JeffC...2 Wrote:
Oct 03, 2013 5:10 PM
Let's say a city employee can start collection a pension upon retirement after working 25 years for the city. (I think I read that's how Detroit does it.) Sticking with round numbers--let's say a 20-year-old gets a job--with pension--with the city trash department. In 25 years, he retires at age 45 and starts collecting his pension. Given raises over the years and that he only gets a percentage of his final paycheck, his pension is about what a new employee would get. The city replaces him with a new 20-year-old with the same pension benefits. The city is now paying for 2 people to do the job--the 45-year-old retiree and the new 20-year-old who actually does the job. In 25 years, that employee retires at age 45 and starts collecting his pension, so the city replaces him with a new 20-year-old with the same pension benefits. The city is now paying for 3 people to do the job--the original 70-year-old retiree (whom there's a good chance hasn't died yet), the 45-year-old retiree and the new 20-year-old who actually does the job. Assuming an average life span of 80 years, the city is spending 2.4x the current salary of a trash man for one man to collect the trash and the other two retirees to collect their pensions. (The ".4" is for the 10 years out of 25 years that the original employee will likely live before the current employee retires.) How long can a city sustain that across its entire government labor force?