by Clyde Weiss | May 04, 2012
In an article published in Truthout, Baker contends that these politicians are “using heaping doses of the politics of envy to try to arouse the anger of workers” in the private sector.
How do they do this? Baker says these politicians – and the right-wing economics they rely on – add the value of a pension over time to inflate the current compensation they say these public service workers are getting. In other words, they contend that $1,000 placed by a government employer into a defined-benefit pension today is worth close to $2,000 over time because the employer guarantees the investment return. That, they argue, would make a pension worth more than a 401 (k)-style private investment account.
Yet, Baker notes, the folks who claim today that public pensions are too rich are the same folks who worked hard “to eliminate traditional pensions in the private sector” by pointing to the higher returns that could be made through a private 401(k)-type account. Of this contradiction, Baker writes:
“When we were talking about cutting back protections for hundreds of millions of workers and their families, we were not supposed to take into account the value of a guaranteed benefit. Now that we are talking about cutting the pay of public-sector workers, it is essential to include the value of the guarantee in the calculation. Is it any wonder that so many people have contempt for economists?”
Read more about public pension truths here. Also, check out this letter from AFSCME Pres. Gerald W. McEntee correcting untruths about public worker compensation.