This week the NPR Fronteras desk continued a series of reports on how retirement is being redefined in America's southwest. One segment, by KPBS reporter Ruxandra Guidi, focused on the San Diego pension debate, and introduced us to one city worker caught in the retirement squeeze.
Michael Smolens, government and politics editor, San Diego Union Tribune
Alisa Barba, editor, Fronteras Desk, NPR
Katie Orr, Metro reporter, KPBS News
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CAVANAUGH: This is KPBS Midday Edition Roundtable. I'm Maureen Cavanaugh. My guests, Michael Smollens, government and politics editor for the San Diego Union Tribune. Alisa barber is senior editor of the fronteras changing America deck. And Katie Orr is metro reporter for KPBS news. And we are inviting you to join the conversation. 1-888-895-5727.
This week, the NPR Fronteras desk continued a series of reports on retirement being redefined in America's southwest. One segment by reporter Ruxandra Guidi focused on a San Diego City worker whose story isn't often heard in San Diego's pension reform debate.
RIH2: Tommy Salazar is a 48-year-old city park worker who's been doing the same job day in day out for 19-year, picking up trash, making sure the sprinklers working cleaning public restrooms and parking the lot. Since the beginning of this year, he's been in charge of ski beach, in mission bay, popular with jet skiers.
What are you checking for right now?
NEW SPEAKER: Just making sure that none of the boards are loose. Make sure that no nails are sticking out so that nobody'll get hurt out here.
RIH2: During the busy summer months, Salazar gets help from another worker. But typically he's out here from 630 in the morning until 2:30 in the afternoon by himself.
NEW SPEAKER: I'm a fast worker. And I have to run sometimes to get a lot of this stuff done. I don't mind it. But it does make it a little difficult to get everything done.
RIH2: Such physical laborer can be hard on the body. Salazar says he and many of his colleagues have suffered injuries and back pain from their jobs. One of the things that's made it all worthwhile has been his city pension. Like most city workers, he doesn't make much. A modest salary of up to $36,000. He's counting on a pension that will be about 50% of his salary for the rest of his life, around 15 to $18,000 a year. He also has health benefits, a three-week pays vacation, are and the steadiness of a full time job. But pause of the pension deficit, the city has frozen his salary, made cuts to retirement contributions, and increased his health insurance deduction, and next year as part of a highly controversial pension reform plan, people in San Diego will be asked to vote on whether new city employees will have a guaranteed pension or contribute to a more risky 401K plan.
NEW SPEAKER: They'll say oh, yeah, you guys are getting a great pension. And truthfully, I don't think I'll ever be able to retire for a long time. I used to think, oh, yeah, I'll be able to retire when I'm 55 or 60. Now? It's like I don't know.
RIH2: Salazar joined the pension system when he was hired almost 20 years ago, and he's been paying into the system since. Somewhere around 10% of his pay is deposited into his retirement account. The city contributes a smaller amount. That leaves him with little money in his pocket, and he worries whether his pension will be enough to support whim had he does retire. Those $15,000 a year will be worth even less than they are today.
NEW SPEAKER: All these different thoughts are going law your mind, going what do I do now? If we don't have our pension, we can't even try to get Social Security because we don't get any Social Security. All we have is this.
RIH2: It's 2:00 PM, and Salazar is nearing the end of his eight-hour shift. Heave does one last minute check of the bathrooms and hauls some plastic bags into his pickup truck. Then he heads to another facility five miles away from here. He says he tries not to think too much about retirement. It's the least of his worries these days.
NEW SPEAKER: Right now, I have no idea. I had a vision before. I lost my mouse. I ended up getting divorced. I don't know. My vision of my retirement has disappeared.
RIH2: Salazar is just one of 10,000 city blue collar and white collar workers in San Diego and hundreds of thousands nationwide who are witnessing public pensions become a thing of the past. As they fear, public workers are likely to end up like their private counterparts.
CAVANAUGH: And this is the KPBS Midday Edition Roundtable. Alisa barber, you edited that piece. And we haven't heard many stories lick that before in the debate over city pensions. Why not?
BARBER: Well, we should hear more about those. When you hear about pension reform, it sounds like some huge fiscal policy. But really what it is, it's individual workers, it's people down the street. It's a lot of people we work with, a lot of people we see on an everyday basis. This was a really compelling story because this man had a sore tale to tell. He had a lot of things going wrong in his life. But basically he's a mid to lower income person just like lots of other government public workers out there who's going to be relying on a small pension to live out his golden years. And it's likely going to be a different kind of retirement, obviously, than he had anticipated. And I think that many of us have anticipated. And this was a good story because it was a person on the inside of this debate. And I think we should hear more stories like this.
CAVANAUGH: And he says no Social Security for him. Why are city workers not enrolled in Social Security.
BARBER: That is a really good question. I did not know that until I did the story. And Katie, maybe you know. Why don't you go?
ORR: They just -- the city made the decision in the 1980s to get out of Social Security. They thought -- the people in charge said it was a Ponzi scheme at the time, and the city would be better off without Social Security so they'd did. And the agreement was that the city would pay for the retiree healthcare for worker fist they voted to get out of Social Security, which they did. So -- that's where we stand now.
CAVANAUGH: Now, Michael, the common perception I think is that city workers are being paid large pensions. And that certainly helps pension reform advocates. But isn't there a deeper issue? Even month the populace about whether or not we should be funding any kinds of designated perceptions for public workers?
SMOLLENS: Are, I don't know that I agree entirely with the premise. Yes, there's been a lot of attention to the big upper end pensions and salaries. And we do that at all levels of government. But let's not forget what happened here, that there were deals made among city leaders, union fortunately, and so forth, to bump up pensions. But he perhaps benefit Friday that as well, and they didn't provide the funding for it. So there were some policy issues, you talk about a Ponzi scheme, which they tried to get away from, that's exactly what they created. Now we have a $2.1 billion deficit in the pension fund. Secondly, I think a lot of people in listening to this, it is a compelling tale. But how does he compare with somebody at that salary level in the private sector? And I would suggest that person probably doesn't even have a guaranteed pension or maybe a shaky 401K. So a lot of people, while sympathetic with people at the lower end are saying that's my situation. And one final thought just because we've talked about this up coming initiative that forces people into 401Ks, those are future workers. I don't believe Mr. Salazar and existing workers will get their pension taken away. But in reality, they are having to pay more. I'm not unsympathetic. But I think just in context a lot of people are looking at it and saying we're all in this boat together.
BARBER: I think that's absolutely fair. This is a guy at the lower end so he's looking at a smaller pension, and he would have been looking at a smaller pension down the line anyway. And the real debate is there was a way to gain the system maybe 5 or 10 years ago, where your pension was based on your last couple years of work. So people would make sure that the last couple years are, they'd max out the salary in those years through over time, and get a pension based on that. California is still one of the few states in the nation where you can retire with full benefits at 55 as a government worker. I remember 10, 15 years ago meeting somebody who -- a really, really smart woman, and she was working as a statistician in the police department. And we were, like, why would do you that? And she said because it's a great pension. I can retire early, great benefits, great pension.
SMOLLENS: And other another thing, not to be unsympathetic, the notion of retiring at 50 or 60 is nothing people are even considering in this day and age for the most part. So they view that as an unusual benefit for government workers that other people in the private sector don't get.
ORR: But I think you have to emphasize again that the city workers don't get Social Security.
SMOLLENS: Yes.
ORR: So where that worker is making an equal amount in the private sector doesn't have a pension but they do have Social Security if. If they're young enough they might have time for the 401K to recover and come back up. And a lot of the benefits that the city offered, you had 206 the money to be able to buy into them. I think that's where the blue collar unions lost out because they don't make enough money to buy in to get these benefits that have inflated some of the pensions that the city is paying right now.
CAVANAUGH: Michael, I think you make a fascinating political point as you were describing this. Because the whole idea that, okay, we don't like the pensions that the city work uppers get because we don't get any pensions, people have been calling this a sort of race to the bottom. You know? I want you to feel my pain. Without main looking generally at where we're going with this as a society learn just sort of, like, do you get more than I do? You retire at 62? I have to wait till I'm 67. Where are we as a society about this? Are we looking at what is the -- what's going to happen to people when they do retire, whether it's at 55 or 67?
SMOLLENS: Well, we see stories regularly in the nation media and the local media that a lot of people don't think they will be able to retire, certainly not at even 65, which is sort of the norm. We all hope that if we have to work that long and beyond, that there will be jobs for us. So there's a lot of worries going on. And again, I use the term not being unsympathetic. This is a very compelling story. And I think it's a good one to do because loss in the billion dollar deficits and the games that were played and how we got there, some people that had nothing to do with that are affected, they're affected by the economy, they're affected by their perceptions going down because they're paying more. So it is a true story and a good story for people to know about in the context of the other stuff. Because sometimes that gets lost in the shuffle and they're not all obviously six figure individuals. We hear a lot about last year during, I believe it was the drop D debate. We heard about the librarian who's making a $200,000 a year pension. But I've done some stories on the blue collar union here and there. Of and the union president told me their average salary is $47,000. So that person is never going to get a $200,000 salary. With that, it's just a cost the city can't pay. Our pension bill is going to be two helped $50 million or so, I believe, this year. Although the projections show in a couple years, after we get over the hump of all these losses, it would drop off dramatically, regardless of whether or not we pass this pension reform bill. If we pass that pension reform initiative that they're trying to get signatures now, it's gonna be 30 years before you really start seeing a significant savings from that because you have to sick cycle through all the current ploys.
BARBER: Back to what you were saying Maureen, you were talking about what is retirement going to look like forker society. We just did a series on five stories on the Fronteras Changing America deck. And looking at how retirement is being redefined by this generation. We have a huge surge of baby boomers moving into retirement, most of whom will not be able to afford retirement. It's not going to be the golf course and the sunny house down in Tucson anymore. It's a different world both for economic reasons, pension reasons, but also because this is a generation of active people who do not see closing the door and walking away at 65. Number one because they can't afford go afford it, and number two, because they're not interested. Six is the now 40, we're helping, right? And anybody who wants to go listen to it can go to Fronteras desk.org/retirement and listen to all five stories.
CAVANAUGH: Very good mention of that because that was an excellent series. Let me ask you, Michael, when we look at -- as Katie is saying, we're not going to be seeing a huge amount of benefit from pension reform, at least some people say we won't see a huge amount of benefit from pension reform for about 30 years. So what is, if there's not a political agenda attached to it this, is it really going to fix any kind of financial problems for the city?
SMOLLENS: It will start stabilizing. It took some big moves and a long time to get into this problem, and this isn't going to get out of it. There's been a lot of analysis of this proposition that they're trying to get on the ballot, Carl DeMaio, and it's supported by the mayor, and some others. And they point out that the shifting new orders of the 401K isn't really the savings thing, it's the five-year pay freeze that triggers that. So there are savings. But it will take some time. But I think that what they need to do, they've made some moods that stabilized things, cycling through as Katie mentioned is going to take some doings. But I think there's a true belief that this will ultimately save money. Whether it's fair or not is the real question. The 401K versus defined benefit.
ORR: And the pensionable pay option, I think the city attorney has said he believes it's a legal concept. But that will be something fought out in court as well.
SMOLLENS: Absolutely.
ORR: Figuring your pension just on your base salary, not including bonuses and things lick that. Of that is one of the things they're trying to hook on the to save money in the near term instead of waiting until everyone cycles out of this system.
CAVANAUGH: If nothing else, this discussion will have us all doing some thinking about our own golden years, I'm sure. I want to thank you all for speaking with me today. Michael Smollens, Alisa barber, and Katie Orr, thank you all.
ORR:
SMOLLENS: Thank you.
ORR: Thank you.
BARBER: Thank you.
