Having a reasonable and reliable income for life after decades of employment is a dream and a wish for many workers. For hundreds of thousands of public employees, it’s guaranteed. Public employees have strong unions (typically much stronger currently than any trade in the private sector) that negotiate quality-of-life salary and benefit provisions. In addition, multiple studies have found that public employees make more than their relative private-sector counterparts. Federal employees have been found to have the highest discrepancy while local municipal workers earn modestly more, depending on which study one relies on.
The argument always goes back to the earning potential, which in private industry is exponential compared to the public sector. That’s a conventional assessment, but the facts in real-life comparison routinely don’t match up. While public employees may ask, what’s stopping private-sector workers from joining the ranks of the public sector? Well, talk to anyone who applied, with proper experience, for a public position and didn’t even get a call back, much less make the final cut. There are plenty.
There is a perceivable exclusivity to public-sector employment, along with strong unions that fund campaigns and lobby politicians to create laws to protect their jobs and benefits and enable job security. Given that reality, it is no wonder that taxpayer watchdog groups are pushing back on what private citizens must guarantee to such employees.
On March 4, the California Supreme Court ruled against the so-called California Rule that allowed public employees, in this case, firefighters, to buy credits, or “airtime,” toward years of service (up to five years) to pad their retirement benefits. This case stems from the 2012 pension reform law championed by then-Gov. Jerry Brown in an attempt to scale back unfunded pension liabilities. The California Rule essentially mandates that “when the Legislature takes away a vested pension right from an employee, it must exchange it for something of comparable value.”
For the California Supreme Court’s decision, the justices concluded “unlike core pension rights, the opportunity to purchase ARS credit was not granted to public employees as deferred compensation for their work, and here we find no other basis for concluding that the opportunity to purchase ARS credit is protected by the contract clause.” This ruling did not include the future application of the rule in general and its legality and it didn’t change pension benefits of those who already bought airtime. In this case, firefighters argued that there wasn’t another similar opportunity to replace the airtime opportunity. We can think of one: Work those years instead of buying them. If disabled from work, other benefits do come into play.
It’s hard to imagine any and all private-sector employees, as it relates to this case, being able to negotiate a lifetime of increased retirement benefits for years not worked in exchange for a fee. Public union employees may argue public pensions can’t be compared to private-sector agreements, stating it’s contract law. To which we counter: Walk a mile in a private employee’s shoes and see just how low that glass ceiling is on income and retirement benefit opportunities for the same or similar work.
Though this particular case may be done, the California Rule as it applies to pension rights overall is still being weighed in other cases to come before the California Supreme Court, and what happens in California sets the precedent nationwide. We will be waiting to see how the court rules.
In California, income inequality continues to worsen while too many rely solely on the nominal benefits of social security to get by. We see increased poverty as the homeless rate continues to escalate and more people die of substance abuse and suicide. It’s hard to imagine the privilege of public employees being able to boost their retirement benefits while the average person struggles to pay their monthly rent — and saving for retirement doesn’t even come into play. When it comes to public service, there is no amount of money that can buy compassion for the plight of the people those employees serve and rely on for their salaries. It’s an unsettling juxtaposition.