What should be done about public employees’ pensions, work rules, etc.

S. in the Midwest writes:

I read your comments about Gov Walker. I must admit that I don’t agree with most of what you blog about. However, on the Walker / public union issue, I am 100 percent in agreement. The public employees don’t seem to get it.

The game is up. The math doesn’t work. The rules of employment in government jobs bear no relationship to any private sector reality. They have to change.

My answer, if I were king for a day, would be as follows:

1. Freeze every public employee pension in existence (including the ridiculous weird plans like the Railroad Retirement Board plan for railroad workers, and especially all pension plans for legislators). All benefits accrued to date will be paid. No future accrual of any benefit under the old plan.

2. Figure out how all these government entities are going to pay off the massively unfunded promises made through the freeze date. This may take 10 to 15 years.

3. Institute 403(b) or other similar defined contribution plans. The government employer will be required to put in some reasonable amount (say 4-5 percent of salary). The government will be required to put this money in no less frequently than monthly. The employees can also contribute. The plan should have 10 to 20 investment choices. The worker can decide how he wants his money invested. That’s his retirement plan. The government is out of the pension guarantee business, as well as the games they play by goosing worker pay right before they retire. When you retire, you get what’s in your account. End of story. Have a nice retirement. You know, like the rest of the country.

4. Put everyone in the social security system, just like the rest of the country (see #1 above). No more special deals, special benefits, special formulas.

5. Abolish virtually all work rules that prevent people from being fired. What works in the private sector should be just fine for the public sector.

6. Institute merit-based reviews (you know, like the ones that happen in the private sector), and merit-based increases. If the worker isn’t doing his job, fire him. You know, like in the private sector.

So there you have it.

Posted by Lawrence Auster at June 07, 2012 08:15 AM | Send