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02-24-2011, 05:55 PM   #1
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Just to clear things up. How Wis state Employees pensions/healthcare are funded.

Out of every dollar that funds Wisconsin' s pension and health insurance plans for state workers, 100 cents comes from the state workers.

How can that be? Because the "contributions" consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.

Thus, state workers are not being asked to simply "contribute more" to Wisconsin' s retirement system (or as the argument goes, "pay their fair share" of retirement costs as do employees in Wisconsin' s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.


http://tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8EDJYS?OpenDocument


Last edited by larryinlc; 02-24-2011 at 06:11 PM.
02-24-2011, 06:34 PM   #2
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OK is it just me or do you get the impression that the guy walks around with his nose up the air too much.

America has roughly the same number of food preparers, who can be high school dropouts, as registered nurses, who require a college education

rather biased generalization as far as I am concerned in this current economy there is no proof that this is currently or ever been the truth. How many of us have know waiters/ waitresses that were college students?
02-24-2011, 06:39 PM   #3
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What guy? I can't see any noses in here.
02-24-2011, 06:42 PM   #4
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sorry assumed you would read the article that the OP cited i should have said the author of the article

02-24-2011, 06:59 PM   #5
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That is how those contracts are negotiated.
What is said is valid.

Wallstreet is doing it now so it doesn't look like they made over $40,000,000 a year.
02-24-2011, 07:25 PM   #6
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At where I work for the federal government take our tradespeople for an example. They have a great pension and benefit package but make much less than if they worked for private enterprise. A fridge tech for example makes 23 per hour with the government and 35 outside. I think that they do indeed pay for much of their benefits. I use them for an example as it is a trade that is easy to compare wages unlike clerical or scientific workers or letter carriers and teachers which do not have many to compare outside of public service.

Of course those who hate both unions and public employees will think that even 35 cents with no benefits is more than these workers are worth but hopefully if you ever need public servants, you know like when your house is on fire , that you will spend your effort berating them and calling them worthless and prevent them from putting out the fire or rescuing your family.

Yes not all union workers are good workers but than not all companies are bad companies unless you are more interested in dogma than truths.
02-25-2011, 06:19 AM   #7
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QuoteOriginally posted by gokenin Quote
OK is it just me or do you get the impression that the guy walks around with his nose up the air too much.

America has roughly the same number of food preparers, who can be high school dropouts, as registered nurses, who require a college education

rather biased generalization as far as I am concerned in this current economy there is no proof that this is currently or ever been the truth. How many of us have know waiters/ waitresses that were college students?
There is nothing snobby about what he is saying. If anything it probably underestimates the number of food-preparers. (He did not say waiters, who generally make more) I said the same thing in another thread. https://www.pentaxforums.com/forums/political-religious-discussion/133337-sco...ml#post1400621 The conservative line has usually been (rightly) one should get an education and better oneself. Not so if you work in the public sector. Give us your dregs.

The reporting has tended to compare government workers to the "average" when the workers involved here often have much higher than "average" education requirements and make much higher than "average" in the private sector. Teachers and nurses are highly educated compared to the vast majority of workers. In the private sector, the difference in average wage is huge for differing education levels. Fast Facts That's not snobbery, but economic reality. I mentioned in the other thread that a teacher in Wisconsin starts at $25k after 4 years of college--less than half the national average for a college educated worker. In New Mexico, a prosecutor starts at $33k after 7 years of college. He or she maxes out at $78k after 20 years. Both of these are about half what they would get in the private sector on average. The article correctly points out that these state workers have to be getting something for the salary reduction.

02-25-2011, 07:16 AM   #8
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Why do they want to have it both ways?

Conservative: Public employees are well compensated making as much or more than the median income in the state.

Liberal: But they aren't paid as much as their private sector counterparts when you adjust for education, experience, and declination of the sun.

Conservative: Plus the public employees get a sweet deal on pension and fringe benefits without paying anything for them.

Liberal: those workers pay 100% of those benefit costs because they negotiated them as deferred compensation.

Conservative: So your saying public employees are paid more than there private sector counterparts when you add in the cost of benefits and pensions? That doesn't seem fair to private workers.

Liberal: _____

Someone please fill in the blank, I have some snarky things I could put but won't in the interest of civility.
02-25-2011, 07:30 AM   #9
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BTW, What would you say to the argument that the base salary difference between private sector workers and public sector workers is at least partially attributable to the increased job security. They are giving up some pay to have the gold standard of job security. This even exists in the private sector when you look at contract jobs compared to direct hire jobs, the contractor can easily be paid 50-100% more than the direct hire because there is no obligation whatsoever keep that contractor on if the contract period expires or if things just don't work out. Most private companies, even in right to work states, keep problematic direct hires on for quite a while longer than they should because no one enjoys firing people. Public employers keep the problematic employees on basically forever just shuffling them around to places where they can't cause any problems even if it means they don't get anything done.
02-25-2011, 07:30 AM   #10
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...and as a good fiscal conservative, I should point out that in the private sector, employees also 'pay' for their benefits - the increases in health insurance premiums, for example, will inevitably limit the raises people get.

Also, the 'crisis' is largely an accounting created one - the methods used to account profilt and loss create 'impossible' conditions in the following years. That this happens is legitimate and fair; what isn't legitimate is the cowardice and pandering of politicians who either do not understand or willfully ignore the issue. Why, for example, are government budget changes often expressed as a percentage plus or minus off a growing number? There, it is because the government accountants at least have to courage to project accurate numbers based on decisions in the current year.

Let me explain, using a simplified PL as an example.

Let's say we run a department with 8 people with an average fully loaded cost per head of $100K per year. (Fully loaded means we include occupancy, office equipment, phones, network and pc, as well as salary related costs). So, this department has a budget of $800K.

Mid way through the year we hire two more people - since each works 1/2 the year, the total impact this year is $100K - so our budget went up by $100K this year, to $900K. But for next year, these two are here the full year, so next year, we'll need to budget $1mm.

If we have to be held to a flat budget - say the $900k that was authorized and allowed us to hire the two - then we have to come up with a savings of $100K or 10% of the 'natural' cost for next year.

Let's further say that we did some capital purchase during the year - a software package, say, that should improve our service. The package license cost is $500K for a 5 year term and the annual maintenance is $50K per year with a CPI based cost increase. For the first year (last quarter) the software company gave us a deal - installation cost + 1/4 maintenace at $75K.
So, while we are paying out $575K in cash... accounting wise we amortize the license over 5 years - our PL impact (as we use the product only in the last quarter) is $25K this year... so $75K + 25K = $100K. The budget impact means this year we spend $1mm. (Let's keep this as the 'flat' number)

What happens next year? we have a full $100K in amortization + $50K in annual maintenance.
Our headcount based cost already is $1mm, now we're looking at $1.15mmm and we have to cut $150K to stay flat.

Then, there's variable compensation or business related cost: these are pension fundings, variable bonuses, reserves for losses etc. Often these types of costs are accrued monthly in the PL, and collected as reserve funds in the ledger... and come off the top, directly reducing our profit (if any) or break-even budget. While these are necessary, they are also evil, and management is often tempted to under or un fund these - especially when financial engineering is required to make some externally imposed quarterly number. This external imposition may be Wall Street or it may be a political sub committee reviewing departmental finances. Raiding these funds will bring short term relief, but unless everything goes exactly as well as possible, there comes a future time when this stuff hits, hard.

So we have this mess... and a budget target we have to hit. We do so by... a) reducing the amount we have to accrue for pensions and the like b) attempting to reduce the cost per FTE by removing benefits or shifting the cost to the workers c) relocating staff to a lowe cost area d) outsourcing (this one may or may not carry its own financial time bomb) and e) layoffs, which have to be progressively larger the later they come in the fiscal year.

My apologies to real accountants, as I only play one on TV.


Note however, how the blame shifts from management who either makes ill advised, non sustainable moves this year; or, management that sweeps financial implications for future years under a rug.

When the finances catch up: management and politicians rarely go after bad BUSINESS contracts - that software contract is difficult to get out of and exposes management politically - I noted in the Milwaukee school district budget one of the largest items was $12mm for a 'microsoft settlement' for example. This item we can be sure won't be brought up publicly if it can be helped!

Mangament won't propose giving up their OWN salaries and bonuses! (They may give up a secretary or a custodian)

So what's left? Union contracts with built in salary increases are an obvious target. Pensions. Number of employees. Outsourcing aka privatization.

Last edited by Nesster; 02-25-2011 at 07:37 AM.
02-25-2011, 07:48 AM   #11
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QuoteOriginally posted by mikemike Quote
BTW, What would you say to the argument that the base salary difference between private sector workers and public sector workers is at least partially attributable to the increased job security. They are giving up some pay to have the gold standard of job security. This even exists in the private sector when you look at contract jobs compared to direct hire jobs, the contractor can easily be paid 50-100% more than the direct hire because there is no obligation whatsoever keep that contractor on if the contract period expires or if things just don't work out. Most private companies, even in right to work states, keep problematic direct hires on for quite a while longer than they should because no one enjoys firing people. Public employers keep the problematic employees on basically forever just shuffling them around to places where they can't cause any problems even if it means they don't get anything done.
1)nobody wants to pay "unemployment" therefore priv. companies usually just try to make work tougher till the employee quits........
2)In re: to "independent contractors" the tax burden ect. gets shifted to them. Bottom line is pretty much wages whether a person is ind or not company pays the same if not a bit more for the contractor in order to not deal w/ the messy hire/fire and tax burdens....... The wages to the "employees" of "ind contractors" are usually lower BUT the charges to the business are not.....
As to "temps" same thing holds true.,. temp angencies get 2x (at least) pay of each employee.......
Cheaper the wage base, worse the local economy/housing/infrastructure.. a truism if there ever was one....
Apparently we need a depression to "save us"....
02-25-2011, 08:42 AM   #12
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QuoteOriginally posted by mikemike Quote
Why do they want to have it both ways?

Conservative: Public employees are well compensated making as much or more than the median income in the state.

Liberal: But they aren't paid as much as their private sector counterparts when you adjust for education, experience, and declination of the sun.

Conservative: Plus the public employees get a sweet deal on pension and fringe benefits without paying anything for them.

Liberal: those workers pay 100% of those benefit costs because they negotiated them as deferred compensation.

Conservative: So your saying public employees are paid more than there private sector counterparts when you add in the cost of benefits and pensions? That doesn't seem fair to private workers.

Liberal: _____

Someone please fill in the blank, I have some snarky things I could put but won't in the interest of civility.
No one is saying they are paid more, even with benefits and the declination of the sun--except those who say government can do nothing right, and want to staff it in a way that will prove themselves correct.

How about facts instead of snark. It is pretty certain that the prosecutors in my example will never come close to the lifetime earnings of an average lawyer even if with their 80% retirement.

Last edited by GeneV; 02-25-2011 at 08:50 AM.
02-25-2011, 01:29 PM   #13
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QuoteOriginally posted by mikemike Quote
Most private companies, even in right to work states, keep problematic direct hires on for quite a while longer than they should because no one enjoys firing people. Public employers keep the problematic employees on basically forever just shuffling them around to places where they can't cause any problems even if it means they don't get anything done.
So, if the private and public employers both operate the same way, and do the same thing, why are you blaming only the public employees for this?
02-25-2011, 02:11 PM   #14
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QuoteOriginally posted by cardinal43 Quote
So, if the private and public employers both operate the same way, and do the same thing, why are you blaming only the public employees for this?
Because by definition no public employee produces anything, some are just worse at producing nothing than others. Private employees are all productive contributors to our wealth... and private companies should handle dead wood the way they want to, and are only limited by the jack boot of government regulation on their necks.

In fact, private employees should have no obstacles placed on their becoming the most productive in the world, again, and to lead US Business to a golden age of profits! Yes, the American worker can be as productive as the Chinese, or Indian, or Korean, or Malay!

What's standing between today and this golden future: labor unions, and the lax largesse of the private sector and its stubborn refusal to see economic reality.
02-25-2011, 02:17 PM   #15
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QuoteOriginally posted by Nesster Quote
Because by definition no public employee produces anything, some are just worse at producing nothing than others. Private employees are all productive contributors to our wealth... and private companies should handle dead wood the way they want to, and are only limited by the jack boot of government regulation on their necks.

In fact, private employees should have no obstacles placed on their becoming the most productive in the world, again, and to lead US Business to a golden age of profits! Yes, the American worker can be as productive as the Chinese, or Indian, or Korean, or Malay!

What's standing between today and this golden future: labor unions, and the lax largesse of the private sector and its stubborn refusal to see economic reality.
Yeahhhh were already there!!!!!!!!!!!
How does it feel people..............
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