“At this rate, I will have to work until I’m 62.”
- Greek protester, on National Public Radio.
Has the world gone crazy? Work until you’re 62? Most of us would be ecstatic to retire by then.
Many have seen their hopes of retiring at all disappear in recent years — along with the equity in their homes, their 401(k) accounts and, in some cases, their jobs.
Retire at 62? You’ve got to be kidding. How about just making it through the week?
It’s quotes like the one I heard on NPR one day that underscore how there are two different worlds out there regarding retirement. There’s the real world. And there’s another one where despite the biggest economic collapse in 80 years, people retire by 60, sometimes as early as 50, with pensions near or equal to 100 percent of their final salary, or more. And people in the other world — taxpayers — are on the hook to pay for the majority of it.
The general public has been given a peek inside that other world with the court-ordered release of Sonoma County pension information. And as we’ve noted in recent days, it’s not pretty. Ninety-eight county retirees are receiving pensions in excess of $100,000 including 29 who are bringing in more than $140,000 a year. Three are making more than $200,000.
But this only tells part of the story. The real story is the overall growth in salaries and benefits. As Staff Writer Brett Wilkison has reported, the average pension doled out to someone who retired in 2001 was $22,863. The average this year is $48,814 — an increase of 114 percent. Yes, the recent figure includes the income of retired Auditor-Controller-Treasurer Rod Dole, 59, who in 2009 was making $186,000 a year and somehow managed to step away with a pension of nearly $255,000 a year. (That is what you call one helluva “bump.”) But these averages also include those who retired after only five to 10 years of service and will be taking home 15 percent to 30 percent of their final salary — for life. Someone making $67,000, for example, would be entitled, under the county’s 3-percent-at-60 plan, to a pension of between $10,000 and $20,000. No, it’s probably not enough to live on. But these are people who likely have retirement income from past public and private employment, income that is not included in these averages. In addition, county employees also qualify for Social Security, which they have been paying into during their work years.
But this is just the story of the past 10 years. If you go back farther, total retirement payouts for the county, since 1993, have increased 534 percent.
If pensions continue to rise over the next decade at the same rate as the last one, the average payout for those who retire in 2021 will be $104,000 a year. Astounding.
Then there’s the other world, the one where unemployment has been hovering at or above 9 percent for two and a half years. Where one out of eight families in Sonoma County live in poverty — meaning less than $22,113 for a family of four. And where even for those who have a job, the situation is not good. Figures put out last week show wages are growing slower in Sonoma County than the rest of the nation as a whole and slower than all but one of the Bay Area counties. The average weekly wage was $846 in Sonoma County during the first quarter, up just 3.4 percent from a year earlier.
These two worlds are about to collide.
On Friday, the county Ad Hoc Committee on Pension Reform will issue its analysis of the issue. I expect the document will be informative, and there will be liberal use of words such as “alarming” when it’s reviewed by the Board of Supervisors. But, in the end, I doubt anything substantial will come of it. The same is true at the state level, where Gov. Jerry Brown said last week that he will be coming out with his plan for pension reform. Don’t expect much.
The real point of contact between these worlds will occur at the ballot box and, later, after the results are challenged, in the courts.
Last November, there were 11 different measures related to pension reform on ballots from Los Angeles to Redding. All but one passed.
Currently, there are six different state ballot initiatives in circulation concerning pension reform. One increases the minimum retirement age for public employees to 65. One limits pensions to 60 percent of an employee’s highest salary. Another eliminates collective bargaining rights for public employees altogether. Funding for these initiatives is in short supply, so it’s not clear which if any will qualify. But it’s a telling sign.
Similar signs are cropping up all over. On Aug. 30, voters in San Luis Obispo overwhelmingly approved two pension measures, including one that eliminated binding arbitration for police and firefighters, something Santa Rosa will be considering as part of its charter review. San Jose and Vallejo have also voted to eliminate or restrict binding arbitration.
Voters in Santa Rosa and possibly Sonoma County may be voting on their own pension measure a year from now.
This is why there’s a full-court press out there to have the public believe there’s no problem, that we can afford to continue funding these pensions. But to be successful, these pension-crisis-deniers will have to persuade the average Joe that there’s no connection between these generous benefits and the fact that the pothole out in front of his house is not getting fixed and half the streetlights on the block have been turned off.
It’s a tough sell, because there is a connection. And my guess is that when voters figure that out, everyone’s world is in for a change.
Paul Gullixson is editorial director for The Press Democrat. Email him at email@example.com. Or call him at 521-5282.