New Study: It Doesn't Pay To Erode Pension Rights
A recent study by the Center for Retirement Research at Boston College concluded that "states and localities with relatively generous pensions should be cautious, because reductions in benefits may result in reduction in their ability to maintain a high-quality workforce." This study is important in light of the sustained attack on public sector pensions by anti-worker and anti-government forces. These attacks, when successful, reduce the quality of the public sector workforce, and, therefore, the quality of government services.
The study starts by noting a "quality gap" between private sector and public sector workers. One indicator of "quality" is the wage a worker can earn in the private sector. The so-called "quality gap" is demonstrated by the fact that workers leaving the public sector consistently command higher private sector wages once in the private sector, than workers coming into the public sector. In other words, where the "quality gap" exists it appears the public sector could be unable to replace workers it loses to the private sector with workers of the same "quality."
According to the study, for most workers, the "quality gap" increases when public employers cut pension benefits. This finding indicates that cutting pension benefits does the opposite of attract, much less retain, high-quality workers for our public sector.
You can read the study by clicking here. For more information on public sector pension issues, please contact your labor law counsel.
By Jake White | October 29, 2014