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What the Numbers say about Creating Jobs in America – Part 3/4

My goal in Part Two was to show what caused the national debt, why it keeps growing larger and who bears the most responsibility of that debt.

Now I will return to the CalSTRS “Retired Educator Winter 2012” newsletter, which said, “Statewide, CalSTRS benefit recipients (I’m one of them, and there are more than 200,000) received $6.03 billion in payments in 2006. The economic ripple effect in the form of job creation as those benefits were spent totaled $9.22 billion, according to a 2007 study by the Applied Research Center at California State University, Sacramento.”

None of this was borrowed money. Educators paid a percentage of their gross earnings into CalSTRS during their working years as I did. This money was invested and earned interest, which was more than $30 billion for 2011. This money does not contribute to the national debt.

In fact, California’s economy gained $6.71 for every single dollar committed to pensions by employees, employers and taxpayers and each dollar also generated 44 cents in government revenues.

Furthermore, according to the Pensionomics: Measuring the Economic Impact of State and Local Pension Plans, these pensions support 2.5 million jobs and $358.6 billion in economic activity.

Does this sound as if the wealthy are funding the start up of small businesses?

For example, in 2006 in California, 976,233 state residents received a total of $23.52 billion in pension benefits from state and local pension plans… The average pension benefit received was $2,008 per month or $24,097 per year… Retiree expenditures stemming from state and local pension plan benefits supported 205,221 jobs in the state. The total income to state residents supported by pension expenditures was $15.1 billion.” Source: Pensionomics – National Institute on Retirement Security (and this was just public sector pensions)

Then, according to Retirement USA, one in five private-sector workers is covered by a traditional pension while 55% of people 65 or older rely on Social Security for half or more of their income—the median income for older households with Social Security and pension and annuity income was $32,105 in 2008, not including earnings from work.

In addition, CalSTRS ended 2011 with net assets of $155.34 billion and that money isn’t sitting around gathering dust. Those billions are invested and earning money. To earn money off those investments, means someone else made money too and this generated jobs.

The CalSTRS newsletter says 53% of those billions were invested in Global Equities, which is a category of mutual funds in which investments may be made in stocks of corporations throughout the world. A portion of the fund’s assets are usually committed to American markets, although the major portions are held in equities of developing countries

In addition, 17.6% of CalSTRS funds were in Fixed Income accounts, 14.8% in Private Equities, 12.1% in Real Estate, etc. When CalSTRS earns money from those investments, that means those investments also earned money for businesses and created jobs for Americans and for the citizens of other countries depending on where the money was invested.

However, where do the wealthy that benefited from the Bush tax cut keep most of their money?

Continued on March 2, 2012 in What the Numbers say about Creating Jobs in America – Part 4 or return to Part 2

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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The Private-Sector, Jealousy-Misery Media Factor – Part 3/5

17 Dec

Another example of how misleading Don Thompson’s AP piece, Public retirement ages come under greater scrutiny, was: “With Americans increasingly likely to live well into their 80s, critics question whether paying lifetime pensions to retirees from age 55 or 60 is financially sustainable. An Associated Press survey earlier this year found the 50 states have a combined $690 billion in unfunded pension liabilities and $418 billion in retiree health care obligations.”

What Thompson doesn’t mention is that some states managed their pension funds better than others did.

A March 2011 report on the Best and Worst State Funded Pensions by Adam Corey Ross of The Fiscal Times offers a more balanced picture.

Ross writes, “State pension programs across the country have undergone a major transformation, as more and more of them are cutting back the amount of money they set aside for retired workers, gambling that they can meet their obligations through investments instead of savings…”

In fact, Ross lists the best fully-funded state pensions, which are: New York, Wisconsin, Delaware, North Carolina, Washington, South Dakota, Tennessee, Wyoming, Florida and Georgia. He also lists the worst state pensions where the gamble did not pay off.

California falls between the two lists and is struggling to fill the funding gap. The following video explains why.

In addition, nowhere does Ross or Thompson mention that California has two state pension plans. There is CalPERS and then there is CalSTRS.

The California State Teachers’ Retirement System [CalSTRS], with a portfolio valued at $148.2 billion as of October 31, 2011, is the largest teacher pension fund and second largest public pension fund in the United States. CalSTRS administers a hybrid retirement system, consisting of a traditional defined benefit, cash balance and defined contribution plan, as well as disability and survivor benefits. CalSTRS serves California’s 852,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.

How well funded is CalSTRS to meet its future obligations?

CalSTRS makes it clear that “It’s important to understand that the risk of facing depleted assets exists approximately 30 years from now versus actually facing insolvency today.”

Note: Due to losses from investments during the 2008 global financial crises, the CalSTRS retirement “fund took an enormous hit to its stock portfolio when the market plunged during the heart of the recession, losing nearly $43 billion — roughly 25 percent of its value — from June 2008 to June 2009.”

Continued on December 18, 2011 in The Private-Sector, Jealousy-Misery Media Factor – Part 4 or return to Part 2

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The Private-Sector, Jealousy-Misery Media Factor – Part 2/5

16 Dec

Due to the politics of money, beginning early in the 1980s, during the Reagan era, there was a rapid shift away from private sector employer-based defined benefit pensions to employee-controlled personal retirement accounts.

Under President Reagan [1981 – 1989] this trend in the private sector was helped along by the Republican Party that controlled the Senate from 1981 to 1987 giving President Reagan the leverage he needed to shift private sector pension money to the stock market and other risky investments—another part of the Reagan plan besides adding two trillion dollars to the national debt by cutting taxes on the wealthy, raising them on the working class by cutting deductions and spending more.

In fact, “Since 1982 and the Ronald Reagan economic program, profit expectations of American corporations have skyrocketed, and right behind have been the costs of health care, the cost of housing, the cost of military programs, the cost of banking, and the cost of many other products and services.” Source: The Agonist

In 1980, approximately 92 percent of private retirement saving contributions went to employer-based plans; 64 percent of these contributions were to defined benefit pension plans [similar to the public pension plans of today].

Then by 1999, [thanks to President Reagan and the Republican majority in the Senate while he was president] about 88 percent of private sector contributions went into defined contribution plans, the vast majority of personal retirement accounts being set up as 401(k)s and Individual Retirement Accounts (IRA).

However, the Public Sector did not follow this risky path to retirement. The Public Sector stayed with employer-based defined benefit pension plans such as the one I’m in with CalSTRS.

It helped that the union membership rate for public sector workers (36.2 percent) was substantially higher than the rate for private sector workers (6.9 percent).

To understand the numbers better and why the media focuses its Yellow Journalism circus act to attract the biggest mob, in November 2011, the Bureau of Labor Statistics reported that there were 20,404,000 public sector employees [2,000,000 work for the federal government—the rest work for the states or local county or city governments] and about 128,000,000 private sector employees.

Those numbers help explain why the Associated Press ran Public retirement ages come under greater scrutiny by Don Thompson.

If you published a newspaper, a magazine, ran a TV news network, hosted a conservative talk show, or wrote a popular conservative Blog, which audience would you focus on to boost advertising rates? As I said, it’s all in the numbers.

A. 20 million

B. 128 million

Continued on December 17, 2011 in The Private-Sector, Jealousy-Misery Media Factor – Part 3 or return to Part 1

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Tag Archives: Pension

What the Numbers say about Creating Jobs in America – Part 3/4

The Private-Sector, Jealousy-Misery Media Factor – Part 3/5

The Private-Sector, Jealousy-Misery Media Factor – Part 2/5

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