Friday, Dec. 29, 2006 | When I publicly criticize government over-compensation of its employees, naturally such employees respond in an effort to rebut my points. Such give and take is essential in any debate.
Recently voiceofsandiego.org ran my letter on the two pensions that San Diego city non-safety employees receive, which combined can easily provide a pension payout equal to 120 percent to 175 percent of their highest salary. Two city employees wrote back to defend their situation.
Great! Let’s consider their arguments.
One letter from San Diego city employee S. Fein asserted that San Diego’s little-known second Supplemental Pension Savings Plan, or SPSP, was started to replace social security. A reminder – SPSP is a 401k-type plan, where the city employees contributions are matched dollar-for-dollar by the taxpayers, up to 6 percent of pay. This pension alone is substantially better than what 90 percent of private sector employees now receive.
Maybe replacing social security was the excuse for this SPSP giveaway, and it is the standard line from city bureaucrats when employees and the press ask about the plan. But the city was NOT required to set up a second pension in order to withdraw from the social security system.
In 1982, the city was able to get out of paying into social security because it had the regular defined benefit city pension plan already in place. Almost every city and county has chosen that route, opting out of social security. But there was no need for the city to start up the second SPSP pension program.
Think I’m making this up? Consider. The San Diego police and firemen have no second pension. The San Diego County employees have no second pension. Neither do the employees of Escondido, Poway, El Cajon, La Mesa, Oceanside, San Marcos, Vista, National City, or Chula Vista. Indeed, I don’t know of any other California government entity providing two pensions as does San Diego, including the state government itself. And none of these employees pay into social security.
Another letter from city employee L. Canning wrote that he “was actually chortling at Richard Rider’s assumption of 3 percent a year [pay increases].” He figures he gets far lower pay increases. Of course, “figure” is not the right word – he didn’t figure it out at all.
City employees get at least three types of pay increases, piled one on top of another:
1. Annual pay increases – often mislabeled “cost of living increases.” These are the increases that Canning doubtless is referring to, which indeed might not average 3 percent a year.
2. Step-rate increases. Funny how too many government employees seem to forget that they get step increases in their pay, based strictly on seniority – not on job performance. Such automatic step increases are rare in the private sector.
Perhaps they forget about these increases because they get them so quickly after taking a city job. Unlike step increases for teachers and federal employees, the city’s increases usually are all bunched in the first three years of holding the job, which works out better since one reaches higher pay levels much more quickly. These rapid, automatic step increases are based strictly on seniority, with job performance a nonfactor in each raise.
3. “Job title” increases. Many city employees move up the ladder. Not necessarily up into management, but into new job levels that reflect their experience and give them a new title. An example is moving up from a “Librarian I” to a “Librarian II.” In addition to being moved to a higher salary, this advancement restarts a whole new set of step rate increases.
Furthermore, often all city employees at a common initial job level move to the next level. For instance, there are 20 San Diego city employees holding “Fire Fighter I” positions, while over 400 hold “Fire Fighter II” positions. The difference is strictly time in service – the “I” job holders are the newbies hired in the past couple of years. Remember, our city employees get rapid step increases in each position.
Hence the reality is that city employees get significantly more than an average 3 percent total annual pay increase – I was being very conservative in my assumption.
There is a lesson in the above city employees’ responses – the city itself doesn’t tell its own employees how good they have it. For instance, they are told almost nothing about the fabulous SPSP 401k plan they have, fully matched by city funds.
By default, the only source of information for these employees is their labor union bosses, and they consistently tell the employees that they are getting screwed by a skinflint city and tightfisted taxpayers. As a result, after city employees retire, they usually are stunned to find how much extra pension money they get from the SPSP deal.
Think about it – what private employer would pay for great benefits, and then hide it from their employees? Such benefits are supposed to be used to get and retain employees. Not so in city government.
Knowledgeable city bureaucrats fully understand that if they publicize the great deal the employees get (including, of course, city bureaucrats and politicians) – high pay, TWO opulent pensions and gold-plated health care – the public might get wind of the ludicrous nature of this giveaway and call a halt. Hence “mum’s the word” in the city hall Human Resources department.
Bottom line? Be tolerant when you hear city employees lamenting their poverty – they really, honestly have no idea just how good they have it.
Richard Rider is chair of San Diego Tax Fighters.