New Teachers and Graduates out of Work to Fund Obscene Pensions

by Darwin on May 23, 2010

There were two articles in the New York Times that had some related themes if you connect the dots.  Primarily, the themes focused around the total lack of employment prospects for teachers entering the workforce this year and likely for years to come (Teachers Facing Weakest Market in Years) and the second article involved the exorbitant pensions of public workers and how they’re impacting budgets because they’ve been exploiting the system for years (Padded Pensions Add to New York Fiscal Woes).  I’m including some of the most egregious examples and key points, but in essence, this is all interconnected and here’s the theme:

Current and soon-to-be retirees are completely usurping public funds at the expense of new hires and needed services.  You are trading rich pensions for just 20 years of work so that your city can lay off teachers.  Is this the direction we should be headed?  It’s a race to the bottom.  Here are the dots to connect:

  • Grant absurdly generous pensions to public workers like police, firefighters, teachers, other public workers (administrative as well).
  • Allow pension calculations to be based upon the last few years’ pay, so employees can game the system and rack up overtime so their pensions are even higher than their base pay was at retirement.
  • These pension promises are so burdensome to cities, states and the federal government that other essential services and jobs are NOT created and are in fact cut.
  • This is a massive shift of income from college graduates entering the workforce to retirees, from our future to our past.

If you think this summary is abrasive or oversimplifying the situation, here are some direct examples:

“…In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year.”

“…The use of public money for outsize retirement pay really stings when budgets don’t balance, teachers are being laid off, furloughs are being planned and everything from poison-control centers to Alzheimer’s day care is being cut, as is happening in New York.”

“…Thirteen New York City police officers recently retired at age 40 with pensions above $100,000 a year; nine did so in their 30s.”

“…“The system encourages police to take as much overtime as they can in the last year before retirement. That’s the way the system is structured,” he said. “There’s nothing illegal or unethical about this.””

Seriously?  That’s not unethical?  Just because it’s legal doesn’t mean it’s not messed up.  This just shows the prevailing attitude of public employees and union bosses fleecing America.  Just like the growing trend of Strategic Defaults creates no ethical quandaries for people these days?

Now, of course, there’s the retort that firefighters and policemen are risking their lives and you can’t put a price on that, etc.  No doubt, these are hazardous and commendable career choices.  But there needs to be a reasonable cost associated with employing them.  By this argument, why not pay all police and firefighters $1Million per year?  What’s the difference?  If you can’t put a price on it?  All services and roles, no matter how noble or dangerous need to be rationed – this ensures you can maintain a reasonable level of employment and replace retiring employees with new ones as needed.

If you think this is a New York issue, you’re mistaken.  This is occurring throughout the entire country and likely in your town.  And we’re all going to have to pay for it eventually in the form of higher taxes, lower services (you know, the new police, firefighters and teachers to replace the ones retiring with these rich pensions?), and a future debt load that will massively burden our children even further.

Disclosure: I have nothing against these professions individually.  My wife’s a teacher after all and I’ve seen the hours of work she takes home at night and how vested she is in the interests of children.  But this situation is untenable.  We are becoming Greece.

{ 4 comments… read them below or add one }

Financial Samurai May 23, 2010 at 11:04 am

It’s just the way of the world. We can’t blame police officers for wanting to make as much money as possible. It’s a dangerous job they signed up for.

We should definitely, DEFINITELY increase funding for teachers though by cutting our military budget. It’s a joke! The kids are our future.


Matt SF May 23, 2010 at 11:08 am

I know I’m generalizing, perhaps wrongly so, but how severe are the entitlement issues of our country when many in the masses think you are entitled to take out $2 (or more) for every $1 you put in.

I get that everyone is “tryin to get mine”, but collectively, the idea is a disease and it will sink the ship if not corrected. Personally, I think these guys should be made an example of and have their pensions reduced to reflect correct parameters.


Jason @ MyMoneyMinute May 23, 2010 at 11:44 am

I’m not so mad at the individuals taking advantage of the cards dealt, I’m more upset at the dealer. Fine if you want to “reward” retirees with a pension above their salary, but average their last 5 years of pay instead of the last year of pay. This rewards the those that routinely work longer. Or just base pension off base salary instead of OT worked if you don’t want to deal with it.

Also, fine if you want to retire at 40 after 20yrs, but you receive a smaller percentage pension. If you want the full pension, work until you’re 55 as a cop or firefighter, or 60-65 as a teacher.

OR get rid of pensions and just provide a 401k program, so the burden (and empowerment) of retirement is put in the individual’s hands.


Darwin May 24, 2010 at 9:54 pm

There’s no reason in this country or any other, we need to treat public employees with extra-special compensation, especially when it’s on the taxpayer’s dime. While private sector employees are seeing flat (no) raises or even reductions in salary year over year, public sector unions continue to operate in a vacuum.

Why not switch to 401(k)/403(b), etc type plans? There’s no reason why we have to allow people to retire and live off the public teet for life.

Look, I’m not contesting the hard and courageous people in this country do, but there’s gotta be some reasonable limits and budgeting reality. Life expectancy is high. Health care costs are soaring. States are broke. The whole system’s going to shit while “I’m gonna get mine” is still the mantra at the negotiating table. Granted, that’s the reason said union leader has the position – it then falls upon the elected officials legislating and negotiating contracts to do the right thing by the taxpayer instead of kicking the can down the road. What we’re doing now is clearly unsustainable, but very few have the courage to take it on.


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