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Manhattan Institute

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How Soaring Benefit Costs Are Coming Back To Haunt Gov't Workers

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How Soaring Benefit Costs Are Coming Back To Haunt Gov't Workers

Investor's Business Daily April 28, 2017
Public SectorPension Reform

Schools across the nation are feeling the pinch as money that should go to the classroom instead goes toward paying for lavish union benefits and perks.

For years, public-employee groups used their political muscle to win contracts granting them pension and health benefits that were often better than what many private-sector workers enjoyed.

Now the exploding cost of those benefits is turning into a problem for government employees themselves, reducing pay increases and prompting ongoing job cuts, especially in states where these workers are unionized. Barring some unexpected national economic outburst that showers states and cities with new revenues, government-worker benefits will likely weigh down budgets for years.

Consider how rising pension and health-benefit costs have influenced public education spending. The Census Bureau data on public school finances for 2014 (the latest year available) show that school budgets grew by $141 billion over a 10-year period — a compound annual rate of about 3%.

But a $47.5 billion increase in benefit costs gobbled up one-third of that growth. That's a huge bill for a budget item that...

Read the entire piece here at Investor's Business Daily

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Steven Malanga is the George M. Yeager Fellow at the Manhattan Institute and a senior editor at City Journal.

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