If you’ve wondered how so many unionized Massachusetts state employees manage to earn over $200,000 per year (plus pension and other benefits worth at least another $100,000), this Boston Herald story provides a small clue. As a 2011 gift to taxpayers, Deval Patrick and our one-party Legislature decided to force cities and towns in Massachusetts to keep offices open and “appropriately staffed” on Evacuation Day and Bunker Hill Day, two holidays not recognized anywhere else in the United States. Meanwhile, union agreements require the government to pay the workers double-time.
[Background: Visit http://www.boston.com/news/local/massachusetts/specials/2010_state_salaries/ and select “department of state police” (and no other options), for example, to see the difference between nominal and actual cash compensation; note that the system is restricted to just those civil servants who earned more than $100,000 per year (the median wage in Massachusetts is about $18/hour or $36,000 per year (source)). Remember that pensions are based not on the nominal salary, but on actual compensation during an employee’s last few years of work. So a Massachusetts worker whose “salary” is $75,000 per year can easily get a pension, starting at age 45, of more than $100,000 per year. The retiree also gets state-paid health insurance whose current funding shortfall will cost the average Boston family about $100,000 (source) in addition to whatever level of taxation the family is currently paying.]
Can this type of situation ever be changed? Is this a consequence of a type of government based almost entirely on welfare (at this point), which is doomed to self-extinction when the money runs out? Is there any way that those in charge can overcome the people with a vested interest to reorganize the structure into something that’s sustainable in the long term?
Excellent use of public money. Especially the $498,216 a year for the UMass basketball coach.
After reading this, tell me if you don’t get sick:
http://www.cambridgeday.com/2011/02/08/even-retired-city-manager-would-reap-extraordinary-rewards/
And speaking of “sick”, this part really makes me sick:
“When Healy retires, he will also leave City Hall with a pot of cash for unused vacation days, sick days and compensatory time, a payout estimated at $282,000.”
George: As a Cambridge property tax payer, that is scary. It is true that Cambridge has a low residential property tax rate, but not because of this one guy. Harvard and MIT take care of themselves, more or less (e.g., their own police forces), and also pay huge sums to the city “in lieu of property tax”. Cambridge also has a lot of huge office buildings. It is a lot easier to keep taxes low when your small town includes two universities with a combined $40-50 billion in assets.
@Philg: Right. Not many folks know about Cambridge; my father had a shop there (26 years) so I know enough about the city.
What got me going on Healy’s retirement is, like you stated, he is claiming the city owes him for his hard work:
“I am worth every penny of it,’’ Healy said of his compensation and retirement benefits. “I fully realize that the money comes from the taxpayers, but the taxpayers of Cambridge have the lowest residential property tax rate in the commonwealth.’’
If Healy is “worth every penny” he should not retire and keep serving his city with no pay. After all, what part of public service are our politician not understanding?
David,
In answer to your question it cannot now be changed. I don’t have any official numbers but I believe “teachers” are the most populous job in the US. Offhand, for sure nearly everyone is on the public dole (Crony capitalism ensures even the richest 1% love the government) and welfare, medicare, medicade, EI, government jobs ect ensure that an overwhelming majority of people enjoy the nanny state.
Ben Franklin said it best.
“When the people find they can vote themselves money,
that will herald the end of the republic.”
All that’s left for the US is “Bread and Circuses” which eventually run out. I imagine within our lifetimes the US will fracture into several independant states.
I actually think this guy has done a poor job of managing Cambridge over the last 30 years. The city has made it almost impossible to build new houses and makes renovating extremely expensive as well. So the city has become a rich enclave with a handful of poor people kept around in very expensive-to-run public housing so that they can be pissed off and envious all the time as the yuppies drive by in their new BMWs. Young people can’t afford to live in Cambridge and have been forced over the border into Somerville (a town with almost no green space). The houses in Cambridge, even ones that cost $1-2 million, look very shabby because they are more than 100 years old and weren’t built well to begin with. Cambridge has quite a few blighted light industrial areas that, in a market economy, would long ago have been developed into attractive and comfortable housing.
I’m interested in seeing the outcome of the proposed legislation in Wisconsin that would remove the right to organize from state workers. It doesn’t fix the problem of the retired Cambridge city manager (or others like him around the country), but it might be the first step toward changing the situation.
The comment of Healy is one I read about constantly here in the Chicago area. There are many school superintendents, police chiefs, and other public leaders that retire after their respective employer boosts their final years’ salaries with the sole purpose of increasing their pensions. They all say the same thing when the newspapers voice outrage: “I earned that money!”. It’s like they think workers that don’t have pensions available to them really don’t deserve them because they didn’t earn it. So, maybe we really do have the hardest-working citizens in our public leadership jobs!
Re:”If you can’t beat ’em join ’em.”
Exposing lucrative state jobs in Massachusetts seems to be a reoccurring theme on this blog. I agree with many of the opinions you present here and would prefer that Massachusetts’ lawmakers would restructure the state’s compensation and benefit structure. However, assuming that that this won’t happen anytime soon, could you share your research and expertise in this area with your young readers who may be in “career shopping” mode?
What are the best state jobs in Massachusetts? Ideally these jobs would have 1) easy entry (I don’t want to have to work years at a bad state job for a small of chance of getting the better job). In addition, a job like “director of department X” shouldn’t make the list, as it is probably a pretty hard gig to get and there is only one such position 2) the total compensation and benefits over the career should be near the top possible 3) I’d be eligible for retirement at a young age with a generous pension (so I could spend my very long retirement doing what I actually wanted to with my life) 4) [secondary considerations] the job and its perks should have a good chance of surviving future budget cuts (as I’m young and there probably will be some belt tightening before I get to retire). 4) [secondary considerations] the job is intellectually stimulating, fun, etc.
John: I think state trooper is the best job. With a little overtime, but without having to rise up into management, you’ll be earning more than $200,000 per year driving a nearly new car listening to audiobooks on your state-provided mobile phone. You should be retired in your early 50s, at the latest, with an inflation-adjusted pension of more than $150,000 per year. There is virtually no chance that the Democrat-controlled Massachusetts legislature would cut union benefits for armed state troopers. Unlike, say, Michigan, the state has vast amounts of untapped wealth that the government can confiscate to pay the obligations agreed to by politicians. For example, they can simply raise the income tax rate from its present 5.3% up to California’s 9.3%. Sales tax could go up from 6.25% to a California-style 9% (state+local). Wealthy non-profit organizations, such as Harvard and MIT, could be hit with fees on their endowments and real estate.
[Separately, note that in Wisconsin, a state that has a multi-billion-dollar budget gap, the Republican governor has proposed trimming back public employee unions’ ability to bargain for pensions and other benefits. The civil servants are practically rioting, with support from President Obama (see http://thecaucus.blogs.nytimes.com/2011/02/18/politics-of-wisconsin-labor-fight-spread-to-washington/ ). But in fact the Wisconsin governor has not proposed eliminating the defined benefit pensions; he just wants employees to contribute a bit more (since they are counting on an absurd 8% return on investment in the fund, you can bet that in fact it will be taxpayers 25-50 years from now who pay most of the cost). The governor has also exempted police and firefighter unions. So if Wisconsin is the worst potential nightmare of a public employee, it turns out that state trooper’s have nothing to fear.]
[This is somewhat off topic, it’s in regards of what’s going on in Wisconsin, and for anyone who thinks they are “entitled” or “earned it”.]
Folks in Wisconsin, (and I’m sure other places will follow soon) who are protesting the proposal the governor has set forth, I wander if the protesters will still protest if they were given the option of keeping their current status quo of their benefits, if-and-only-if they also agree that their own off-sprints, and only their own off-sprints, will become responsible for the debt they are accumulating today.
This kind of unjust is what drove immigrant to Americas; I don’t know where we can immigrate to, as there is no new land with no government left on Earth.
A detailed analysis: Are Wisconsin Public Employees Over-compensated? The author (Jeffrey Keefe, at Rutgers’ School of Management and Labor Relations) notes that public-sector occupations require higher average levels of education (“59% of full-time Wisconsin public sector workers hold at least a four-year college degree, compared with 30% of full-time private sector workers”). Controlling for levels of education, total compensation per hour worked (including non-wage benefits) is 4.8% lower in the public sector than the private sector.
Russil: Most undercompensated workers quit their jobs and find jobs where they receive at least market compensation. In fact, government workers have a much lower “quit rate” than private sector workers (see http://www.downsizinggovernment.org/overpaid-federal-workers for data on federal government workers). Are you suggesting that government workers, despite their impressive educational credentials, are too stupid to realize that they are underpaid?
Separately, the study that you cite mixes all majors indiscriminately. Is it interesting that Wisconsin is paying a teacher with a bachelor’s degree in education 4.8% less than Google pays someone with a bachelor’s degree in computer science? Or that Wisconsin is paying a teacher with a Ph.D. in education (perhaps earned online at low cost) 4.8% less than a biotech company would pay a Ph.D. in biology?
The study doesn’t take into account productivity. A government worker who does nothing can earn more than $100,000 per year. There are few private employers who can afford to pay an entirely unproductive worker that much.
“Separately, the study that you cite mixes all forms of education. Is it interesting that Wisconsin is paying a teacher with a bachelor’s degree in education 4.8% less than Google pays someone with a bachelor’s degree in computer science? Or that Wisconsin is paying a teacher with a Ph.D. in education (perhaps earned online at low cost) 4.8% less than a biotech company would pay a Ph.D. in biology?”
What? The study doesn’t mix all forms of education, it breaks it down by level of education. From the abstract: “Wisconsin state and local governments pay college-educated employees 25% less in annual compensation, on average, than private employers.” The difference is 36% for employees with professional degrees (law or medicine), 26% for employees with a master’s degree, 29% for employees with a doctorate. Conversely, Wisconsin state and local governments are paying 14% more for employees with less than high school.
[Moderator: Edited out unrelated argument below.]
Russil: Sorry. I should have been more clear and said “the study that you cite mixes all majors” (moderator: fixed above). It does distinguish between a Ph.D. and a bachelor’s degree, but not between a bachelor’s in education and a bachelor’s in finance or between a bachelor’s in criminology and a bachelor’s in chemical engineering.
Anyway, I think the question no longer needs to be studied by pointy-headed academics. The folks collecting government paychecks are actually rioting in the streets of Madison to preserve their current compensation. A willingness to riot is not a sign of below-market compensation. When Burger King shuts down a location, you don’t see the workers rioting. They go across the street and get jobs at McDonald’s with comparable pay. That’s how you know that Burger King was paying market wages.
“The folks collecting government paychecks are actually rioting in the streets of Madison to preserve their current compensation.”
I’m not clear on the connection between being overpaid and being willing to riot!
Their leaders have already stated that they’re willing to make the financial concessions demanded–the problem is that the government is also demanding they give up their collective bargaining rights. From the Milwaukee-Wisconsin Journal Sentinel:
Russil: It does sound painful to give up a “God-given right” as the union leader put it (I suppose he means that the right to extract pensions from our grandchildren was granted by Allah and is specifically listed in the Koran, but sadly my ability to read Arabic is not sufficient to verify). Maybe that is why folks on Wall Street have to be paid $1-10 million/week; it is to compensate them for the suffering of not being part of a “real union”.
I have to side with Phil. People in our society are very confused on what their “rights” are. There is no “right” to get married. You don’t have a “right” to a high paying, cushy job with a bottomless pension. You don’t have a “right” to educations. You don’t have a “right” to be affirmative action slotted into a position because you are a woman or some visible minority.
They are taking the position it is their “right” to have a union and ransom taxpayers. I am of the extreme position that anyone who collects money from the government or works directly for the government should lose their right to vote, nevermind still being allowed to form a union and strike. Unfortunately at this stage it is entirely impossible as that probably account for 70% of the people in our societies. But it would have been nice if the founding fathers put that in the begining…..Ben Franklin actually noted the problem….but did nothing to solve it. What a missed opportunity.
Jesse: I’m not sure that I said all of the things you’re agreeing with! As a taxpayer, I don’t want to incur high costs for public workers. On the other hand, I’m not sure that there is a recognized “right” for me not to pay 100% of my income in tax. If I were a subject in a monarchy, for example, it might be the case that the king was entitled to everything that I had or produced. So I don’t blame public employees for trying to capture as much of American wealth as they possibly can. We made it legal for public employees to unionize and we made it legal for unions to spend hundreds of millions of dollars supporting political candidates who will then agree to give them trillions of dollars in extra benefits, including pensions.
[I guess you could argue that we as citizens didn’t directly make it legal for public employees to unionize, but we voted for politicians such as John F. Kennedy who made it legal.]
As a citizen, I do find it sad that all of society’s wealth is trending towards paying retired 50-something former government workers and being used to enrich the health care industry. Since we have limited wealth, I know that is going to mean reduced educational opportunities for young people and reduced assistance to the poor (since high taxes will reduce private charity and the government won’t exist to do anything other than pay pensions and health care).
Jesus said that “the poor will always be with us”. He apparently did not foresee that we wouldn’t be able to help them because we were too busy working to support retired 41-year-old bus drivers (from the MBTA here in Boston).
Intersting Phil,
My initial reaction was to agree with you that it is not our “right” to be free of taxation. However, if I take it that far, I have to argue that we have no rights at all. What is a right? Personally, I go back to one of the most well know definitions of it as stated in the constitution “Life, liberty and the pursuit of happiness”.
I think almost all rights in our society are based on the above sentence. Given that the death penalty exists, the right to life arguably doesn’t exist in some parts of our society. Taxation (or quite frankly theft) in my opinion is a refusal of “liberty” and a restriction on “the pursuit of happiness”. I personally think that most left wing policies are routed in “the pursuit of happiness”. It’s ironic though that in order to create most of their policies that allow(or enhance) some people’s pursuit of happiness, they have to take away liberty from everyone(well all taxpayers) and restrict the “the pursuit of happiness” for others.
I admit that I enjoy some government. I admit that I am will to pay some of my money for certain aspects of that government. But I will never concede that income taxation is either just or beneficial to a society. In fact, it is very damaging. You are creating a disincentive to work and/or you are taking away some of the benefits of the main thing you want your populace to do. I believe that any form of taxation needs to be either voluntary or avoidable(consumption tax).
Out of curiosity Phil, I have a couple questions for you.
1) What(if any) rights do you feel we as human beings are entitled to?
2) Do you feel that government employees and recipients of government money should have the right to vote?
Jesse: Your questions are philosophical ones, not related to the practical nature of the original posting, which was simply about how exactly do government employees whose nominal salaries are under $100,000 manage to earn more than $200,000 on a regular annual basis (and then collect a pension based on that $250,000/year salary).
What are “rights”? I take a pragmatic view toward this subject. If you can somehow enforce a “right” then it is real. For example, it would be nice if every human on the planet had unlimited food, shelter, education, and health care. These are sometimes referred to as universal human rights. However, if an Egyptian, for example, doesn’t have these things, and he has no means of forcing others to provide them, it doesn’t make sense to say that he has a “right” to food.
Back to the subject of U.S. federal and state government workers.. until 1960, despite the fact that many people asserted the existence of one or more gods, they did not have a “God-given right” to unionize. When the Democrats, such as John F. Kennedy, changed the laws so that public workers could unionize and collectively bargain with the same politicians that they’d supported during elections, I think it is reasonable to say that they have the “right” to bleed taxpayers white. In Wisconsin, the Republicans are trying to change the laws back to where they were from the 1600s through 1960.
So the retired City of Cambridge manager collecting $5 million in pension benefits and the retired 41-year-old MBTA bus driver both have a “right” to make a $10/hour McDonald’s server, who might well be older than they are, pay taxes to support them. Whether that is a “moral” or “just” is a separate question. We Americans like to believe that our government is somehow more moral or just than other governments, and we sometimes carefully choose a comparison, e.g., between the U.S. government and the government of Haiti, that shows our government to be more moral and just. But from the point of view of a group of public workers, the government exists primarily as a way to channel wealth from taxpayers into their own pockets. Surely the former manager of Cambridge would not have accepted a $5 million pension if he could have gotten $10 million from his cronies on the city council. That would have been immoral and unjust with respect to his spouse and children. Similarly, the Wisconsin public workers’ have a primary responsibility to their own families. If they could force 67-year-old taxpayers to work 18 hours/day, 7 days/week to support them in a retirement that starts at age 32, they should do so. They’d have extra time to spend with their children, extra time to help their spouse, etc.
[This wouldn’t work quite as well in a union of workers for a private company, since the maximum amount of wealth that the workers could extract would be the total value of the company. They could wipe out shareholders, but not use an armed police force and taxes on necessities such as food and shelter to force shareholders to work to support them indefinitely. Also, the private company could move its factory to China or Mexico in order to escape the U.S. workers whereas taxpayers supporting public employees cannot move out of the U.S. (since other countries won’t accept us as immigrants, by and large; most Americans are too old and poorly educated, for example, to be admitted into Australia or New Zealand under their point systems). The only limit on a public worker’s ability to tap into the wealth generated by taxpayers is that the taxpayers might not vote for the Democrats anymore. To prevent that from happening, it will help to hide the total compensation from the public, e.g., saying “A state trooper has a salary of $80,000 per year” without mentioning that cash compensation is more likely to be $200,000 and pension and other benefits will bring it up to over $300,000 per year. That’s why the structure of compensation tends to be so much more complex than in a private company. Spanish air traffic controllers managed to earn spectacular sums (e.g., average of $500,000/year and some at more than $1 million per year each) without taxpayers finding out for a decade or more. Another good idea would be for the government to have its own TV and radio stations, as is common in many countries, including the U.S. (NPR, for example). The government-funded media can run stories about good works being done by public employees and can present the state trooper’s salary, for example, as $80,000 per year without mentioning the holiday pay, overtime time, and pension obligations. The taxpayer who watches/listens to these media outlets might never question why he or she must pay a larger amount every year for the same basic services.]