$4 Million a Year Meter Readers

Today’s College Degrees are Worth Much Less Than Before

By: George Noga – March 10, 2012
       If you want an example that encapsulates the pervasive extortion by public sector unions, look no further than paying $4 million per year for a meter reader. That is just so much bushwa, you may be thinking; surely that could never happen in America. Think again. I take you step-by-step to demonstrate how it  costs local governments $4 million for only one active meter reader position.
“You don’t believe a $4 million per year meter reader is possible in your city; think again!”
        A ubiquitous feature of public pension plans is for employees to receive 3% of their final year’s pay for each year worked. In this case I assumed the final year salary was $78,000 –  not an unreasonable assumption for a public sector union employee after 30 years of government work including merit raises, promotions and cost-of-living adjustments. Of course, overtime is included in computing the pension.   If our unionized meter reader begins work immediately after high school and works for 30 years, he receives 90% (30 years at 3%) of his pay for his life and also, in many cases, for the life of his spouse.
       Moreover, his pension is indexed for inflation and often includes retiree medical benefits. Thus, our meter reader retires at age 48 and collects his public pension until age 91 inasmuch as the joint life expectancy of him and his spouse at age 48 is 43 more years. And then there is the disability. The system is rigged to permit a large number (in some cases, 90%) of workers to qualify for disability, which adds 30% to the cost of the pension.
       Okay – our enterprising meter reader graduated high school at age 18, got married and had a child at 20, retired at 48 and (jointly) lived to 91. His patriarchal family was traditional and they knew a good thing when they saw it. Therefore, the meter reader’s son, grandson, and great-grandson followed in his footsteps – doing everything he did at exactly the same ages.
       Each, in turn, maximized overtime during his final year on the job, a practice with which everyone was complicit; it even has a name – spiking. I assumed they spiked only 60% of their base salary although frequently spiking can be well over 100% with even 300% being possible. They also qualified for disability; like spiking, this is a fraud in which all are complicit. I assumed inflation was 3.75%, a reasonable long-term average. All the numbers used herein are on an Excel worksheet and I will email it upon request. The numbers are breathtaking.
“For each active employee, government must pay four people – three retirees and one on-the-job worker.” 
       There comes a time when the original meter reader and his son and grandson all are retired and collecting pensions; the great-grandson is still active reading meters. Therefore, for one active employee who is performing one job, the city must pay four people – three retirees and one worker. The total cost using the assumptions disclosed herein is $3 million. The number approaches $4 million if retiree (and, of course, spousal) medical benefits are included and/or the employees spike at a rate significantly higher than 60%.
       This bears repeating. The government’s cost for one active meter reader position is $3-$4 million per year depending on the level of spiking and whether or not there are medical benefits. In our story, four generation of the same family can make $4 million a year for doing one job. Now you know how corrupt unions (oxymoron) game the system at our expense.
“Instead of $4 million annually in the out years for unionized public sector employees, the comparable amount for a private sector company would under $300,000 – this is 93% less!”
     Let’s compare the $4 million government union price tag to comparable non-union private sector employees. There are humongous (highly technical economic term) differences.
  1. Private sector employees have defined contribution pension plans (which they mostly pay for) like 401(k)s rather than costly defined benefit plans.
  2. Once private sector employees retire, the employer has no ongoing pension obligation.
  3. Private sector employees retire at age 65 not 48.
  4. It is rare for private sector employees to qualify for disability.
  5. Defined contribution plans are not indexed for inflation nor based on joint lives.
  6. Seldom do private companies provide retiree health benefits.
     Instead of  $4 million for someone employed in a unionized government job, the comparable cost  for a private sector job is less than $300,000, or a staggering 93% less.
College Degrees Have Become Vastly Overvalued
     A basic college degree no longer conveys intellect or knowledge now that government has decreed everyone should have one. Since successful folks tend to have college degrees, the way to raise people up is for them to have a degree; right? But college degrees aren’t causes of success; they’re simply markers or societal totems for possessing the traits and skills needed for success, i.e. mental acuity, discipline and deferred gratification. Having the traits always must precede obtaining the markers. Getting the markers doesn’t produce the traits any more than a designer suit makes a gentleman of a Neanderthal.
“Having the traits must precede obtaining the markers.” 
     Note: Another common marker for middle class success is home ownership. Government therefore assumes that if people who can’t afford homes are given homes through government programs (Freddie, Fannie, etc.) they will rise into a higher economic class. Just as with college degrees, government confuses markers with traits and causes. Giving a home to someone who can’t save for a down payment, make the monthly payment, pay taxes, insurance and utilities or even maintain the home will not improve their economic position. Habitat for Humanity learned this lesson long ago. Despite Habitat’s generous terms, rigorous screening and education of putative homeowners and insistence on investment of considerable sweat equity, they still have failures. Again, the traits needed for home ownership must precede the marker.
“Getting markers doesn’t produce the traits any more than a designer suit makes a gentleman of a Neanderthal. . . . Most motivation comes from Bluto rather than Plato.” 
     Moreover, college frequently is a bad deal. Forty percent don’t graduate. Many that do, obtain degrees that are of no market value. Graduates are saddled with debt that lasts decades. Much of college is pursuit of a totem and results in no increase in human capital. Nor are graduates well-rounded. Instead of being inspired by Plato, most motivation comes from Bluto. College actually discourages freedom of thought; instead, it initiates young people for life into an emotional, unthinking tribe of liberal orthodoxy from which precious few ever escape.

Labor Day – Remembering Forgotten Heroes

Ruminations about Labor, Unions, Capitalists and Entrepreneurs

By: George Noga – September 5, 2011

         It is not far fetched to assert entrepreneurs are responsible for the rise of humanity from isolated hunter-gatherers up to and including modern man. There is one dark side to this: seeing the prosperity created by early traders and entrepreneurs, politicians created taxation. The pattern was thus established: entrepreneurs create wealth; governments destroys it. 

“Entrepreneurs create wealth; governments destroy it.”

      Entrepreneurs, creators and innovators have spawned enormous wealth, reduced poverty and increased life expectancy more in the past 100 years than in the preceding 100,000 years. Are they forgotten heroes of the world? Who did the most to benefit the common man – Henry Ford, Thomas Edison, and Steve Jobs or John Kennedy, George W. Bush and Barack Obama?

      I once took a graduate course in the history of economic analysis based on the teaching of Joseph Schumpeter who wrote about entrepreneurs: “First, there is the dream and the will to found a private kingdom . . . then there is the will to conquer; the impulse to fight; to prove oneself superior to others; to succeed for the sake, not of the fruits of success but, of the success itself. . . Finally there is the joy of creating, of getting things done, or simply of exercising one’s energy and ingenuity.”

The Legacy of the Peddler

        America owes much to peddlers; in many ways they built America. A budding peddler (entrepreneur) began by taking all the modest money he had and buying all he could fit into his backpack. He ventured into the hinterlands, sold everything and then did it all over again. He lived frugally and saved for bigger backpacks and more merchandise. When he could afford a horse and wagon, he ventured deeper into sparsely settled areas with more goods. Eventually he found a place that could support a resident peddler; he built a shack, filled it with things people wanted and lived simply in the back. Later he took a wife and started a family; they helped in the business and shared his hardscrabble life.

“Luxuries a short time ago are selling at Wal-Mart and Costco for ridiculously low prices. Government created none of this.”

        As the town grew around him, he expanded his store and eventually moved into a separate house. Most department stores and industries in America began that way. The peddler was the backbone of the American economy and society. A peddler had to have initiative, self-reliance and, above all, integrity. He paid his debts and taxes, attended church, contributed to charity and participated in civic affairs. There were no written contracts; his word was his bond. His life was orderly and scandal free. He had the dream and the will as described by Schumpeter. Are peddlers forgotten heroes?

Heroes of the World

        Do you doubt entrepreneurs are the heroes of the world? Look around you; ponder with amazement the monuments they have bestowed on the world. Gape in awe at the medical breakthroughs, technology and the cornucopia of everyday marvels. Average folks live better today than monarchs mere decades ago. World poverty has been halved in the past generation. Luxuries a short time ago are now selling  at Wal-Mart or Costco for ridiculously low prices. None of this was created by government. Is government heroic?

        Not uncoincidentally, entrepreneurs are the antithesis of socialistic and collectivistic schemes; without them we would be just like the former Soviet Union, Cuba and all the other places that elevate the state over people. Indeed, the greatest measure of the progress of a civilization is the rate at which it creates new millionaires. Creation of new wealth means society is innovating, spawning jobs, efficiently allocating its resources and serving its people’s needs.

       Are entrepreneurs truly the heroes of the world? You make the call.

Labor Unions Today – Are They Heroic?

      Labor Day was established to honor all labor not just organized labor. As conceived by President Cleveland and Congress, Labor Day was intended to serve as a reminder that work was an ennobling experience. It was placed at the end of summer to symbolize the end of seasonal indulgence and a return to work. Labor unions however have long sought to co-opt the Labor Day holiday for the minuscule segment of private industry that is unionized.

“Only in the fetid parallel universe of government is unionization growing; it extracts uncompensated value through politics that it cannot obtain on the merits.”

        Today less than 7% of private-sector workers are unionized and that percentage continues to plummet. Unionization of private workers is in free-fall for one, and only one, reason: workers independently conclude that the costs of belonging to a union are not worth the putative benefits. Only in the fetid parallel universe of government is unionization growing; it extracts politically what it cannot win on the merits.

        In economic terms unions are “rent seekers”, i.e. they accrue economic benefits via manipulation and/or exploiting the political environment rather than through the production of added value. In short, they extort uncompensated value from others – you and me; is this heroic?

Labor Day should Honor Entrepreneurs and Capitalists along with Labor

    Labor Day should honor all work as a noble experience. Let’s expand it to honor entrepreneurs and capitalists. America is the planet’s quintessential capitalist country. Let’s therefore honor capitalists who make labor more productive via investment in plant, equipment, tools and – well, capital. Finally, let’s honor entrepreneurs, those with a dream and a will to create; they are the sine qua non that leverage labor and capital, create synergies and thereby produce unbounded prosperity for all.

   The veritable horn-of-plenty that is America results from entrepreneurs, capital and the virtue of work. Let’s honor them all!

All-Time Media Hall of Shame

Nonexistent Guns, Nonexistent Defeat and Nonexistent Scandal

By: George Noga – June 1, 2011
      Media Watch is one of our regular features. Only this time I explain why and how media bias occurs. This is followed by the three most egregious examples of media bias that MLLG has reported since we began in 2007. As a bonus, I throw in a current example of extreme media bias dealing with gas prices.
     If you are like most, you assume when news happens, the editor or producer impartially assigns the story to a reporter who (hopefully) has some knowledge of the subject matter. The reporter objectively covers the story and reports the facts. The editor, also objectively, questions the reporter, fact checks and edits. The end result, even if flawed, represents a good faith attempt to report the news.
“Media organizations have, inter alia, black, Latino, gay and women’s caucuses that solely determine how any issue affecting their caucus is reported.”
      That’s not how it happens. Every substantial media organization has internal groups they call caucuses, i.e. employees who band together to determine how anything affecting their caucus is reported. Caucuses always exist for blacks, Latinos, gays and women; there may be others. Most other issues such as those involving the military, environment, guns, poverty, corporations and religion don’t require caucuses as all reporters  have been in lockstep about them since at least journalism school. Should they forget the correct slant, that’s where editors come in.
      Let’s follow a typical news story involving say abortion. The editor/producer will try to assign the story to a reporter from the women’s caucus. The reporter will write the story using only criteria and terminology approved by her caucus. If perchance the story was assigned to a reporter not part of the women’s caucus, that reporter would not submit the story to the editor without first running it by the women’s caucus. If the story was significant and involved something not previously discussed by the caucus, the reporter and/or editor would not print it without first checking with the members of the affected caucus. Nothing ever gets printed that disrespects a caucus. Now that you understand the process, let’s go to the media hall of shame.
Appalachian State: Nonexistent Guns
      In 2002 an Appalachian State student went on  a shooting spree killing 3 and wounding several; 208 newspapers reported the story, of which 204 reported the killer was stopped, pounced on, tackled or overpowered by other students. All the networks reported the story this way. When I read the story I wondered how students pounce on or tackle a gunmen. There’s one major problem: the students didn’t tackle or pounce on the armed killer. Two of the three students went to their cars and retrieved legal handguns which they used to subdue the killer.
     The role guns played in stopping the killer was well known. Over 100 reporters interviewed the students and nearly every reporter knew the positive role handguns played in stopping the bloodshed. Yet, less than 2% of the newspapers mentioned the students’ handguns. This kind of reporting is de rigeur in Cuba, Zimbabwe, Iran and North Korea. American media will not report stories with a positive role for guns although they happen 2,500,000 times a year in the US.
Walter Cronkite and Tet: Nonexistent American Defeat
     Walter Cronkite was just another anile talking head until he endeared himself to progressives by his misreporting of the Tet Offensive – declaring Tet a great American defeat and the war irretrievably lost. That’s NOT the way it was. Tet was a desperation gamble by the enemy who suffered staggering losses – 60,000 of their best men. Both then and now the political and military leaders of North Vietnam declared Tet to be a total defeat and disaster for them. Tet was a massive American victory.
“If you don’t read the newspaper, you are uninformed; if you do read it, you are misinformed.” «TWAIN» 
     Tet was the biggest story of Cronkite’s career and he got it dead wrong. The media’s distrust of America  transmogrified Cronkite into a media hero – make that saint. Cronkite achieved legendary status due to an act of gross journalistic malpractice. The crowning achievement of the media darling of my lifetime was not only wrong, it caused America great harm.
Pedophile Priests: Nonexistent Scandal 
     There never was a pedophile priest scandal; less than 3% of incidents were pedophilia. What really happened was a homosexual priest scandal. Pedophilia is rare; it involves children before puberty whose age usually is a single digit; moreover, pedophilia is mostly heterosexual. Of all the misreporting and bias in the past few decades, this story tops the charts.
     As media began to report about the emerging scandal, the gay caucuses were mortified. Gay organizations are so sacrosanct, powerful and intimidating, no one opposes them. So the media protected the priests (and by extension gays) by concocting pedophilia, which is a bogeyman everyone opposes. The church gleefully went along because it knew pedophilia was a strawman and it couldn’t dare confront the church’s culture of homosexuality.
     The lengths the media went to protect gays is legion. In the 8-page U.S. News & World Report story, homosexual was mentioned once. Instead, the magazine used sex-abuse scandal, predatory sexual behavior, youth-sex scandaland sexual misconduct; they tried to blame celibacy. All of this was misdirection. Over 95% of incidents involved boys; this rules out priests not being able to marry and celibacy as causes. But the problem runs even deeper. Gay men are attracted to the priesthood because it provides an unending supply of young, impressionable and vulnerable boys. Despite the horrific scandal, nothing much has changed; the band plays on.
Media Watch 2011 – Obama and High Gas Prices 
     It is instructive to contrast media reporting of gas prices during the Bush and Obama presidencies. Bush was hounded by the media for 8 years. At press conferences he was asked the following: “What do you say to people who are losing patience with gas prices at $3 a  gallon? “How much of a political price are you paying for $3 gas?” “A majority of Americans disapprove of your handling of gas prices.”  He and Cheney were lambasted for their former connections to the oil industry. At the end of Bush’s presidency gas prices (inflation-adjusted) were 9% lower than when he took office.
     Since Obama took office gas prices have skyrocketed. Where are the media watchdogs? Virtually no questions have been asked Obama about: (1) the high price of gas and home heating; (2) Obama’s bungled response to the BP oil spill; (3) the moratorium on domestic oil exploration; (4) the lack of drilling permits in the gulf; and (5) the loss of tens of thousands of jobs in the energy sector. The statist media is dead; it finally expired in 2008 after being comatose for many years. There are only a few places for truth these days, mainly talk radio, Fox News, Drudge and the Internet.