Killing Pensions with the Welfare Queen Strategy
In the early 1980s, Ronald Reagan painted the picture of a single mom taking advantage of the welfare system in order to erode public support for government programs to aid the poor. The image helped to turn the public against welfare and poor people. A decade later, President Clinton was proud to “end welfare as we know it.” The same strategy is being used to destroy public pension plans.
Critics of public pensions are pointing to the forty-something year old policeman or fireman who qualifies for a full pension, and then has a second career. They also cite the case of the schoolteacher who puts in twenty-five or thirty years of service, retires, and then goes to another state to teach.
Let’s start with police and fire professionals who typically qualify for pensions after about 20 years on the beat. First, there’s a good reason why folks in these professions qualify for a pension after about two decades of employment: they do extremely difficult and physically taxing work. There seems to be a visceral reaction when these public servants have a second career after they retire. It’s odd to me that we single out public employees, but think it’s okay for executives and other professionals to collect their pensions, and go on to lucrative careers as consultants and board members.
Our police and firefighters haven’t done anything wrong. They signed up to provide at least 20 years of public service in exchange for a salary, pension, and other benefits. The problem is that our legislators did not put set aside enough money to properly fund those pensions. Moreover, they encouraged pension officials to use unrealistically high assumptions for investment returns as a way to hide the true liability. By the way, over the years the policemen and firemen probably contributed more to their pension than the public. Critics conveniently forget that almost all public pension plans require employees to contribute 4% to 6% of their salaries. Now that the bills are coming due, we prefer to vilify pension recipients rather than confront our obligation to our public servants.
As for teachers who take another teaching job after retiring, they too are playing by the rules. More importantly, the extra job is probably a financial necessity. Teachers’ salaries have been stagnant for the better part of a decade, so it is prudent for many teachers to find a way to supplement their retirement income. Getting a job after qualifying for retirement is a sensible move.
Many taxpayers aren’t eligible for defined benefit plans because corporations have been eliminating them for years. Thus when politicians turn policemen, firemen, or teachers into the pension equivalent of a welfare queen, the argument resonates. Rather than arguing that public servants should be stripped of their pensions, taxpayers should be demanding that every citizen have a defined benefit plan.