In the years following the Great Recession of 2007-2009, billionaire-backed opponents of defined-benefit pensions presented a reasonably straightforward case. The financial crisis sent equities tumbling, funding ratios of pension plans cratered, and it was easy for opponents of public employees to spread doom and gloom about pension plans. To make matters worse, pension opponents often deliberately sowed envy among non-pension recipients. At the NPPC, we believe everyone deserves a stable retirement. It’s a false choice to pit one group of workers against another. In a race to the bottom, we all lose.
Today, the environment for pensions has improved dramatically. Signs point to more employers offering pensions, not fewer. When IBM announced it would switch back to a pension and stop contributing to employee 401(k) accounts, the New York Times noted, “IBM seems to be reversing a decades-long trend of corporations moving away from traditional pension plans.”
This week, Business Insider reported that “government jobs are hot right now.” The article cites pensions and the superior benefits often associated with public sector jobs as being a major reason many workers are proactively seeking out employment with government agencies.
“According to the US Bureau of Labor Statistics, employees working in government jobs stay longer than those working private-sector gigs– with the median years of tenure for public sector jobs in 2022 being 6.8 years– about 2.7 years higher than private sector jobs. Pensions facilitate longer tenures because workers are incentivized to stay to become fully vested and receive the maximum benefit. This also saves on public dollars invested in training and recruitment.
Many public sector workers have even taken to social media to tout the advantages of government jobs.
Legislatures and pension systems around the country are also doing a better job shoring up pension funds, which cuts off one line of attack pension opponents – like the Reason Foundation, Equable, and Koch-brothers funded groups– use to denigrate public pensions. According to NASRA, state and local governments contributed $221 billion to pension funds in FY 22, representing a 20% increase over the prior year and “includes additional funding, above actuarial requirements.” Because of these investments, Pew analysts announced in November that “no state is at risk of pension plan insolvency.”
Finally, states like Alaska, where defined-benefit pension plans were cut nearly two decades ago, are reconsidering their mistake, with severe worker shortages causing interruptions in public services. Senate Bill 88 passed the Senate chamber in Juneau overwhelmingly, and now the bill has moved to the House.
Employers increasingly recognize that they need better benefits to attract quality workers. And employees, many of whom are far behind in preparing for retirement, seek government jobs with quality benefits, including pensions. While it’s too early to declare victory, it’s clear that public sector pensions are better off than they were a decade ago.
And if some billionaires lose in the process? That’s just an added bonus.
