"nationally, state and local workers earn on average $14 more per hour in wages and benefits than their private sector counterparts. A city like Buffalo has as many public workers as it did in 1950, even though it has lost half its population."
The problem here is that much of this "obligation" is in the future - paying workers 90% of their salary for the rest of their lives after they retire at age 50. This could mean some will receive these benefits for longer than they actually worked.
Unfortunately there isn't going to be enough population to support this payment structure.
Wisely the NY Times has decided that a growing state pension system like this is a problem - though you might question their timing or reasons...
I wonder if the reason is their own billion dollar debt?
That's right - billion with a "b" dollar debt - and revenue of $2.4 billion. I wonder if all of their pension obligations are fully realized in that public number.
Now, the newspaper business took a huge hit in 2008/2009 - ad revenue's dropping by 30% or more.
My business was hurt by this - my good friends at another large national newspaper simply stopped paying on their obligations. (They had an annual support contract which we allowed them to make payments on over the course of the year. In 2008 they just stopped one day - sorry, we have no revenue - we know we owe the money but we cannot pay.)
How about that from a $1.3 billion dollar enterprise. We're four (that's 4) decimal places smaller in terms of revenue compared to these guys - and we have to carry their freight...
Interestingly, calling up American Express or the power company and making the same claims won't work for me. Not that I wish it did or that I even would try.
Its the principle.
Politically in the US its hard to see how things will change going into 2011 - companies are expending cash only to make themselves more efficient. People and companies are afraid to commit to large capital expansions until the economy improves. Various eminent tax and non-business obligations (like new health care laws) make the future cloudy.
Businesses with large pension obligations, particularly underfunded pension obligations, are hurting bad. Carrying that kind of load can be difficult, particularly when your ad revenue drops 25% per year.
So, at least according to the NY Times, the long, wild debt party bus is starting to run out of gas. Sadly, my old friend print has been in the back seat all along with all her friends whooping it up the loudest - right there with her old friends from the newspaper business.
Pensioners of these companies take note of my experience and where the party bus is - your turn is coming.
Where will a company like the NY Times get the revenue it needs to support its retirees?
What will it do if it falls short?
Its kind of like the postal service. No one in the union twenty years ago really thought that the party bus would ever run out of gas - after all the economy, the need for postal service and printing, will just go on forever, right? But it has run out of gas and there doesn't seem to be a bright light at the end of the tunnel.
With the NY Times coming out against the public pension infrastructure it certainly seems like there are winds of change blowing. Perhaps they see the writing on their own wall - perhaps not.
I wish I had a pension for printing.... er, on second thought, maybe not.