The boring stuff: government job pensions | Boring but an obligation that overwhelms many governments

San Diego went bankrupt over pension liabilities.  Chicago keeps doing budgetary dancing wrt their pension liabilities ("Chicago's Pension Debt Decreases $1.3B in 2024 to $35.9B," WTTW, "A new bill would force Chicago Public Schools to pay into municipal retirement fund," Chalkbeat), as does the State of Illinois.  As part of getting DC out of bankruptcy, the federal government took over the city's pension obligations.  Etc.

To get away with not necessarily paying market rate wages for jobs, government agencies have provided good benefits packages including lifetime pensions.  But mostly cities never put away enough money to cover fully these obligations and now pension overhang is a serious problem in many cities ("What a $1.48 trillion pension gap means for cities and states," SmartCities Dive).

Oddly, Philadelphia, not known for being best practice in municipal management, is on track to have its pension obligations fully funded ("A decade ago, Philly’s pension fund looked like it could sink the city. Now it’s on pace to be fully funded by 2032," Philadelphia Inquirer).

A decade ago, the pension fund was only 45% funded and appeared to pose a significant threat to the city’s fiscal health. But a series of reforms carried about by successive mayors, state and city legislators, and municipal labor leaders have fostered a remarkable turnaround.

The city’s pension system pays for retirement benefits for city workers. Benefits vary based on when employees were hired. About 35,000 people are currently receiving benefits, according to the pension board’s most recent newsletter. That includes retirees, their beneficiaries, and disability claimants.

“The fiscal health of the Pension Fund continues its relentless upward climb since many reforms were put in place 10 years ago,” Brady, who sits on the city Board of Pensions and Retirement, said in a statement. “We’ve made smart investments, doubled our assets, reduced investment manager fees — resulting in a large reduction of the overall liability for taxpayers."

The reforms included increasing annual contributions from the city budget to the pension fund beyond the minimum amount required by state law; negotiating union contracts with higher employee retirement contributions; moving away from high-fee investment managers; and dedicating revenue from a 1% sales tax in Philadelphia to the pension fund.

Basically, they used all the tools at their disposal to make it work.  They made it a priority.  And the priority stayed a priority even as Mayoral administrations changed.

How to incentivize better police conduct: pay settlements out of police officer pension funds

Yes, police officers and other emergency workers put their lives at risk. This is often used as a justification for particularly generous pensions and retirement policies ("Amid Funding Shortfall, Lawmakers OK Pension Boost for Cops, Firefighters," New Jersey Spotlight; "Frosting on an already-sweet pension deal," Orange County Register)

In the previous post, "Where is the risk management approach to police misconduct and regularized killings of citizens?," I forgot to mention my idea on how to "better align incentives for optimal police officer conduct" by making police officer pension funds responsible for paying out settlements for police misconduct, and concomitantly reducing pension payouts as required.

Granted, that comes at the expense of already retired officers, but then again, what better way to align incentives?

Then again, in the heat of the moment, a police officer isn't likely to think about his pension or the pensions of fellow and retired officers.

OTOH, police unions would likely agree to significant changes in training.

For example, in the UK, police officers have to get special training and ongoing certification in order to carry a gun, and it is a much more difficult and involved process compared to US police training requirements. From the wikipedia entry on Authorized Firearms Officers:

Candidates are required to gain approval from their superiors before embarking on a series of interviews, psychological and physical fitness tests, medical examinations and assessment days, before permission to commence firearms training is given. There is no guarantee of success; candidates can be returned to their previous role at any point in training if they do not meet the required standard.

Once authorised, AFOs must pass regular refresher training and retests in order to maintain their authorisation. Failure to meet the required standards can result in the officer having their firearms authorisation revoked. Health or fitness problems can also result in temporary or permanent suspension from firearms duties.

Imagine if US police officers had similar requirements. Although, like with the recent incident in Minneapolis, and past incidents in New York City, Baltimore, and others, people can be killed by use of force other than a gun.

Labor Day

I don't have the time to write a detailed post doing this topic justice, but here are some issues to think about.  Also see "At last, workers are pushing back" and "If Labor Dies, What's Next?" by Harold Myerson.

-- Wage inequality, and the impact of inequality on a consumption-based economy.

- US Economics: Inequality and Consumption, Morgan Stanley

-- Various minimum wage initiatives at the city and county level across the country.

- Campaigns | Raise The Minimum Wage

-- The state of labor unions as a potential check on inequality, power, relationships to progressive urban policy agendas, and the negative impact at times of police unions on crime and public safety policy.

-- For cities and states, the pension and health insurance cost "crisis."

- The pension crisis in Chicago and Illinois, Chicago Tribune

-- The "Gig" or "independent-contractor"/consultant based economy and how this puts more responsibility for risk onto the individual.

- Risk Shift and the Gig Economy, Economic Policy Institute

-- The New York Times published a piece on Friday about labor-related art. "Take a Labor Day Tour of Blue-Collar Art" in the New York region and earlier in the summer, about labor-related poster art in an exhibit at the New-York Historical Society, in "Seeing the Power of Political Posters."