Q: What happens when two key Wisconsin wingnut values clash?

A: The more hateful one wins, of course

by folkbum

Today's topic: "double-dipping." The competing Wisconsin wingnut values: reflexive anti-tax advocacy vs. personal animus against gubmint workers.

Back in the olden days, when I used to be more involved in my union, we hated what the folks are now calling "double-dipping." This is when my (or any) school district would hire a retired individual to fill a job opening. The union's position was that this was artificially limiting opportunities for active union members and artificially keeping potential new union members out of a job. It worked out for the employees, though, because they could draw both a paycheck and their pension, and that was pretty sweet.

Republicans have finally come around to believe in this union-supported position, with legislators trying to ban the practice. Righty talk-show babblers--notably, Mark Belling--have been apoplectic over the issue for weeks. And the wingnut commentariat are out for blood against double-dippers.

There are two reasons why a school--and it's always schools, people, at least in the wingnut imagination--would hire a retiree to fill an open position. One is if there are no qualified applicants to fill the open spot. Better to have a retiree who knows what she's doing than a substitute (for classroom spots) or a novice administrator who would take too long to get up to speed.

The second is to save taxpayer money. It goes like this:

Say we have a teacher, let's call her Employee A. She's ready to retire. For the ease of math, let's say the cost of employing her is $100,000. She's got a $65,000 salary, with $35,000 in benefits, including a $20,000 health insurance package, pension (12% of salary), payroll taxes (8% of salary), and some other stuff like dental and life insurance. If she retires, she's eligible for retiree health insurance that covers, say, 2/3 of the cost of the plan, but that's the only taxpayer cost upon her retirement. (If she's old enough to qualify for Medicare, that cost may not even be there.)

Don't taxpayers pay her pension?, I hear you asking. True, we do, but we pay for her pension while she's working. No new tax dollars are required to pay her pension upon her retirement. It's already paid for; the money is there in the award-winning Wisconsin Retirement System, and she is paid from those funds already collected. (In their defense of double-dipping at the daily paper the other day, William J. Holahan and Charles O. Kroncke did a really crappy job explaining this, which is why you get letters to the editor from the wingnut contingent who insist that the pension payouts cost taxpayers in real time.)

So, cost of Employee A as she works: $100,000. Cost of Employee A when she retires: $13,000, for that retiree health insurance. There are two possible scenarios, and I'll call them, for the sake of convenience, Scenario 1 and Scenario 2.

In Scenario 1, Employee A retires and the district hires Employee B to take her place. B is likely younger and less experienced, so his cost to taxpayers is less. Let's say a salary of just $45,000 and benefits proportionally reduced to about $30,000. So his cost to taxpayers is $75,000. Throw in the cost of A's retirement health insurance, and the total cost now is up to $88,000. Yippee! The district is saving $12,000 over the cost of paying just A while she was working.

In Scenario 2, Employee A retires but gets hired back at her old salary. That's $65,000, plus some payroll taxes (about $5,000) and the retiree health insurance. But nothing else--because she's retired, she gets none of the other benefits of being an employee--no pension contributions, no sick days, no dental or life insurance. That's a grand total of $83,000--for a savings of $17,000 over pre-retirement, and an additional savings over hiring a new guy as her replacement. Yippee times two!

Indeed, when you look at an actual case, not just numbers made up for the sake of easy math, this is what you get--savings. North Lake, a subject of that article, is one district Belling was on about lately, yet the administrators of the district note that the one "double-dipper" saves money: Her "compensation package--$58,746 in all--was less expensive than a new teacher's would have been"--and $16,000 less than what North Lake says a new hire would cost. The same is true for the spark that lit this thing, the administrator up in Green Bay. Unless the person they hired to replace him got 2/3 or less of the first guy's salary--unlikely, let's be honest there--paying him his salary but not any bennies saves UW-GB money.

Now in Used-to-be-Land, Republicans and wingnuts liked saving taxpayer money. Word is they still do. But you know what impulse is stronger? Hating public employees. So rather than embrace the position that saves money, they look at the situation and all they see is public employees--those god-damned teachers--taking both a salary and a pension at the same time and they can't stand it. It is much better, in wingnut-land Wisconsin, to hate on the public employee than to celebrate the tax savings.

Remember, opposing this double-dipping is a union position from way back. If Republicans are coming around to it, it can only be because their spite is so strong.

More on my Deferred Compensation Battle

The post I wrote the other day facetiously comparing pensions and retiree health care to Dick Cheney's deferred compensation--but making a serious point about how public sector employees should not be quite the targets they are--has itself been a target. the Milwaukee Journal Sentinel's Patrick McIlheran, whose post inspired that compensation rant, graciously defers (get it?) to Dad29 to do the dirty work.

Dad29, on his way to becoming my own stalker, perhaps, tries to show that, compared to others, teachers don't have it so bad in the pay department. Therefore (he implies) I should just shut my trap when conservatives demand we--or other public employees--give up the benefits we have leaglly baragined for. He even throws in the old "all those other folks work 12 months a year" just so you know he's original.

Of course, I never said I wanted more pay. I said, in fact, that people like me have voluntarily chosen less pay in exchange for, essentially, deferred compensation--penisons and health care upon retirement. He also notes, helpfully, that average pay for all workers in Wisconsin shot up 10% between 2002 and 2005--considerably more than teacher pay rose in that time.

Rick Esenberg, in comments to that original post, complains that the burden of pensions and retiree health care is too great and, he says, way better than what your average bear retires on. This means--again, implied--that our benfits need to be trimmed, rather than health care needing to be cheaper or everyone else's retirement needing to be sweeter. (I love it when someone complains about how good I have it. Why, I ask them, are you complaining about mine? Sounds like you should be complaining about yours.)

But not everyone is complaining. Jim McGuigan revises and extends my remarks:

To expand on his argument, there is no 401-K and no profit sharing plan public sector employees can enjoy. The GOP isn’t really too stupid to be able to figure that out, they just don’t have the little guy in mind with any of their policies. That’s why they support tax cuts for the wealthy and don’t bat an eye at multi-million dollar executive compensation packages that are hundreds of times the salary of some of their employees.

Deferred compensation and pensions are ways for companies to meet todays needs while allowing the company the ability to use its capital to grow the business now. Public pension plans are a little different in that if they do especially well with investments, the government entity is not allowed to draw any excess from them to pay for existing expenses.

Thanks, Jim.

And, perhaps most surprising of all, Republican extraordinaire Deb Jordhal steps up for me:

A pension is not a gift from employer to employee; it is part of an employee's overall compensation package, and when employment terminates, the pension belongs to the employee. Any attempt by the legislature to seize that property is not likely hold up in court, especially if it’s done retroactively.

Let's remember that, people, as the demands to wring public employees trying to solve bigger budget mismanagement problems keep coming.

McIlheran Watch: Republicans want to steal my deferred compensation

I like it when Patrick McIlheran blogs a lot, as it gives me so much more material. If I get time, you'll see another one yet tonight.

As prelude, consider this: I am a public school teacher. That means that, depending on your perspective, I am either woefully underpaid or I have Cadillac fringe benefits that I don't deserve.

Actually, both of those are accurate.

Thing is, I consider myself to be just like Dick Cheney. See, Cheney once worked for a tiny little outfit called Halliburton, and during his time there, he negotiated a compensation package that not only paid him handsomely while there, but continues to pay him to this day. It's a good deal for both Halliburton (tax incentives and whatnot) and Cheney, who is now able to enjoy his retirement without concern for his future financial needs.

But, Jay, you may be asking, how is that like you at all? Simple: As a public school teacher, I, too, have chosen a package that includes deferred compensation. In fact, most public employees have.

We just don't call it that.

Here's McIlheran, complaining about Milwaukee County:

As [County Executive (and Big Brother) Scott Walker] has pointed out earlier, after it makes its payroll, the county has another huge bill, another 70% or so added on, to cover benefits. That rate, he says, is “Staggering. Nationally, the private sector is under 30% and state and local governments are under 33%.”

The Journal Sentinel’s Avrum Lank and Dave Umhoeffer covered this in detail. Read it if you haven’t; it says exactly what has gone wrong that we don’t have money to keep up parks or bus lines. The reason is that we’re paying, still, for work done long ago [. . .]. The reason the county is having the raise bus fares and talk about cutting service is because it is paying people splendid benefits not merely to drive buses — but to have driven buses once upon a time.

One of the nice things about living in a capitalist society is the ability of workers to organize and bargain for a compensation package that suits them best (management also gets a stake; that's why they call it bargaining). Public employee unions long ago figured out that demanding high salaries was pointless--and too expensive for employers concerned with the other costs of maintaining government services--and so they opted for something besides salary: namely, benefits, including retirement benefits like pensions and health care.

This is not significantly different from unions in other sectors did, sure. Other sectors, though, have been able to maintain salary increases at a much better pace than public unions have.

As the costs of (retirement and non-) health care and pensions increased, unions traded a maintenence of those benefits for potential salary increases. Teachers like me, for example, have seen wage increases below inflation (.pdf) and, even when not below inflation, below the increases seen in other sectors (a fact acknowledged even by the anti-union WPRI in this .pdf report). Teachers in Wisconsin have not just fallen in salary compared to other workers, but also to teachers in other states: Fifteen years ago, we were in the top third; now we're in the bottom half. This is again due to our being willing to take lower salary in exchange for benefits in the Midwest's most expensive state for health care. Bus drivers, too, apparently aren't raking it in, either.

But the non-retiree benefits aren't the subject of this post, or of McIlheran's rant (it does, indeed, take one to know one). The subject is the pay that I'm not getting now that I expect to receive when I retire--in the form of a pension and health benefis. What I want to know is, why is my deferred compensation--which I bargained for and agreed to lower current wages in exchange for--different from Dick Cheney's--which he bargained for and agreed to take lower salary in exchange for?

Republicans bristle at the suggestion that Cheney should give up the money he's getting from Halliburton, especially now that we're at war and Halliburton is getting mucho contracto federales (I know, I've sugested it at Republican blogs before). But Republicans like McIlheran--and, to pick just one more example, Brian Fraley--have no compunction at suggesting that public employees surrender their deferred compensation.

But, I can hear them objecting, Cheney's not being paid his deferred compensation by taxpayers! Oh, really? How many billions in contracts is Halliburton getting from the feds this year?

I'll pony up here and admit that I'm at least somewhat facetious. But I do regularly wonder why those who extol the virtues of the free market complain about those of us who have used market principles and a technique--deferred compensation--that doesn't even merit a raised eyebrow in the private sector.

I'm not saying that the public sector isn't headed for trouble when deferred compensation starts coming due. And, as usual, I could recommend some fixes, like a national health-care policy that brings per capita health care costs down significantly. (The Republican agenda, sadly, is not even close.) I can't fix everything from here at my laptop. All I can do is speak up when spoken about.