August 7, 2007

Two for the Price of Three

Justin Katz

I'm not sure why the Providence Journal is making such a big deal about public workers' overtime. My understanding is that such employees' benefits packages cost significantly more than 50% of their salaries, so it's cheaper to have them work extra hours than to bring on somebody new to share the workload. If there's a problem, it seems to me that the solution is to bring down benefits to a sufficiently reasonable level that it is more cost effective to spread the labor (and the wealth). That way, more people could make a reasonable amount of money doing a reasonable amount of work.

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The problem is that under RI's pension system the pension payment is determined based upon the highest consecutive three years pay.

So working a lot of overtime in the last few years gooses the pension payments received for the rest of life.

Posted by: Tom W at August 9, 2007 9:52 PM

But the question remains: Is this "goosing" sufficiently expensive to the taxpayer that it would be better to create a whole new pensioner?

Posted by: Justin Katz at August 9, 2007 10:40 PM
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