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Hallelujah Christie



February 12, 2010 – Comments (10)

I am reading a post by Mish which outlines the cuts that Christie has order for New Jersey.

This is part of Christie's speech that got my attention:

One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits -- a total of $3.8m on a $120,000 investment. Is that fair?

A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it “fair” for all of us and our children to have to pay for this excess?

 I have gone on that people will complain about their pensions -- that they paid for them -- but my analysis of the numbers have never shown that to be true.  The examples here are much further out then any numbers I have worked with.

Pensions are not supposed to be welfare programs without means tests, and that kind of unpaid for supplement is insane.  I think of a pension plan as something that is paid for and welfare as getting something for nothing.

The only reason pensions have worked for as long as they have is the pyramid nature of demographics, not many collection, many paying in.


10 Comments – Post Your Own

#1) On February 12, 2010 at 2:20 AM, ikkyu2 (98.05) wrote:

Teachers take a fairly low salary; one of the reasons, I think, is that the benefits are valuable to them.  Quite valuable, as these numbers point out.

In the case of teachers I do not have many qualms about compensating them in a way that reflects their true value to society.  Someone who teaches well for 30 years has added far more value to society than $3.3 million dollars, because that teacher's students are able to do more and do it better.

It seems particularly insane to consider that a person spends a life in service to society this way, and then they are left in their old years to rot in poverty and suffer needlessly from correctable medical disease.  Can't say I'd get behind that.  Would rather get behind paying more taxes to make up the shortfall.

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#2) On February 12, 2010 at 7:57 AM, cthomas1017 (98.45) wrote:

Is there anyone other than me that considers that the reason teachers take "a fairly low salary" is because the greatest reward is working with children and seeing the grow? 

Ask any young person choosing to go into the profession as they leave high school.  I have and not one of them have said, "Because the benefits are great." 

dwot, I agree with your post but take exception that pensions should ever have means tests.  A pension is a contract, and I would consider any contract that has a means test at some future date to be a contract not worth signing.

And for the record, I have yet to witness any career teacher that has been "left in their old years to rot in poverty".  When this kind of falsehood gets interjected into the discussion, the person loses complete credibility.  For those less in tune with the tactic, the emotional drag on the heartstrings wins.  The only problem is that the "argument" is still false.

The compensation in teaching is not monetary.  We have made a grave mistake in turning the profession of teaching into a career.  There is a difference.

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#3) On February 12, 2010 at 7:59 AM, cthomas1017 (98.45) wrote:

I wish there were an "edit post" feature in CAPS.  Reading my post above would make one suspicious that my teachers did not earn their pay nor their benefits.  My apologies.

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#4) On February 12, 2010 at 8:26 AM, russiangambit (28.92) wrote:

#2  - may be not in a case for many of the teachers, but I met a lot of people who choose to work for the government because of benefits and job safety compared to the prviate sector even though the salary itself is low.

I agree, the real approach to pension calculation would be to figure out how much income was given up in lower salaries compared to public sector and then compare to pensions.

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#5) On February 12, 2010 at 8:40 AM, Farous (< 20) wrote:

Nice post. And good comment CThomas, I agree wholeheartedly.

As someone who once worked in education I can tell you that while the focus on educational waste is always centered upon teachers (and yes I'll be the first to admit there are some bad, lazy teachers out there) where I think most of the real waste is at the administrative level.

Administrators (Vice Principles, Advisers, Principles, etc) get paid high 5 figures or well into the 6 figure salary range. This is comparable to salaries for doctors and pharmacists. Now if they are truly doing great and wonderful things for society I have no problem with that. However, it has been my overwhelming experience that the vast majority of administrators do precious little for the school and spend most of their time locked up in an office away from the "front lines" of the classroom.

Yet they are paid double, triple sometimes even quadruple the amount of regular teachers. This I find very unfair although it hardly gets mentioned.

And if you REALLY wanna talk about waste: try going into a poor, inner city school district. I guarantee you these administrators are making 6 figure salaries while the school is a disaster and kids have broken computers in the classroom that don't work and not enough books to go around.

To be perfectly fair it's probably not their fault the school's shape is what it is , but then again, if they are unable to dramatically improve the situation what on earth is the point of paying them doctor-like salaries??

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#6) On February 12, 2010 at 8:51 AM, Farous (< 20) wrote:

Yes very true teaching may not give you a great salary at the outset but where else could you find the security that tenure gives you?

Automatic pay increases, job security, benefits for you and your family, lots of holiday time and ever see a teacher salary chart? The pay starts increasing dramatically the longer  you work I know some districts where veteran teachers with a Masters make close to 100K.

Yes they had to work many years to get this but again name a profession where you could make close to 100K, get full benefits for you and your family AND have the guarantee of job security that with tenure it's almost impossible to get fired?

 Especially in these times where even many lawyers are having trouble finding work, the lure of security, iron clad pay raises and ample vacation time is not unattractive. Again not for everyone, (and if I had my way I think the starting pay for teachers should be increased at the expense of lowering the  pay scale at the very high end...and perhaps a few administrators, see above) but it's not the woeful, mired in poverty profession that some make it out to be either.


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#7) On February 12, 2010 at 9:10 AM, weg915 (< 20) wrote:

It all depends on when you got in. 

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#8) On February 12, 2010 at 9:35 AM, Melaschasm (71.34) wrote:

Pensions are just a contract that shifts pay earned now, but recieved in the future.

The problem with pensions is that they are not funded at the time they are earned.  For a typical 30 year pension, 1/30 of the value of the future payout should be set aside each year. 

Since pensions are set up like a ponzi scheme, both the people earning the pension and those paying for the pension are going to suffer greatly when the bill is due.  An obvious example of this is the US auto industry.  A big chunk of the problems they are facing right now is that huge pensions were offered to workers, but no money was set aside to pay those pensions in the future.  Now that the pensions are being collected, there is not enough money to fund them, resulting in the current mess.

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#9) On February 12, 2010 at 9:41 AM, russiangambit (28.92) wrote:

#8 -  agree, it is somewhat similar to stock options. Both  future pension obligations and stock options should be brought on the books.

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#10) On February 12, 2010 at 12:36 PM, TheClub55 (< 20) wrote:

The average salary for teachers is not all that low, slight over 40k per year, not including the crazy benifits package.  Then consider they have 2-3 of summer vacation and all school year holidays (bascally they only work 2/3 of the year).  We need to end the myth teacher are underpaid, its just not true. 

And I agree w/ russiangambit, that all costs need to be put on the books and funded with current dollars.  No more ponzi-ish defined benifit pensions, they must be definded contrubution or 401 (like) and fully funded.


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