The Real Story on Unemployment & Government Pensions

Real Unemployment Still in 17 Percent Range is a New American article indicating that the real rate of unemployment is much higher than the offical rate. One of the reasons is that the government figures do not include people who have simply given up trying to find jobs because of discouragement. In addition government statistics do not distinguish between full and part time work. Those figues indicating people employed include some who are only able to find part-time work. When you know this it changes your perspective on the accuracy of the government statistics.

Challenger Layoffs- Government Cuts highlights public sector pension abuses. Karl Denninger wrote:

Some of these services are indeed important - or even essential. But over the last 20 years or so we have changed a government job from something you do because you want to be of service to something you do to extract as much money as possible from your neighbor across the street - or next door.

Witness the pension abuse loopholes that are being closed - and are generating the loudest screams. The usual practice for years has been to use take the last handful (frequently three or five) years of service as the salary base, then pay that. But "salary base" has nearly always included overtime, "hazard pay" and any other "add-ins", including in some cases pay taken in lieu of accrued vacation time off! The result is that many people "retire" from these positions with six-figure pensions that frequently exceed the base pay that they would have earned while on the job. Further, many of these systems allow people to retire at 50 or 55, instead of the private-sector standard of 65 or even 67 (as is now the case for full Social Security benefits.) Many of these pensions also provide full medical coverage - all paid in full. And then you have the abusive changes made to state law and constitutions which effectively protect these payments as "super-senior" obligations that cannot be renegotiated or defaulted upon.

Contrast this with a private pension plan which can and sometimes does default. When private sector employees push too hard and abuse their pension systems, forcing them underwater, the PBGC comes in and takes over the plan. This results in the plan forcibly resetting back to whatever it can actually fund, which frequently results in a 50% or more reduction in benefits for pensioners.