Sunday, January 09, 2022

Stay home or work sick? Omicron poses a conundrum
By ANNE D'INNOCENZIO and DEE-ANN DURBIN


FILE - A medical technician performs a nasal swab test on a motorist queued up in a line at a COVID-19 testing site near All City Stadium Dec. 30, 2021, in southeast Denver. Millions of workers whose jobs don’t provide paid sick days are having to choose between their health and their paycheck as the omicron variant of COVID-19 rages across the nation. While many companies instituted more robust sick leave policies at the beginning of the pandemic, those have since been scaled back with the rollout of the vaccines, even though the omicron variant has managed to evade them. (AP Photo/David Zalubowski, File)

As the raging omicron variant of COVID-19 infects workers across the nation, millions of those whose jobs don’t provide paid sick days are having to choose between their health and their paycheck.

While many companies instituted more robust sick leave policies at the beginning of the pandemic, some of those have since been scaled back with the rollout of the vaccines, even though omicron has managed to evade the shots. Meanwhile, the current labor shortage is adding to the pressure of workers having to decide whether to show up to their job sick if they can’t afford to stay home.

“It’s a vicious cycle,” said Daniel Schneider, professor of public policy at the Harvard Kennedy School of Government. “As staffing gets depleted because people are out sick, that means that those that are on the job have more to do and are even more reluctant to call in sick when they in turn get sick.

Low-income hourly workers are especially vulnerable. Nearly 80% of all private sector workers get at least one paid sick day, according to a national compensation survey of employee benefits conducted in March by the U.S. Bureau of Labor Statistics. But only 33% of workers whose wages are at the bottom 10% get paid sick leave, compared with 95% in the top 10%.

RELATED COVERAGE
– A glance at who's getting paid sick days

A survey this past fall of roughly 6,600 hourly low-wage workers conducted by Harvard’s Shift Project, which focuses on inequality, found that 65% of those workers who reported being sick in the last month said they went to work anyway. That’s lower than the 85% who showed up to work sick before the pandemic, but much higher than it should be in the middle of a public health crisis. Schneider says it could get worse because of omicron and the labor shortage.

What’s more, Schneider noted that the share of workers with paid sick leave before the pandemic barely budged during the pandemic — 50% versus 51% respectively. He further noted many of the working poor surveyed don’t even have $400 in emergency funds, and families will now be even more financially strapped with the expiration of the child tax credit, which had put a few hundred dollars in families’ pockets every month.

The Associated Press interviewed one worker who started a new job with the state of New Mexico last month and started experiencing COVID-like symptoms earlier in the week. The worker, who asked not to be named because it might jeopardize their employment, took a day off to get tested and two more days to wait for the results.

A supervisor called and told the worker they would qualify for paid sick days only if the COVID test turns out to be positive. If the test is negative, the worker will have to take the days without pay, since they haven’t accrued enough time for sick leave.

“I thought I was doing the right thing by protecting my co-workers,” said the worker, who is still awaiting the results and estimates it will cost $160 per day of work missed if they test negative. “Now I wish I just would’ve gone to work and not said anything.”

A Trader Joe’s worker in California, who also asked not to be named because they didn’t want to risk their job, said the company lets workers accrue paid time off that they can use for vacations or sick days. But once that time is used up, employees often feel like they can’t afford to take unpaid days.

“I think many people now come to work sick or with what they call ‘allergies’ because they feel they have no other choice,” the worker said.

Trader Joe’s offered hazard pay until last spring, and even paid time off if workers had COVID-related symptoms. But the worker said those benefits have ended. The company also no longer requires customers to wear masks in all of its stores.

Other companies are similarly curtailing sick time that they offered earlier in the pandemic. Kroger, the country’s biggest traditional grocery chain, is ending some benefits for unvaccinated salaried workers in an attempt to compel more of them to get the jab as COVID-19 cases rise again. Unvaccinated workers enrolled in Kroger’s health care plan will no longer be eligible to receive up to two weeks paid emergency leave if they become infected — a policy that was put into place last year when vaccines were unavailable.

Meanwhile, Walmart, the nation’s largest retailer, is slashing pandemic-related paid leave in half — from two weeks to one — after the Centers for Disease Control and Prevention reduced isolation requirements for people who don’t have symptoms after they test positive.

Workers have received some relief from a growing number of states. In the last decade, 14 states and the District of Columbia have passed laws or ballot measures requiring employers to provide paid sick leave, according to the National Conference of State Legislatures.

On the federal front, however, the movement has stalled. Congress passed a law in the spring of 2020 requiring most employers to provide paid sick leave for employees with COVID-related illnesses. But the requirement expired on Dec. 31 of that same year. Congress later extended tax credits for employers who voluntarily provide paid sick leave, but the extension lapsed at the end of September, according to the U.S. Department of Labor.

In November, the U.S. House passed a version of President Joe Biden’s Build Back Better plan that would require employers to provide 20 days of paid leave for employees who are sick or caring for a family member. But the fate of that bill is uncertain in the Senate.

“We can’t do a patchwork sort of thing. It has to be holistic. It has to be meaningful,” said Josephine Kalipeni, executive director at Family Values @ Work, a national network of 27 state and local coalitions helping to advocate for such policies as paid sick days.

The U.S. is one of only 11 countries worldwide without any federal mandate for paid sick leave, according to a 2020 study by the World Policy Analysis Center at the University of California, Los Angeles.

On the flipside are small business owners like Dawn Crawley, CEO of House Cleaning Heroes, who can’t afford to pay workers when they are out sick. But Crawley is trying to help in other ways. She recently drove one cleaner who didn’t have a car to a nearby testing site. She later bought the cleaner some medicine, orange juice and oranges.

“If they are out, I try to give them money but at the same time my company has got to survive,” Crawley said. ″If the company goes under, no one has work.”

Even when paid sick leave is available, workers aren’t always made aware of it.

Ingrid Vilorio, who works at a Jack in the Box restaurant in Castro Valley, California, started feeling sick last March and soon tested positive for COVID. Vilorio alerted a supervisor, who didn’t tell her she was eligible for paid sick leave — as well as supplemental COVID leave — under California law.

Vilorio said her doctor told her to take 15 days off, but she decided to take just 10 because she had bills to pay. Months later, a co-worker told Vilorio she was owed sick pay for the time she was off. Working through Fight for $15, a group that works to unionize fast food workers, Vilorio and her colleagues reported the restaurant to the county health department. Shortly after that, she was given back pay.

But Vilorio, who speaks Spanish, said through a translator that problems persist. Workers are still getting sick, she said, and are often afraid to speak up.

“Without our health, we can’t work,” she said. “We’re told that we’re front line workers, but we’re not treated like it.”

___

D’Innocenzio reported from New York and Durbin reported from Detroit.
FILM
Babelsberg: World's oldest large-scale film studio

Many of cinema's greatest names worked in the legendary Babelsberg film studio, located just outside Berlin. In early 2022, it was acquired by a US investment firm.



The birth of a film studio

While independent US producers were already establishing their studios in Hollywood, German filmmakers were shooting in the center of Berlin. Because the hot spotlights kept triggering fire alarms, they were asked to find a more remote location. Film pioneer Guido Seeber picked new premises in Potsdam-Babelsberg, at the southwest outskirts of Berlin, where a first studio was built in 1911.

123456789101112131415
Austria's former Chancellor Sebastian Kurz joins anti-racism NGO

Sebastian Kurz has been appointed co-chairman of the European Council on Tolerance and Reconciliation, just a few months after leaving office amid a corruption scandal.



Kurz previously announced his departure from politics after serving as Austria's chancellor for several years

Conservative politician Sebastian Kurz, who stepped as Austrian chancellor down amid a corruption scandal last year, was announced on Sunday as the new co-chairman of the European Council on Tolerance and Reconciliation (ECTR).

The ECTR is an international NGO that describes its goal on its website as fighting "such evils as extremism, racism, antisemitism and xenophobia."

Other noteworthy co-chairmen of the group are former UK Prime Minister Tony Blair and former Spanish Prime Minister Jose Aznar — both of whom were in power when their nations joined the 2003 invasion of Iraq.


ECTR founder Moshe Kantor welcomed Kurz's appointment on Twitter.

"We could not have found a better person to lead with passion, wisdom and determination against today's global challenges," he wrote.

Other noteworthy co-chairmen of the group are former UK Prime Minister Tony Blair and former Spanish Prime Minister Jose Aznar — both of whom were in power when their nations joined the 2003 invasion of Iraq.

Why did Kurz leave office?


Kurz resigned from the top job in October while facing allegations that he and other members of the Austrian People's Party misused public funds to help boost his political rise.

The 35-year-old denies any wrongdoing. He later announced his complete withdrawal from politics.

"It is a great honor to join such an important organisation which works against extremism and for greater tolerance across Europe," Kurz said in a statement issued by the ECTR.

During his time in office, Kurz made efforts to confront Austria's role in the Holocaust and placed himself firmly on the side of Israel in diplomatic affairs.

"Sebastian Kurz is widely known for his dedication in fighting all forms of antisemitism, terrorism, extremism and radicalization with a particular focus on preventing youth radicalization during his almost 10 years in leadership roles," the ECTR said.
What is Kurz's relationship with the far right?

During his political career, Kurz was also instrumental in forming a coalition with the far-right Freedom Party in 2017 — making Austria the only country in Western Europe to have a far-right party in government.

He also opposed the acceptance of refugees from camps in Greece as well as those fleeing Afghanistan after the Taliban came to power.


Since leaving office, he has joined the investment firm led by tech billionaire Peter Thiel whom many see as a far-right figure.

ab/dj (dpa, Reuters)
Former Biden adviser says US won't get more than 70 percent vaccinated 'without a mandate

Sun, January 9, 2022


Ezekiel Emanuel, a former member of the Biden transition's COVID-19 advisory board, said on Sunday that the U.S. will not get more than 70 percent of its population vaccinated "without a mandate."

"We will never get to 70, 80 percent or 90 percent of the American population vaccinated without a mandate. It's just that simple," Emanuel told moderator Chuck Todd on NBC's "Meet the Press."

Emanuel, who is currently serving as a vice provost at the University of Pennsylvania, said vaccine mandates are "our best tools to get 90 percent" of the population vaccinated.

"They make sure that people who get infected don't get hospitalized at such a high rate and are very, very, very unlikely to die. That's an important protection for people, and we have to make sure that people get it," he added.Emanuel's comments came after the Supreme Court heard oral arguments for President Biden's vaccine-or-test mandate for a large swath of the U.S. workforce. The conservative justices on the bench asked sharp questions regarding whether a decades-old federal workplace law provides the legal authority for the regulation.

A number of states have filed lawsuits to stop the controversial policy from being enacted. It is set to take effect on Jan. 10.

Emanuel on Sunday said the Supreme Court must "recognize that COVID in the workplace is a real health threat and really does affect many people."

"Unfortunately, many front-line workers have died from COVID and contracting COVID in the workplace. They need protection, and ... mandating vaccination is a quite reasonable protection," he added.

The U.S. is currently seeing a surge in COVID-19 cases nationwide driven in part by the highly transmissible omicron variant. Deaths, however, have remained lower than during previous surges.

Early studies suggest that the omicron strain causes less severe illness in vaccinated individuals who contract the virus compared to previous variants.
Massive fire that tore through Bronx building sparked by e-bike battery: FDNY

Thomas Tracy, New York Daily News
Sat, January 8, 2022

A massive fire that tore through a six-story Bronx building early Saturday, seriously injuring a firefighter, was sparked by a charging e-bike battery in a ground-floor restaurant, FDNY officials said.

The e-bike was being charged inside the Caridad Restaurant on Grand Concourse at E. 182nd St. in Fordham Heights about 2 a.m. when the bike’s lithium-ion battery caught fire, the FDNY said.

The fire quickly spread, causing extensive damage.

More than 160 firefighters and EMS members were called in to put out the fire and treat the injured. The blaze was brought under control within an hour.

Two firefighters were injured, one seriously, an FDNY spokesman said. The firefighter was taken to a local hospital for treatment. No residents were injured.

Restaurant workers had several e-bikes charging inside the restaurant overnight.

“One failed and burst into flames,” an FDNY source said.

The Grand Concourse blaze was the first e-bike battery fire in this city this year — but part of a growing concern, FDNY officials said.

E-bike and scooter batteries sparked 104 fires last year across the city, including a fatal fire in the East Village where two teens were forced to shinny down a pipe to safety.


A resident of that building was charging nine e-bike batteries inside his fourth-floor apartment when they caught fire. The explosive force of the blaze blew out the windows and a wall.

Last year’s lithium-ion battery fires caused 79 injuries and four deaths, FDNY officials said.

The batteries sparked 44 fires in 2020 and 28 in 2019, but the number of blazes increase as devices like e-bikes and scooters become more popular.


Factory-installed scooter batteries seem safe and adhere to industry standards, safety experts say. The batteries that tend to combust are “after market” items e-bike users buy online or in scooter stores as supplements or replacements for the battery that came with the device, FDNY officials said.
A lesson from Surfside? Underground assault from sea-level rise puts coastal structures at risk

Kimberly Miller, Palm Beach Post
Sun, January 9, 2022

Subterranean assaults by rising seas on the ill-fated Champlain Towers South more than doubled over a 26-year period, according to a Florida International University study that measured how often water levels rose higher than the building’s basement floor.

The often invisible incursions may or may not have played a role in the horrifying collapse of the Surfside condominium June 24, said FIU geologist and research professor Randall Parkinson, who conducted the study published last month in the journal Ocean and Coastal Management.

But he said quantifying below-ground saltwater sorties on coastal structures has been largely overlooked when climate change and sea level rise-related risks are calculated.

“Prior to June 24, 2021, our primary focus was on a relatively narrow field of future above-ground conditions and related risks,” Parkinson said. “Now we must also consider existing and future below-ground conditions and climate-related risks from a much broader perspective.”

Palm Beach Post investigation: Surfside rescuers heard her voice, tried for hours to save her. Then officials buried her story.

Surfside collapse: What really happened to the pets of Champlain Towers South?

More: Destin officials to ask state for more oversight on high-rise condos

The condominium collapsed early in the morning of June 24, killing 98 people. The structure was demolished 10 days later.

Parkinson used water-level data collected from a National Oceanic and Atmospheric Administration gauge on Virginia Key, about 10 miles south of Surfside. It showed an accelerated rise of sea levels since 1981 that caused the number of hourly water level elevations above the condominium’s basement floor to reach an average of 244 per year between 1994 and 2006.

That increased to an average of 636 per year from 2007 to 2020. The study attributed the substantial hike to a threefold increase in the rate of relative sea-level rise that occurred after 2006.

“We’re not talking water coming in from above ground,” Parkinson said. “That’s not what was happening. It was coming in through the structure of the basement. Through cracks and points of weakness that may have been there from the beginning or evolved over time.”

'Save lives, not just money': Surfside collapse grand jury report calls for reforms, warns of further troubles

'It's messy': In Surfside's aftermath, Jupiter restricts building heights near Inlet, Intracoastal

How vulnerable are Palm Beach County coastline structures?


While Palm Beach County’s coastline is at higher elevations than Broward and Miami-Dade counties because of a ridge of coquinoid limestone called the Anastasia formation, Parkinson said barrier islands and underground infrastructure are still vulnerable.

Spalling, where water seeps through concrete pores to damage reinforcing rebar and ultimately dislodges the concrete, is often seen on the balconies of coastal condos that must be repaired. Imagine what it could be doing unseen, Parkinson asked.

Yet, most of the studies he's found on the effects of salt water on concrete were from road studies in winter weather where salt is used as a de-icing agent. "None of them, until recently, were done on saltwater and marine conditions and most of those were done on bridge abutments," Parkinson said.

A climate change vulnerability assessment of seven coastal Palm Beach County cities that was released last summer said rainfall flooding was currently a bigger concern in many areas than tidal flooding or sea level rise.

In the city of Boca Raton, about 80% of residential properties in a southwest pocket of the city between Camino Real and 18th Street and along South Military Trail have a medium-to-high vulnerability to rainfall-induced flooding.

Traffic on South Olive Avenue near Hibiscus Street in West Palm Beach slows to a crawl as cars cope with flooded roads in June 2018 following an afternoon storm.

But the report for the Coastal Resilience Partnership of Palm Beach County noted that future increases in the frequency of tidal flooding caused by sea-level rise should be considered. By 2070, seas could balloon by 33 inches compared to a 2020 baseline, according to the report.

The partnership includes the municipalities of Lake Worth Beach, Lantana, Ocean Ridge, Boynton Beach, Highland Beach, Boca Raton and Delray Beach. Parts of unincorporated Palm Beach County are also included in the study.

“All the flooding threats are interrelated,” said Boynton Beach’s sustainability coordinator, Rebecca Harvey. “Maybe we are not seeing major impacts right now. But we need to look at 2040 and 2070, because if we look at what’s coming, it’s a tenfold increase.”

Related to sea-level rise, the report also evaluated shrinking shorelines — beaches that have fewer dunes to act as a buffer to the ocean, suffer from a lack of regular beach renourishments, or have structures that are closer to the ocean. Delray Beach and Boca Raton were ranked as having good-to-excellent shoreline conditions, but Ocean Ridge, Lantana and Highland Beach fell into the "severe" category — the lowest among the shoreline ratings.

More: Surfside building official was on roof 14 hours before condo collapsed
How do rising sea levels affect groundwater?

Harvey said one of the key takeaways from the report was that the county needs a detailed analysis and modeling of its groundwater tables to better understand how sea-level rise may affect groundwater.

“Our capital planning has been focused on one, two and three years out, and we need to use the study to look longer term and plan for addressing resilience farther into the future,” Harvey said.

Water from the Intracoastal Waterway covers Marine Way in Delray Beach at high tide on September 28, 2019.

After the collapse of the12-story Champlain Towers, which was built in 1981, Palm Beach County officials considered creating their own program to inspect high-rise buildings but has since deferred to state lawmakers to come up with statewide requirements.

Palm Beach County has 125 condominiums that are six to 10 stories high built before 1980. Sixty-one condos built before 1980 are 11 stories or higher, according to county officials who spoke at a July meeting of the County Commission.

The city of Boca Raton became the first Palm Beach County municipality to adopt its own building inspection program in August.

“All of this is going to have to be taken a lot more seriously,” Parkinson said. “We know the collapse hasn’t been attributed to climate change right now, but it opened everybody’s eyes to the fact that there are potential risks that we never thought about and didn’t and don’t have a process to evaluate those risks.”

Kimberly Miller is a veteran journalist for The Palm Beach Post, part of the USA Today Network of Florida. She covers weather, climate and the environment and has a certificate in Weather Forecasting from Penn State. Contact Kim at kmiller@pbpost.com

This article originally appeared on Palm Beach Post: Surfside condo collapse: Florida tower faced assault by sea level rise
DEMOCRAT
 Maine governor cites rising costs in veto of farmer unionization bill

Sat, January 8, 2022


Maine Gov. Janet Mills (D) on Friday vetoed a bill that would have allowed farmers in the state to unionize, the Portland Press Herald reported.

The proposal called for agriculture workers to be able to organize and bargain for wages, hours and working conditions.

"While this bill is well intended, I fear its unintended consequence would discourage the growth of farms in Maine," Mills wrote in her veto statement.


Maine farms are mostly small and family-owned and do not need the same protections as larger factory farms controlled by corporate interests, Mills argued.

She said the bill would "subject our farmers to a complicated new set of laws that would require them to hire lawyers just to understand."

Labor union Maine AFL-CIO criticized Mills's decision, claiming that the bill would protect farm workers from abuses like sexual harassment and wage theft.

"Farmworkers provide the most essential service to our communities by growing, picking and processing the food we eat every day. They perform back breaking labor and are among the most exploited workers in our nation," said Maine AFL-CIO Executive Director Matt Schlobohm.


The AFL-CIO said a lack of unionization rights among farm workers is a result of longstanding racism and fails to protect workers of color.

"This bill would have advanced racial justice and corrected a long-standing injustice," Schlobohm said.

Some agricultural associations opposed the unionization bill while it was still being debated in the Maine Legislature. The Maine Vegetable and Small Fruit Growers Association and the Maine Potato Board both agreed with Mills's decision to veto the bill.

"Legislation that would restrict the ability to plant, care for and harvest our crops would risk the livelihood of Maine farmers and those employees that rely on the jobs Maine farms provide," the Maine Potato Board said in a statement released after the decision.

Maine is the only producer of wild blueberries in the United States. The state also produces potatoes and maple syrup and contains large dairy farms as well as smaller livestock farms.
It’s time for companies to pay their fair share to their employees


Nicholas Creel
Sun, January 9, 2022

Nicholas Creel is an assistant professor of business law and ethics at Georgia College and State University.

While corporate America continues to echo the claim that we are in the midst of a “labor shortage,” the current situation is better understood as a wage shortage, born of a refusal by companies earning more than ever to pay employees fairly.

One statistic makes abundantly clear we don’t really have a labor shortage: the labor force participation rate. This statistic tells us the percent of all working age adults who are working or seeking work. Currently, this rate is 61.8%, down only by the tiniest of margins from the 62 to 63.5% range it has fluctuated between over the past decade. Put another way, 39.2% of all working aged adults are currently neither working nor are they seeking work.

With well over a third of working aged adults not in the workforce, there is an incredible amount of potential growth in the number of people who could easily provide labor to companies seeking it. However, these individuals sitting on the sidelines will only enter the workforce if market wages rise to such a level as to make it worth their time.

Framing this situation as a labor shortage only makes sense if you think employers are entitled to an employee at below market wages. The plain reality is that wages, stagnant for decades, need to be raised significantly. The meager 1.5% increase in wages as of late is nowhere near enough to make up for what workers are owed.

Many corporate executives, like the former CEO of McDonalds, will claim that an increase in wages will simply be passed onto the consumer via higher prices. However, there is nothing that mandates this to happen outside of corporate greed, particularly for companies like McDonalds that are running a handsome profit.

Increasing prices to maintain a higher profit when labor costs go up is ultimately a value choice. Those companies that would raise prices after raising wages would largely be deciding that they value returns to investors more than they do paying higher wages to their employees while offering low prices to their customers. In essence, they would signal with this reaction that the investors is who they value most.

Let’s look back to McDonalds as an example for why higher wages really don’t need to lead to higher prices. McDonalds has a net operating cost of around $12 billion and 25-30 percent of those costs are wages. So, on the high end, McDonalds spends about $3.6 billion annually paying all of its employees.

If we doubled all wages at McDonalds, their current average annual net profit of $10 billion would narrow to $6.4 billion. That’s right, McDonalds could literally double wages for all of their employees and remain incredibly profitable.


Nicholas Barry Creel

True, the low wage status quo is responsible for the incredible performance of the stock market over time, but consider for a moment that the richest 10% own about 89% of all stocks. Shareholder primacy is a concept that only serves the wealthiest among us while leaving the rest of society as exploited labor to fatten the bottom line.

While some may see the term “exploited” as hyperbole, the reality is that the likes of Walmart and McDonalds have thousands of employees who are so poor that they qualify for food stamps and Medicaid. Companies raking in billions of dollars in profit annually are effectively supplementing employee wages with government welfare benefits.

Put aside for the moment the fact that no gainfully employed person should still be so mired in poverty that they require welfare programs to live. The fact that this happens at all only further highlights how poorly employees are paid.

This is why, for many Americans, staying at home to help raise children or take care of elderly parents is by far the more economical choice. Until wages go up significantly, that won’t change.

This article originally appeared on Augusta Chronicle: Why aren't people applying for jobs? Because wages are not high enough
‘Like telling a 30-year mortgage holder it’s all due at year’s end’ — Pressure on unfunded public pensions relies on flawed math


JANUARY 9, 2022

ECONOMY

How Healthy Are US Public Pensions?

While news media coverage – and critics of public pensions – often draw attention to the large unrestricted liabilities, a new study Provides a new way of looking at those liabilities from a public-pension business group – the economy and market they say is more relevant to the SPX
Work.

The group, the National Conference on Public Employees Retirement Systems (NCPERS), argues for a new approach to considering liabilities in the context of economic development, known as “sustainability assessment”.

Critics of public pensions compare “30 years of pension liabilities, i.e. liabilities that are amortized in 30 years, with one year of state and local revenues. They then argue that public pensions are not sustainable,” says NCPER. The report’s author, Michael Kahn, writes.

“Comparing 30 years of pension liabilities to one year of state and local revenue is like a bank telling a borrower that his 30-year mortgage is due at the end of this year,” he said.

NCPERS argues that traditional methods of presenting pension liabilities are often misleading. 

Instead, Kahn writes, outstanding public pension liabilities should be placed in the context of the 30-year period in which they are amortized, not considered something that must be paid immediately.



NCPERS argues that its approach to analyzing revenue and liabilities is more accurate. 
Source: NCPRS


Kahn argues that such an approach should be an additional tool for monitoring how well-funded and sustainable a pension plan is, in addition to existing, familiar approaches such as actuarial analysis and stress testing.

It urges “to monitor stability on an ongoing basis and to make fiscal adjustments to keep the ratio between unfunded liabilities and economic capacity stable, on average, over the past two decades.”

As an example, he indicates a 2020 opinion piece From the Chicago Tribune, which claims that pension liabilities in Illinois total 10 times state and local revenues. “It certainly sounds terrible,” Kahn writes, “but it is a false comparison. When we compare pension liabilities amortized over 30 years with 30 years of revenue (an apples-to-apples comparison), then They account for only 8% of the revenue.

While it may be tempting to find a new and more compelling way to frame liabilities, the NCPERS report adds to a recent wave of public-pension research that argues there are good reasons to bring broader context to the issue of pension funding.

a 2021 Working Papers from the Brookings Institution Challenged the idea that state and local governments should fund pensions in full—that is, for the entire 30-year period as Kahn refers to above.

“Governments don’t have to pay off their debt like a house,” said Lewis Sheiner, one of the co-authors of the Brookings paper, in an interview with Businesshala. “They can just keep turning it around. They are never going out of business and they have to pay all at once.”

Public pensions don’t need to be fully funded to be sustainable, paper finds


To be sure, there are some public-pension schemes whose funding levels are not sustainable, and which must be addressed urgently. The Kentucky Employee Retirement System is one of the least funded systems in the nation, according to statistics from Retirement Research Center at Boston CollegeAs of 2019, only 16.5% was funded.

He runs the worst funded public pension in the country. Here’s the story of his ‘good news’

What’s more, any analysis of sustainability relies on governments making the necessary contributions to them in both good times and bad, something that hasn’t always happened.

But there are also solid reasons to criticize those details as severely framed as a push to fully fund pension conditions. Among them: dedicating a large portion of an operating budget to future expenses that can meet actual current needs, such as schools or capital projects.

In addition, the perceived need to fully fund 30-year liabilities may cause municipalities to engage in financial practices that are arguably more risky or harmful, such as taking out loans to plug the pension gap.

Read further: State and local governments have issued more pension bonds this year than ever before
USA
Pensions May Actually Be Cheaper For Employers Than 401(k) Plans


Ben Geier, CEPF®
Fri, January 7, 2022

pensions 401(k)

With a few notable exceptions, the age of pensions is largely over in the U.S., with traditional defined benefit plans mostly being replaced by defined contribution retirement vehicles like 401(k) plans. 

A new study from the National Institute on Retirement Security, though, seems to suggest that the end of pensions may not actually be as beneficial to companies as once thought. In fact, a giving employees a traditional pension plan may actually be less costly than operating a 401(k) or other defined contribution plan.

Why Are 401(k) Plans Costlier Than Pensions?


The logic behind why companies wanted to switch to defined contribution plans is pretty simple. In a traditional pension plan, the company is on the hook for a predetermined payment every year until a worker dies. If they live particularly long, that can get expensive. With a defined contribution plan like a 401(k), however, the payment is entirely determined by how much an employee saved during their working years — and of they run out, it doesn’t impact the employer.

The group nature of a pension plan, though, may actually result in lower costs for the employers, though, according to the new NIRS study.

“Pensions have economies of scale and risk pooling that just can’t be replicated by individual savings accounts,” said Dan Doonan, the NIRS’ executive director, in a statement. “This means pensions can provide retirement benefits at a much lower cost.”

The study found that in order to replace 54% of income for employees after retirement, a DB plan required contributions of 16.5% of total payroll. A DC plan, meanwhile, required 32.3% of payroll to get to the same endpoint.

“These cost differences are a key consideration for employers and policymakers given that most Americans are deeply worried about retirement and retirement savings levels are dangerously low for the typical U.S. household,” Doonan notes. “Policymakers are wise to protect existing pensions while also fostering innovation in DC plans to improve the financial security of those relying on 401(k) accounts.”

Pension Plan Basics


pensions 401(k)

A pension plan works by having money contributed to a pool by both the company and employees who are enrolled in the plan. There may be a cliff at which point a person becomes vested in the plan — meaning that you become eligible for benefits after working at the firm for a certain amount of time.

The money put into the pool is then invested in the market so that it grows. There will often be either an investing board or a financial advisor who makes investing choices. The money from the pool is then used to pay predetermined amounts of money to retired employees, often based on how long a person has worked at the company and what their salary was while they were there.

401(k) Plan Basics


A 401(k) plan is much more individualistic. Each person contributes money to their own account and choose from a menu of investment options. Once they retire, they can schedule their own drawdown plan to take money out as needed. Money contributed to a 401(k) is put in pre-tax, so participants will pay taxes when they take money out in retirement.

There is sometimes an employer element to 401(k) plans — an employer match. This is an option some employers use as a part of employees compensation package. Basically, a firm will match a certain amount of money the employee contributes. This could be a dollar-for-dollar match or a possible match, but generally the company only contributes based on how much each employee contributes.

The Bottom Line

pensions 401(k)

For the past several decades, pension plans have largely been phased out in favor of defined contribution plans, except in a few industries, notably the public sector. New research, though, shows that the conventional wisdom may be wrong and pension plans may actually cost employers less than offering a 401(k) plan.

Retirement Planning Tips


No matter what type of retirement plan your company offers, a financial advisor can help you plan for your golden years. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/insta_photos, ©iStock.com/pinkomelet, ©iStock.com/SrdjanPav