hour and offered benefits so the government didn’t have to make up the difference. I would be perfectly happy to pay an extra $2 for my burgers if it meant that the employees got a job they could take some pride in. (Don’t pretend it would be an extra $15, it isn’t.)

        Without going too far off they beaten path, the same is true of police and firefighters. Most of the money I pay in local taxes goes to public safety, and most of that goes to pay the employees. For an extra $1 a day, we can fully fund their pension plan. As long as we call a halt to the automatic increases, the problem would stay fixed for as long as it takes to switch over to defined contribution.

        But if we keep offering huge increases every year, then it seems silly to blame the police and firefighters for accepting it. If someone offered me free money, I would take it also.

        Somewhere along the line, we need to look into the economics of the middle ground. And that means you don’t switch people to 401K just for the cost savings of cutting their benefits.

  • VC

    I big killer of government retirement plans are the “cradle to grave” health care plans given to retirees at little to no cost. Fairfax County retirees pay 100% of their health care premiums, (some retirees qualify for a $230.00/month subsidy, if they have worked for over 20 years). For 2017 an HMO family plan would cost a county employee $5,820.36/year. That same plan would cost a retiree $21,622.56/year(not including the monthly subsidy). Cost include HMO and Dental plan.

  • Brian Dunn

    I am a county employee and many items stated in this article are false. Sensational media coverage again.

  • Sebastian Lorenzetti

    Pensions work fine, when companies pay into them properly and regularly. Companies simply don’t WANT to fund retirements, and found a way to shift those expenses on to a gullible and weak spined private sector. Now, that private sector is realizing those 401k’s are inadequate and there is no way people in many lines of work (yes I know there are exceptions) could possibly fund those accounts adequately based on their salaries. The public sector should not abolished defined benefit plans simply because the private sector fell for the scam.

  • JoAnne Norton

    Just thinking that retiring at 55 and below is done by many armed services personnel. I wonder if you would suggest the Federal Government do the same. We always say they put their lives on their line. But you cringe at benefits going to Police and Firemen who are always in jeopardy, day in an day out.

  • JoAnne Norton

    If you take away my pension, I would have 1400 dollars to live on for the month. I would not be able to afford my health insurance adjunct to my Medicare, I would have to wait in a shelter for public housing, hope to get some food stamps. I would be ineligible for Medicaid. Their cutoff in this state is 10 grand for an indiviidual. I could not pay for my blood pressure medicine, and my other meds. Cost of the county putting me up in a shelter would be 300 or so dollars a day. Compare this for the measly 750 dollars a month Fairfax gives me.

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