for union work rules in employment contracts that allowing “featherbedding,” which is requiring that more workers be hired than are really needed for the job, or paying workers for more time than is actually worked or is necessary. These are hidden costs that unions negotiate for in employment contracts for their government employee members.
For example, police in the northern New Jersey town of Englewoodcan earn roughly $3,000 extra a year in so-called “muster pay” by showing up for work just fifteen minutes prior to their shift and changing into their uniforms. Is it really necessary to pay them for this time? When was the last time you got paid extra for showing up a bit early to work to get ready for your day?
Income for Life
And there is even more bad news. Government employees are extra burdensome for taxpayers because they retire earlier than other Americans. Early retirement is a union creation—and makes no fiscal sense.Retiring government employees early places a huge burden on the next generation of taxpayers.
Government employees are extra burdensome for taxpayers because they retire earlier than other Americans. Early retirement is a union creation—and makes no fiscal sense.
For example, in New York City, “firefighters and police officers may retire after 20 years of service at half pay—which means that, at a time when life expectancy is nearly 80 years, New York City is paying benefits to 10,000 retired cops who are less than 50 years old,” notes labor analyst Daniel DiSalvo. That’s twenty years of work for thirty years of retirement income. 50
The unions
love
these early retirement schemes. Why? Because for every retiree, there’s a new hire. Which means that both the retiree and the new hire have to pay dues to the union. It’s two for the price of one for the government employee unions—and one for the price of two for the taxpayers. Of course, retirees pay less union dues than active members do, but they still do pay some dues and fees to the union. Plus, by substituting a new worker for an old worker, the union gets a longer payout—the new employee has his whole government career ahead of him during which he will pay the union dues. It is a great scheme for the union to guarantee its future income stream.
As virtually everyone recognizes at this point, pensions have destroyed full-fledged industries like the American auto industry. General Motors drove itself into bankruptcy because it had triple the number of retirees and widows as actual workers. GM provides one million people with health-care coverage, but has less than 100,000 people working for it. As Mark Steyn writes, “How do you make that math add up? Not by selling cars: Honda and Nissan were making a pretax operating profit per vehicle of around $1,600; Ford, Chrysler, and GM a loss of $500 to $1,500. That’s to say, they lose money on every vehicle they sell.” 51
The U.S. car manufacturers are no longer car companies—they are pension companies. Our government will soon be a pension company itself as a greater and greater percentage of state and local revenue goes to pay for retirees instead of active government workers. And ultimately, being a pension company will even prove unsustainable for ourgovernment. The cost of paying for retired government workers with rich union-negotiated pensions ultimately will be too much for the taxpayers to bear.
Extreme Pensions in California
California has the notorious, budget-busting “3% at 50” scheme. At first, this deal allowed only California Highway Patrol officers to retire at 50 and a full pension based on 3 percent of their final year’s pay times the number of years worked. For example, an officer hired at 20 years old and retiring after 30 years on the job gets a pension equal to 3 percent times 30 years, or 90 percent of his final year’s pay, which is later indexed for inflation. Sweet deal for police officers, right? Then, the California Legislature
Carol Wallace, Bill Wallance