by Brian T. Lynch, MSW
When I first went into civil service it was a calling to serve, not a career choice for the prospect of making lots of money. I was following the inspired words of John F. Kennedy and asking what I could do for my country. I was, and am still, an idealist. Money didn't matter as much to me. I wanted to help people. I still feel that way now, which is why I blog.
Back when I started with the state, everyone in the private sector had better health care and benefits, better defined pension benefits and they made a lot more money per hour or had higher salaries. Even the state cars we drove back then had no radios or air conditioning as that was considered too extravagant for state employees. That is the way it was, so working for the State came with low earnings expectations.
But things were changing in 1979 when I began my civil service career, even though I didn't know it at the time. Big business had begun organizing politically and started spending big bucks on lobbying government for laws and regulations more favorable to business. Industry organizations were created to raise money and coordinate anti-union marketing campaigns. Ronald Reagan came into power in 1980 and set the tone for union bashing by crushing the air traffic controllers union. Private sector wages, which up to that time always rose in to proportion to increases in hourly GDP, were frozen and have remained frozen ever since. A fear campaign and actual business tactics based on globalization made jobs less secure. Private company pension systems were intentionally dismantled by big corporations to quarterly boost profits. Profit sharing arrangements took their place initially so workers had to invest in their company for their hope of retirement income. Then Wall Street saw all this money and wanted some action. They got congress to pass the IRA laws and all that pension money went to them.
Instead of real raises, businesses only offered cost of living adjustments, which keeps up with inflation but doesn't share the extra wealth that the growing hourly GDP created for their employers. That extra wealth went to CEO's and wealthy stockholders, beginning the cycle of great income disparity we have today. At the same time, Reagan cut the top marginal tax rate from 70% to 28%, a windfall for the rich and a huge loss of tax revenue that the rest of us had to bear.
So while the raises, salaries and benefits I received were always sub-par compared with the private sector during the first half of my career, declining private sector wages and benefits, rather than civil service raises or improved benefits, is the reason civil service looks so good today. In fact, civil service benefits have been steadily eroding for the last 15 years but this decline is slower than the collapse of private sector benefits. Civil service salaries also have barely budged in years and actually declined when you factor in inflation. But the assault on private sector salaries and benefits makes civil service look great by comparison only.
Know this, if corporate business interests had not conspired to suppress wages in America over the last 40 years the median income for a family of four today would be over $100,000/year. Instead it is shrinking and down to $51,000/year.
My point is that people in this country who work in the private sector have to fight back to regain a fair bite of the wealth they create for their employers. Workers need to re-organize and demand their fair share of our GDP. Rather than tearing away at civil servant pensions, people should be working to recreate what has been taken from them and use civil service as the framework and model to rebuild private sector retirement security.
There are particulars about why the pension system in New Jersey is in so much financial trouble. It isn't because it is too generous. It is in trouble because when New Jersey was flush with money during Governor Christie Whitman's (R) term she stopped making payments. She said she did this because the stock market was booming at that time. She said the pension system was way over-funded and didn't need more cash. By the time she finished bankrupting the state with massive tax cuts and increased credit spending, Governor James Florio (D) didn't have the revenue to pay into the state pension system during his entire term in office. This default model became a habit with subsequent Governors. Nothing, or only fractional amounts, were paid into the retirement system for the last 20 years. Governor Chris Christie (R) refused to put money into the system a few year back, when he had the money to pay, saying he didn't want to put money into a broken system. This is crazy talk since it was the Executive branch that broke the system in the first place by doing exactly what he was doing.
The New Jersey State Pension system is, to a lesser extent, also in trouble because it has been abused for years by politicians bumping up the salaries of their political cronies just before retirement so they get huge pensions that they didn't deserve or contribute towards. Politician's take advantage of the way pensions are calculated to reward their buddies.
In New Jersey, civil service pensions are based on the average salary for the last three years. Recently the Star Ledger newspaper criticized the Governor for bumping up the salary of a political friend such that his retirement income was around $120,000 per year when his base salary had been closer to $30,000 for most of his career. Politician's have treated the state's pension system like it was there private cookie jar.
So when the state's pension system, or any states fixed pension system becomes a target for political destruction, let it be a reminder instead of just how much ground private sector workers have lost. Let state pension systems be the model on which the rest of the work force rebuilds what they once had.
Photo Credit: http://ivn.us/2012/07/11/california-ignores-growing-public-pension-crisis/