An official revision of CalPERS’ investment assumptions would place significant pressure on government spending, with public employee pension obligations consuming a larger portion of taxpayer dollars. That could, in turn, squeeze other government programs.
It’s trying to persuade Gov. Jerry Brown’s administration to give its members a larger raise than its initial offer of 12 percent over four years.
Voters in Arizona, Colorado, Maine and Washington approved ballot questions seeking to raise minimum wages in those states to $12 an hour or more, and then lock in those higher levels in real terms by binding future increases to the cost of living. And in two states, the provision also guarantees sick leave to workers.
The best way up for people is — and always has been — the capacity to participate in the economy as an employee, entrepreneur, or owner. No amount of redistributive policy can achieve the same result. The safety net, as the name implies, is to prevent downward mobility; it has never been a very good trampoline.
Most critical, however, is the clear downshift in the standard of living in my adopted home region, greater Los Angeles. Once L.A. was full of high-wage jobs, many of them tied to aerospace and manufacturing, as well as high-end business services. Those industries have been eroding for well over a decade, replaced, in large part, by lower-wage positions in hospitality, retail and health. Now it is one of the poorest big cities in America, yet one with extraordinarily high costs, particularly for housing. The cost of living in LA is 46 percent above the national average, driving real wage from a respectable nominal average $59,000 to a dismal adjusted $40,400.
California’s path-breaking bid to end workplace pay disparities faces one of its widest gender wage gaps among the state’s own employees.
“Since the 2012 law applied mainly to newly hired employees, savings will trickle in slowly over many years. Pension contributions required from state and local governments will continue to increase — although they are estimated to be 1% to 5% less than they would have been without the changes. Total savings from the Public Employee Pension Reform Act of 2012 are estimated at $28 to $38 billion over 30 years for the state’s main pension fund, the California Public Employees’ Retirement System, and $22.7 billion for the state’s teacher pension fund. The savings are a fraction of the two plans’ unfunded liability — the gap between the benefits owed to current and future retirees and the money set aside to pay for them. CalPERS’ unfunded liability is estimated at $93 billion. For the teachers’ fund, it is $76 billion.”
A surprising reason dissident actuaries advocate using a much lower earnings forecast for public pension investment funds is “intergenerational equity,” ensuring that the pensions of government workers are paid by the generation that receives their services.
The largest actors union in Hollywood officially called a strike early Friday morning against several prominent video game companies after the two sides failed to reach an agreement on an increase in compensation for performers who do voice-over and motion-capture work for popular games.
Women still earn less than men, but they’ve narrowed the gap because they tend to work in jobs that require more social and analytical skills, a new study from the Pew Research Center finds. . . Women’s pay went up 32 percent while men’s pay went down 3 percent from 1980 to 2015, according to the study, “The State of American Jobs.”
I have just come across an International Monetary Fund working paper on income polarization in the United States that makes an important contribution to the secular stagnation debate. The authors — Ali Alichi, Kory Kantenga and Juan Solé — use standard econometric techniques to estimate the impact of declines in middle class incomes on total consumer spending. They find that polarization has reduced consumer spending by more than 3 percent or about $400 billion annually. If these findings stand up to scrutiny, they deserve to have a policy impact.
So now the question is this: when will wage growth resume its upward path? A lot of research into this question has been focused on productivity. But the Federal Reserve of New York has just released some research that points to demographics as a defining issue. They write that across the US economy, all segments of the population “display rapid real wage growth early in a worker’s career, with positive real wage growth ending when the worker is in his/her forties. This is followed by a period of either flat (high school graduates or less) to declining real wages (some college or more). By age 55, all education categories are, on average, experiencing negative real wage growth.” . . . We have shown that U.S. real wage growth has been slowing down over the past thirty-five years with the aging of our workforce. Abstracting from cyclical factors impacting the labor market, this slowing is likely to continue in the years ahead as more individuals near retirement and experience negative real wage growth… Consequently, the aging of the U.S. population will continue to act as a headwind to labor productivity and wage growth.
Dallas’s police and firefighters are quitting in droves, wagering that financial-market losses are about to render their promised pensions too good to be true.
Much has been written about the aging of the U.S. population, but the importance of this trend for the economy and its evolution can easily be overlooked. This week, we focus on the aging of the labor force and explore its implications for the behavior of real wage growth. In this first post, we examine estimated real wage profiles of workers and document how their levels and growth rates differ across demographic characteristics such as sex, race/ethnicity, education level, and age. Moreover, we argue that the demographic trends predict a slower pace of real wage growth for an increasing fraction of the workforce. Our second post combines the implied real wage growth rates and changing demographics of the U.S. labor force to derive a “cyclically neutral” aggregate real wage growth series. We show that this series has been steadily declining since the mid-1980s.
More than 50 employees working inside Los Angeles County’s juvenile lockups received promotions despite a history of disciplinary problems or criminal arrests under a deal county leaders quietly cut earlier this year.