This morning, New York City Comptroller John Liu released a report with a banner press release: "NYC Government Workers Paid Less Than Private Sector Peers," it read. The report captured press attention.
Over at The Torch, E.J. McMahon studies the study. McMahon cautions us to be careful on Liu's wage comparisons. But he is most skeptical about Liu's comparison of public-sector vs. private-sector retirement benefits.
"The true cost to New York City taxpayers of providing a guaranteed [defined benefit] pension is not the amount that would be paid into a theoretically fully funded system comprised of newly hired 25 or 30 year olds," McMahon notes of Liu's approach.
Rather, a better measure would be:
the cost of funding that benefit out of New York City's existing pension plans, which are seriously underfunded -- and currently charging employer contribution rates that range from 20 percent of average salary for NYCERS members to 82.5 percent for firefighters. The current cost to city taxpayers of teacher pensions -- about 32 percent of salary, on average -- is enough to wipe out the report's estimate of the private-sector compensation advantage among workers with post-graduate degrees.
Read the whole thing.
And don't say you weren't warned.