HEADLINES : Massachusetts , New York
Public sector retirement benefits 337% greater than private sector
Retirement is a goal that employees in both the public and private sector work towards, but the difference between the retirement benefits in the two sectors is monumental. Government workers are getting better deals than employees in the private sector, and their pensions are partly paid for by taxpayers.
The state governments have been increasing the fringe benefits of their employees. As Bob Williams explains, this is because the government cannot afford the cost of employee union demands-often regarding retirement and health care benefits. State Budget Solutions found that heavily unionized government worker states, like California and New York, have the largest unfunded pensions and retiree health care.
According to the Bureau of Labor Statistics Databases, there is an increase in state and local government fringe benefits. Public employees are receiving pension and retirement benefits that are 337 percent greater than private sector employees. The cost of employee compensation, specifically retirement and savings, averages $0.97 per hour in the private sector. This is compared to the $3.27 per hour that public sector employees accrue.
New York and Massachusetts both illustrate the differences in retirement benefits between the public and private sectors. In New York, the Census Bureau recorded that the average private sector retiree was receiving an annual pension of $13,100 in 2009. State and local employees earned over twice as much in annual benefits, resulting in $27,600. For public sector retirees, this number is free of state and local taxes--a luxury that private employees don't have.
Massachusetts is running into the issue of potentially losing some of its municipal services because pension and health care benefits are increasing rapidly. The number of state employees with receiving $100,000 or more in pensions has increased to 20 percent in one year. Massachusetts's state pension fund has a current unfunded $4.9 billion guaranteed to current retirees.
Public sector employees across America are required to rely on their 401(k)--a benefit plan that might not be guaranteed. States across the country are having issues guaranteeing money to public sector retirees. That promised money is to be coming out of the pockets of state and local taxpayers.