Public workers getting a bad rap

Wed, Jun 25, 2008 (2:01 a.m.)

So what can we do with all these overpaid government workers who rake in more than the poor slobs in the private sector here?

Here’s an idea: Let’s take away their cost-of-living raises and caricature them as indolent, two-hour-lunch-taking, useless slugs.

Everyone onboard?

Before the train leaves the station, though, let’s take a look at the Las Vegas Chamber of Commerce’s study on public employee pay that was released this week, just days before lawmakers are scheduled to return to Carson City to find a way to bridge a $250 million budget chasm. The findings were stark: 28 percent higher public pay than private compensation, ranking Nevada eighth in the country.

The Democrats have been seeing a lot of black helicopters circling lately, with some still implying the Economic Forum cooked the numbers to help the governor’s case for the special session and now surely believing the chamber released the study showing high public sector wages to provide cover for slashing COLAs on Friday at the special session. Next thing you know, they’ll allege some conspiracy between the chamber and the Las Vegas Review-Journal to make a huge deal out of the study on the front page and downplay the aspects that don’t help the chamber/R-J case that government employees should have their salaries lowered — in lieu of a lethal injection, I suppose.

Truth be told, the chamber commissioned a series of studies by Applied Analysis and Hobbs and Ong, two reputable firms, months ago and the timing is coincidental, albeit unfortunate for those workers and the Democrats. The business group has long promoted a so-called “government reform” agenda — in this case, “reform” means showing government to be fat so they don’t have to feed the beast with any of their hard-earned money (money apparently earned by paying workers less than the public sector does).

So the chamber’s motives here were relatively honorable and the group has raised serious questions about how much state and local government workers are paid, and will soon have other information that bolsters its contentions about benefit packages and the ominous, multibillion-dollar shortfall that lawmakers so far have ducked.

But before the “take the money from the sloths” train gets too revved up — and it’s hard to argue the raise repeal shouldn’t at least be discussed because it is such a huge chunk of money ($130 million) that could be saved — there are two points embedded in the study worth considering, too:

• Nevada teachers, who make up three-quarters or so of the state workers whose raises could be rolled back, “reported average wages that were 6.5 percent lower than the national average,” the study said. Somehow the chamber news release, headlined “Nevada government workers should be castrated,” buried that little finding and portrayed it as “93.5 percent of the national average.” An inconvenient truth for the chamberites warming up to the idea of rolling back the COLAs. (By the way, the real headline wasn’t THAT bad: “LV Chamber releases reports revealing public employee pay 8th highest in U.S.”)

• The size of the government workforce is exceedingly low. Indeed, at 41.4 public employees per 1,000 people, Nevada ranks 51st, the study discovered. “Higher relative workloads, should they exist, may lead to higher compensation levels,” the study said. Higher workloads? For government workers? Aren’t those numbers men funny?

The chamber’s conclusion is that public sector salaries are out of whack and, as Government Affairs Chairman Hugh Anderson put it, “right-sizing these numbers is a critical part of a long-term solution to expenditure reform.”

Really? Would the chamber folks argue that if a private sector company were paying its workers more but operating with fewer employees than a competitor, the company should cut those salaries? And does the chamber not conclude that the public sector here, clearly already strained by growth and woefully understaffed compared with other states, may actually be getting a bang for its big bucks?

It’s simpler to take a one-sided approach and suggest our tax money is being wasted on lazy bureaucrats and those teachers earning — wait for it — 93.5 percent of the national average!

I say pull the raises and tell them they ought to be happy they have jobs. And if they decide on layoffs, the good news from the study is we can’t possibly fall any lower when it comes to per capita government workers. And I’m sure the services — from local governments, from state government, in the classroom — will be wholly unaffected, too.

So all aboard the cutting train. Don’t get left behind when it departs Friday from Carson City.

Discussion: 31 comments so far…

By kennekra

6/25/08 at 7:26 a.m.

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This is another great example that you can do pretty much anything you want with numbers, and that with the right amount of "spin" you can frame the discussion how you want. What's worse is that very few people, including myself, even bothered to read the actual report.

Politics is all about telling someone why you are right and they are wrong. In this instance, it is that the Chamber wanted to paint State and Local (I also noticed that city and county employees were included - not just state employees employees are taking money from the taxpayer and it's not spent wisely.

This will be an interesting Special Session. I can't wait to see what levels of inaction our elected leaders rise to.
By nvnatv

6/25/08 at 8:01 a.m.

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The biggest problem with the Chamber's "analysis" is that it lumps state and local government workers together. City of Las Vegas, Clark County, Washoe County, and Reno (to name a few) have MUCH higher pay scales than state workers with the same jobs. Yet it is the COLAs for the state workers that are being targeted either for elimination of COLAs or elimination of pay raises.
By jfnance32

6/25/08 at 8:24 a.m.

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Where do I apply to get one of these jobs?

1) Higher Pay

2) Best golden retirement program in the state (not even one private plan comes close to it...Most of us will only get that tiny social security check)

3) Do not have to pay Social Security Tax

4) They get a subsidize private health care in retirement....all I will get is lousy Medicare and Medicaid
By Oliver07

6/25/08 at 8:33 a.m.

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Maybe its really the other side of the coin. Maybe our private sector employees get paid too little. Years ago the scenario being touted about Las Vegas was that work was so plentiful and good, even a maid could buy a house. When I moved here 8 years ago......I found out that unless you wanted to work for a casino.....it was hard to find a job that paid a wage that would allow you to pay the high rent/mortgage and still have a life. Maybe we should be looking at what private sector workers (both union & non-union and executive & "clerical") are making compared to the cost of living here.
By jfnance32

6/25/08 at 9:06 a.m.

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Let’s set the minimum wage to be $100,000 or even better we all can work for the state.

I think that was tried once, but I am not sure.
By Judy

6/25/08 at 10:38 a.m.

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It's a shame that Nevada again comes in 51st - lowest paid teachers in the country. Seems Nevada is oblivious to being embarrassed about our last place finishes in everything related to children and other things.
All of these whiners about public employees need to shut and and apply for a public job if they think they are so good. There are more high paid casino employees than state, local and city government employees.
I tend to believe the whiners don't work at all and only comment during commercials while Jerry Springer is on.
By jfnance32

6/25/08 at 11:42 a.m.

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Nevada is not 51st in teacher paid, especially if you include the super golden retirement plan that they have.

According to this in 2004, Nevada was 25th. http://www.census.gov/statab/ranks/rank2...

According to the NEA, Nevada was 25th in 2006. http://www.nea.org/edstats/RankFull06b.h...
By gopher

6/25/08 at 12:48 p.m.

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Public employees only have themselves to blame for this mess. Their admin folks cannot step up and provide data on how they set salaries, so the press run rampant with emotion. The difference in private sector is that they scrutinize and benchmark ad nauseum.

Don't start that "but we have to negotiate with the union" dribble either. It takes two to negotiate. If you walk in the room with no idea what your salary philosophy or benchmark position is, then any number is as good as any other. FYI - That goes for benefits as well. So enjoy the mess you created!
By BringtheRain

6/25/08 at 12:50 p.m.

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What about the cops and firemen? Nobody brings up how much they're paid.
By JohnF

6/25/08 at 2:14 p.m.

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Among your many outstanding columns, this one stands out, Jon.

This should be required reading for all legislators and especially for the Governor (assuming, of course, that he's learned how to read).
By jfnance32

6/25/08 at 2:20 p.m.

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In 2004, over half of the Clark County fire department have salaries that exceed $100,000 a year.

http://www.reviewjournal.com/lvrj_home/2...

I believe that most of them work 3 days on and 4 days off.

Most have 2nd jobs or side businesses.
By thebs

6/25/08 at 4:16 p.m.

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Nance, total pay is radically different than salary.

If you click on the pretty picture that accompanies that article that you cited, it shows what the average salary for each position was in 2004. Nowhere near $100,000. Another utter lie by Nance.

Take-home pay, which includes overtime and longevity pay, is what the R-J was reporting. There's a distinction. On average, every person working for the fire department took home over $14,000 in overtime in 2004. (8.5 million in overtime divided by the total number of department personnel reported by the R-J: 570)

But it's altogether unsurprising you're criticizing men and women who work overtime to protect our homes and property and who expect renumeration for risking their lives.
By jfnance32

6/25/08 at 4:47 p.m.

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Over half the department took home over $100,000 a year. HALF . ..not 2% or 15% or 25%......over 50%.......No wonder liberals love taxes so much. They have no clue when they see excessive cost when it is staring them right in face.

I bet there are a lot of taxpayers that give their right arm to achive $100,000 with or without OT.
By thebs

6/25/08 at 5:53 p.m.

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LOL, watch Nance backtrack. "Er, um, take home! Yeah, yeah, that's it!" It's sad when you don't even read the articles you cite, Nance.

You know, we'd hire more firefighters, thus negating the need for so much overtime, but since the Love Gov made his pinky swear to Chuck Muth, we have to live with the consequences and thus lack the budget to hire more.

You should be worried they're working so much overtime. Would you rather that they NOT work overtime? Are you proposing that firefighters only work their shift? Wouldn't that suck to have a house that caught on fire right around shift change?

And all your taxpayer friends that would "give their right arm?" They'd be willing to forego a limb, but won't fill out a job application for the fire department? I think you need new friends.
By jfnance32

6/25/08 at 6:38 p.m.

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Poor poor government workers....here are some other gems from that article.

"Clark County workers received an average annual pay increase of 7 percent between 1997 and 2002. Last year county administrators negotiated a 5.75 percent increase and considered it a victory. "

Wow 7% for 5 years!!!!!!!

"Just days before Commissioner Erin Kenny was to leave office, she called another meeting, sources said. During that meeting, Kenny tried to persuade her colleagues to be more generous with the firefighters, many of whom helped her campaign during her unsuccessful bid for lieutenant governor that year."

Your hero....Kenny.

Corruption and big government go hand and hand while at the same time trying to dig very hard into the taxpayer pocket.
By thebs

6/25/08 at 6:56 p.m.

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Nance, obviously you don't know me, because everyone who knows me knows how much I hate Erin Kenny.

She's the most cut-throat corrupt commissioner in Clark County history.

Again, just to reiterate what I told you yesterday, I'll quote myself from a Sun comment at 11 p.m., yesterday:

"Nance, politicians are all amoral egomaniacs, on both sides of the aisle. It's always a choice of the least corrupt and those more likely to uphold my values. I don't harbor the illusion that a perfect politician exists, and thus don't name a political "hero.""

Keep trying, kiddo. Hope you enjoyed the citation.
By jfnance32

6/25/08 at 6:58 p.m.

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This article talks about the next freight train that will cream Nevada taxpayers which is the unfunded liability for the state workers golden retirement program.

http://www.lasvegassun.com/news/2005/jul...

It says, “A report prepared for the state by Aon Consulting of San Francisco estimated in April that the unfunded liability over the next 30 years would total $1.75 billion to $4.44 billion”

To fund the liability they are estimating that they to raid taxpayers pockets for $119 million to $223 million a year.

Shhsss…shss…..a Democrat is whispering to their friends the need to raise taxes. Do you see them? They are hiding under some rocks.

But next year after the election, they will announce with great fanfare, “The sky is falling. We need to raise mega-taxes.”
By thebs

6/25/08 at 9:07 p.m.

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"Shhsss…shss…..a Democrat is whispering to their friends the need to raise taxes. Do you see them? They are hiding under some rocks."

The DSM IV-TR criteria for a positive diagnosis of schizophrenia include the following: delusions, hallucinations and disorganized speech. That paragraph is evidence of all three. You're hearing voices from inanimate rocks. I'm just sayin'...

I'll let you in on a secret: PERS has had unfunded liabilities for over 20 years. PERS was funded at a whopping 68% of it's liabilities in 1988. It's nothing new. In fact, if you look at the date on that article, it's from 2005. According to the last data released by PERS, they're currently funded at 82% of liabilities.

Way to be on the ball, sport.

In fact, the last time the Legislature took up the issue, in 2005, the legislature rejected Republican Governor Guinn's proposal to create a second class of public employee who would have restricted access to benefits.

So, "the next freight train?" Not quite. PERS has positive cash flow, as it's current employee contributions cover current liabilities. They also have the option of raising employee contributions by deferring raises into PERS. Also, PERS has a contributor to retiree ratio of 3-to-1.

Who's yapping about the sky falling... err, locomotive creaming? You.
By jfnance32

6/25/08 at 11:28 p.m.

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You are wrong.

PERS reports, “As of June 30, 2007, the most recent actuarial valuation, the System was 77.2% funded, compared to a funding level of 74.9% as of June 30, 2006”.

Nevada has one of the worst underfunded retirement programs for state governments. The 4% COLA will cause Pers to be more underfunded. It will be interesting to see what the unfunded rate is next June.

By law private companies are required to fund at the minimum 90% level. If it falls below 90% then the private company must contributed assets to the fund to get it above the 90% level.

What does the 77.2% underfunded number mean?

It is a guess. Someone is guessing on what the future cost providing retirement benefits to state employees will be and they are guessing what the future rate of return is on investment will be.

77.2% means that someone is guessing that at some point in time within the next 20 or 30 years that there will not be enough money in the fund to pay all the benefits to the retirees. At 77.2% there is almost a guarantee that this event will occur.

According to this article, http://www.gao.gov/archive/1996/he96056...., it says, “Moreover, if pension benefits are not fully funded, the fiscal burden of providing for them can grow quickly as a share of the budget under various circumstances.”

What this means is once you get behind then it becomes harder and harder to catch up.

The only thing that is saving Pers butt is that they are currently earning high rate of returns on investments.

Since Pers is grossly underfunded and all it would take is a significant recession to put in crisis mode.

Of course, when that happens the taxpayers will bail it out.

Funny but sad points:

1) Like usual, the government places a higher standard on private companies then themselves
2) Social security is a "pay as you go" system. It has no investment support. But Democrats scream bloody murder if someone suggests a tiny fraction of social security be investment driven. They should apply that same passion to all government retirement programs.

I believe that Nevada’s grossly underfunded retirement program will eventually cause a budget crisis much worse than the one that we are dealing with now.
By thebs

6/26/08 at 8:15 a.m.

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"77.2% means that someone is guessing that at some point in time within the next 20 or 30 years that there will not be enough money in the fund to pay all the benefits to the retirees. At 77.2% there is almost a guarantee that this event will occur." "The sky is falling! The sky is falling!"

Funny, cause PERS was only funded at 68% in 1988, 20 years ago, and yet PERS enjoys a higher funding of liabilities now, and still has positive cash flow.

The same bombast and posturing was being screamed in the legislature 20 years ago, and yet PERS is still there, still viable, still covering all of it's liabilities and then some.

If the unfunded liability is such a problem for you, you may want to question why Gibbons unilaterally cut out the $18.7 million in the 2007 budget that would have cut the unfunded portion by $800 million in the long term.

More fiscal irresponsibility by the Republicans.

So why does Gibbons want to destroy the lives of Nevada's public retirees?
By jfnance32

6/26/08 at 8:50 a.m.

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Why not let the fund get lower than 77.2%?

According to you it is no big deal.

Wow...I think you came up with the solution to budget problem.

Reduce the contributions from the state to the fund.

Good job, theBS!!!!!!
By thebs

6/26/08 at 9 a.m.

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Nance, google "tipping point" and try to figure out how it applies here. I'm not going to do the math for you. You wouldn't understand it, anyhow.

Your freight train just completely ran out of steam.
By jfnance32

6/26/08 at 9:35 a.m.

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Either you are right or you wrong.

Cannot have it both ways? You should not argue with yourself!

If you right then we should go to Carson and present the brilliant plan to save the budget problems by reducing contributions to PERS. If it can function OK at 68% then we can push down from 77.2%.

If you are wrong then it is a freight train that one day will slam into us. They will turn to hard working taxpayers who have social security retirement plans to fork up and pay up to bail out the state workers' golden retirement plans.

All it will take is a recessionary period that span over a year or so to make this weak fund go on life support.

I got an idea. How about making new state employess have 401k's for retirement and get Medicare when they retire?
By thebs

6/26/08 at 10 a.m.

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I'm not arguing with myself, I'm arguing with you. (That must be your schizophrenia talking, dude.) You're still unaware of what a tipping point is, or how it applies here... which doesn't surprise me, really.

It also doesn't surprise me that you believe the funding levels and obligations from 1988 are the same for 2008. Someone's stuck in the past.

You also fail to argue the point that PERS has positive cash flow and is continuing to meet its burden, contrary to your hysteria otherwise.

It's hilarious that you don't understand that you're doing the exact thing you prognosticate Democrats will do in the future: your awful freight train analogy is the same thing as the Chicken Little analogy.

No one is arguing that the state should fund PERS less... your boneheaded red herring and straw man. Funding PERS less will only lead to an increase in the unfunded obligation. Gibbons' choice to eliminate the $18.7 million in promised funds from the 2007 budget leads to an increase of $800 million in unfunded liability.

No one is arguing that the unfunded obligation is a good thing... another of your boneheaded red herrings.

Your freight train analogy, that unfunded obligations were going to wreak havoc in 20-30 years has been PROVEN false, as it's the same argument that was made 20 years ago, in a more dire financial situation and the system is still functional.

Just another loss for Nance.
By jfnance32

6/26/08 at 10:36 a.m.

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OK you win since now we have "positive cash" flow we need not worry about adding contributions to PERS any time soon.

I think Social Security is a "positive cash" flow scam...I mean system.
By thebs

6/26/08 at 10:53 a.m.

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While you're google-hunting for tipping point, try "cognitive dissonance" as well, Nance.
By DavidMorgan

6/26/08 at 11:32 a.m.

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Once again, huge fire and fury inside the house...but no one has a clue as to what it really ought to cost to be a state of the union. No 'inside' picture can be made sensible when the 'outside' picture is left to the guess-aholics.
By jfnance32

6/26/08 at 2:08 p.m.

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I notice the pyramid effect of the PERS system too.

As long as the number of new state employees is growing at an exponential rate then it will keep the contributions from the state growing at an exponential rate. If they ever hit a long period where the number of new government employees is relative flat then it will have a serious impact on the health of the fund.
By CybScryb

6/26/08 at 8:58 p.m.

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Not sure what I did wrong, but I took a 20% pay cut to move from a casino to my chosen field of higher education. As a state employee, I was able to chose the same 401k plan I had as a private sector employee and my insurance benefits are essentially the same.

I think that what we have here is a classic case of Mark Twains "lies, damn lies and statistics" at work.
By jfnance32

6/26/08 at 10:22 p.m.

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CybScryb, in your 401K the university is matching 100% of the 10.5% that you put in.

Holy Cow!!!!! The state is matching 10.5%!!!!!

I doubt that there is any private company in the state that matches at 10.5%.

Also, you are not paying Social security tax.

Also I believe your family either gets free or greatly reduced tuition rates.

In the long run because of the tax deferred nature of 401K and because of the compounding interest on that tax deferred matching funds, when you retire you will be miles ahead of the dude that took your old job in the casino.

I shed a tear for you tonight.
By thebs

6/27/08 at 9:35 a.m.

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Nance, you're merely proving how little you know about state workers and Nevada's retirement programs.

No, state workers do not pay social security tax. You may see that as a great benefit. But when they forego the social security tax, and earn a pension, they become ineligible to collect social security in most situations.

PERS is NOT a 401k. Nor are all state employees on the 10.5/10.5 matching contributions to their pension. There are two state retirement systems.

Under the first (EE/ER), the employee contributes 10.5% of their salary, and the state matches the contribution... to PERS. In the event of separation, the payout of their PERS retirement account is ONLY the 10.5% that they contributed. The state contributions remain in PERS. This is completely different from a 401k, in that with a 401k, once you are vested (typically 3-5 years) you can withdraw ALL funds, employee and employer contributions.

The second is the EPC, or Employer Pay Contribution in which the employee's salary is decreased by 20.5%, and that 20.5% is what is invested in PERS. Unlike EE/ER, if you separate from the State under EPC without hitting the retirement guidelines, your contributions are gone. You are not allowed to withdraw them.

The state offers a deferred compensation plan, but it is NOT a 401k, and there are NO matching funds.

Say, for example, a 45 year-old man, making a $45,000 base salary worked for the state for 14 years. Let's say the state went into a layoff period and his job disappeared when he was 59. He would have contributed $129,150 (with no raises) under the EPC plan and would LOSE IT ALL if he were laid off because he hadn't met the age guidelines, nor the time of service guidelines.

Under the EE/ER system, he would leave with a measly $65,000 after 14 years of service. Unlike the 401k, that money isn't invested while he's in state employ, so there's no ability for his contributions to grow. Factoring that in and inflation, he would lose even more.

Thus, the RISK inherent in and unique to the state retirement program, especially now that layoffs are a real possibility, negate your entire line of reasoning.