FEDMAGEDDON

Some folks are warning us that we’re headed to Fedmageddon.

That’s the threat of civil war over the likely Federal Reserve decision to buy long term bonds, print money and re-inflate the economy. Time Magazine’s Stephen Gandel, in his “The Curious Capitalist” blog muses over “will the Federal Reserve’s Ben Bernanke cause a civil war”:
http://curiouscapitalist.blogs.time.com … civil-war/

Let’s hope that the overheated rhetoric of this political season doesn’t lead us into further devolution of the republic.

At a time when many voters seem to be in a blind rage against “Government”, it’s good to look at the facts.

It turns out that common myths are inaccurate. Government workers are not overpaid.

That’s the upshot of a study by economist Sylvia Allegretto of the Institute for Research on Labor and Employment at UC Berkeley. The study is titled “The Truth about Public Workers in California: They Are
Neither Overpaid nor Overcompensated”:
http://www.irle.berkeley.edu/cwed/wp/2010-03.pdf

Allegretto’s research concludes that state and local government employees are underpaid about 7% in comparison with their private sector counterparts. She concludes that when benefit packages are included in the analysis there is no difference in pay between government and private sector counterparts.

These results may not stem the concerns over the sustainability of public pension obligations. There’s a new study on that from the Milken Institute. The study analyzes demographic changes and notes that to be sustainable the retirement age will have to be raised and that employee contributions will have to be increased.

You can find the study (by Perry Wong and I-Ling Shen) here, titled “Addressing California’s Pension Shortfall: The Role of Demographics In Designing Solutions”:
http://www.milkeninstitute.org/publicat … cat=resrep

In Britain we’re seeing mass public employee layoffs. In France we’re seeing growing unrest over proposed changes in the retirement age and pension eligibility age.

We don’t need a Pensionmageddon in California, but there needs to be a close look at the facts as the next governor wrestles with these issues.

In coming posts I’ll be blogging on last week’s hearings on the WCIRB rate increase recommendation. And I’ll be continuing the Comp’s Got Talent series.

Meanwhile, check out my new venture:
www.thecompguys.org

Julius Young
www.boxerlaw.com

Category: Political developments