If it were up to them, Republican lawmakers would have you believe that public pensions are bringing the country down, framing public employees as greedy Americans who retire into wealth on the backs of taxpayers. We've already addressed how these ideas are flat out wrong. Now recent reports argue an additional case for how public pensions benefit the country - by supporting not just retirees, but entire communities as well.
National Numbers2009 expenditures from public and private pensions provided:
- $756 billion in economic impact
- 5.3 million American jobs
- $121.5 billion in federal, state, local tax revenue
Data collected by the National Institute of Retirement Security (NIRS) reveals that public pensions have consistently provided a much-needed boost to local economies over the past several years.
Take California for example, where pension benefits paid out over 2010 spurred more than $26 billion in economic activity in the state. According to the California Public Employees' Retirement System (Calpers), these payments led to an increase in the gross state product of more than $8.6 billion and supported more than 93,600 jobs in California last year.
"Calpers retirement checks are a powerful engine helping to drive California's economy," Anne Stausboll, Calpers' chief executive officer said in a statement to Bloomberg News.
This is happening across the country, in struggling towns where retirees with a guaranteed retirement income are putting it back into the local economy.
"Pension payments are particularly vital to small communities and economies across the country where there is a lack of diverse local industries or where other steady sources of income may not be readily found," Diane Oakley, NIRS executive director, explained at a recent hearing in Washington, D.C. Oakley testified before the Senate Health, Education, Labor & Pensions Committee that pensions provide economic stimulus for virtually every state and town across America.
Why is this significant? Because pension payments in the form of defined benefit plans -- unlike risky 401(k) plans pushed in the private sector -- are a stable form of retirement security that allow retirees to live above poverty, support local businesses, and contribute to billions of dollars in federal, state and local tax revenue. Public employees provide dedicated service for years, often at lower salaries, and contribute toward an expected and fixed retirement income, which they can then rely on regardless of the ups and downs of the financial markets, unlike 401(k)s.
Public pensions have already taken a hit from Wall Street's reckless behavior and many states' failures to make their fair share of contributions. As lawmakers hunt for ways to cut spending, they should keep in mind how valuable public pensions are to their residents, businesses and government alike.
Rather than cutting public pensions and doing further damage to our still-reeling economy, we should be debating how to provide pensions to more workers in both sectors, so they can enjoy the benefits of secure and dependable income and help expand the economy in retirement just as they do during their active work life.