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April 24, 2008

The Economic Self-Interest of Early-Retiring State Workers

Marc Comtois

So, faced with a reduction in benefits, about 2,500 state workers are expected to retire. Under the new plan, they'd have to be 59 years old, have 20 years in and then would have to pay $1,700 per year for health benefits (20% of the total health package). Currently, retired state workers pay nothing towards their own health care and they can retire much earlier. Those of us in the private sector know just how tough it must be.

According to the Governor, the intent was to save money (around $120 million overall--$6.1 million this year) by reducing health care expenditures, but others--like state employee unions and some Democrat legislators--think the intent all along was to reduce the state work force by pushing people out who'd want to preserve their benefits. Shucks.

But let me get this straight. Apparently the unions and some Democrats acknowledge that early-retiring state workers, realizing that they will pay more/receive less if they don't take certain actions by a certain time (retire early to get better benefits), are acting in their own economic best interest. Yet, these same people fail to recognize (apparently) that, golly gee, private sector workers and companies act the same way when faced with onerous taxes and a bloated state government. They decide to either leave Rhode Island or not come in the first place.

Comments

I think this is great. Dump the expensive dead wood and replace them with half as many new employees getting a 401(k) plan.

The concern is the 'brain drain' from these departments. Please. Seriously, how great is the quality of ANY government service in this state? I can't imagine we're going to see a real decrease in the 'quality' of services.

As for the economic interests of the state employees, good for them. Nobody FAILS to see the reality of it. They just pretend it doesn't exist.

Posted by: Greg at April 24, 2008 9:42 AM

This is a simple issue to evaluate. If the state workers feel it is necessary to retire, sacrificing some growth in their pension benefit, in order to save their post retirement health benefit, then the retiree health benefit is way too generous.

But we already know this.

This is a good beginning. There is so much more to be done.

Posted by: John at April 24, 2008 10:08 AM

I don't think that the private sector workers have much a say in anything the private companies decide.
("private sector workers and companies act the same way.....")
Another problem that afflicts some private sector workers is their acceptance of the reverse class warfare argument made by some in the media and those representing businesses. Groups like the Greater Providence Chamber of Commerce, and Education Partnership, The Shoreline Alliance, Providence Journal editorial board, radio talk shows, and the usual political suspects all frame their argument by first saying we cannot afford public sector workers compensation packages in these difficult times as if we could afford them in better times. Then they follow with comparing health care benefit packages of the public sector worker ( calling those benefits "generous, overly generous, goldplated , lavish etc.) with the average private sector workers lack of those kind of benefits. This generates the desired affect on the workers who compare unfavorably . They don't ask why should this be so and how did it get to this point and "Am I getting screwed by this employer" but rather they're angry and resentful at their fellow workers for getting more than they do. How sad and stupid. These are the people who end up voting against their own self interest. Somehow they become convinced that by lashing out at their neighbors and co workers they will be better off. And its most likely that some of the millionaires who govern who use these kinds of appeals are some of the same ones who oversaw the axing of private employee compensation in the last couple of decades while personally making fortunes (which allows them to run for office as "outsiders"). Hell they're just trying to bring wages and benefits "in line with whats out there." Less for you and more for them. Splendid. So golly gee why don't you leave the private sector workers out of this because they don't count except to work and vote the way the wealthy wish. Oh they do get the ring through their noses for free.

Posted by: Phil at April 25, 2008 4:19 PM