Written by Keegan Shepherd, Policy Coordinator for the Texas Pension Coalition
This is a part of the Texas Pension Coalition’s ongoing series highlighting the realities workers face during their careers and the subsequent impact on their retirement. While these profiles are based on fictional workers, the salaries, contributions, and cost of living data are all factual.
A common misconception with workplace issues is that the problems active employees face are completely separate from those endured by retired workers. In reality, the issues public employees face, especially when it comes to pay, have a direct bearing on their retirement security. If we want to ensure dignified retirements for all public employees, we also need to make sure they’re paid fairly right now.
Take Tania, for example. She is one of the nearly 37,000 employees of our state’s Health and Human Services Commission. Tania just started working as an entry-level custodian in Austin. The starting salary for this position can be below $20,000 per year and the position tops out under $35,000 per year, even after two promotional steps. In other words, Tania may start out at around $10 per hour, all while doing considerable work to keep other employees safe. Public employees like Tania haven’t received an across-the-board raise since 2015––and even then, this raise was to offset the rise in their pension contributions. This low pay for entry-level positions can have a tremendous impact when it comes to retirement security.
Low-wage public employees are put under considerable strain when asked to make their pension contributions. As a state employee, Tania contributes 9.5% of every monthly paycheck into her pension. Without her pension, Tania wouldn’t have the means to build long-term savings, but she is still cash strapped at the end of each month because her take-home pay isn’t enough. Quite simply, in a city like Austin, it’s impossible to rent even a one-bedroom apartment with Tania’s wages; in nearly every city in the state, Tania would have to settle for living conditions that are far from ideal. Without a living wage, Tania may feel like these savings are a burden or a nuisance rather than a way to ensure security down the line.
When public employees have low starting wages, they also have a lower chance of finishing with wages that actually reflect their years of service and effort––and that also has a direct impact on pensions. Even if Tania stays in this position and advances to one of the few managerial positions available, she’s still likely to receive a salary that’s much lower than what she needs and has earned. Because pension payments are based on an employee’s final salary range, workers who spend their careers in low-paying positions risk having a pension that doesn’t quite make ends meet. Although these pensions are nearly always going to offer more than a 401(k)-style plan, they also depend on our state employees receiving fair compensation for their work.
Workers like Tania are under additional pressure during the pandemic. Public sector custodial workers have a heightened responsibility to keep workspaces safe, so that essential business can continue in the state. Operating with little state-level guidance, our public custodial workers have been put into extremely hazardous conditions––all without any meaningful changes to their wages, healthcare, or retirement benefits, let alone personal protective equipment. Our state is depending on employees like Tania to keep operations running: they deserve wages and pensions that make ends meet.
Right now, our state’s Employee Retirement System (ERS) is in need of considerable legislative assistance. Without legislative action, our state employee pension system will run out of money in several decades––meaning new employees like Tania risk not receiving the pensions they’ve earned and deeply deserve. Our lawmakers have the ability to fix the chronic underfunding of ERS and ensure that it remains healthy, for both current retirees and those on the front lines of the pandemic. They also have the ability to ensure that our current public employees receive the compensation they deserve, not only for tackling COVID but also for committing to public service and keeping our state running.