Monday, February 02, 2015

Penalizing low wage workers

The most right wing city government in our lifetime has already obliterated the traditional civil service wall between politics and service delivery.  Now they are moving on employee pensions.  Like any right wing outfit, they'll tell you they're operating out of a sense of fiscal responsibility, but really they are about punishing people for not being wealthy enough
The actuary said Social Security integration could be appropriate, but it wouldn't save the city much money and it would penalize low-wage workers.

The city, like any private employer, pays for half of a worker's Social Security costs, so it's not unreasonable for the city to deduct those contributions from an employee's pension package, the actuary said, but doing so would represent a "radical change" in the plan's structure. It might not be legal to apply it to current employees, he said.

The actuary also noted that Social Security's benefits are proportionately more generous at the low end of the wage scale, so the workers who benefit most from the current system are those at the bottom rung of the employment ladder. If pension benefits were reduced as a function of Social Security payments, as Head's scenario would do, low-paid workers would take the biggest hit.

The move also would provide relatively little budget relief, according to his analysis. The most aggressive of Head's scenarios would apply Social Security integration to all employees with less than 15 years service. That would improve the fund balance by .3 percent and save the city $1.5 million in 2014, and more over time as the share of employees covered by the new plan increased.

Not sure if Stacy Head actually cares about saving the city money as much as she cares about penalizing low wage workers so you can see why she likes this option.

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