L E T   ' E R    R I P !!!!!

Someone will have to pay for a two-tier job system.

The compensation gap between the public and private sectors is growing ever wider.

Toronto's garbage strike is about as popular as a skunk at a picnic. As the streets get messier and smellier, public support for the union seems to be hovering at zero. Why? Because the garbage workers are striking to hang on to benefits unknown to the rest of us, including a cushy deal that allows them to pile up sick days and cash them in when they retire.

The sick days have caused public outrage. But they're the tip of the entitlement iceberg. Across the country, the compensation gap between public- and private-sector jobs has grown increasingly wide.

The garbage workers are typical. Their hourly wage is about 20 per cent higher than in the private sector. They have a gold-plated benefits plan, to which they contribute not a cent. After 10 years service, their jobs are guaranteed. Workers with top seniority get seven weeks vacation. Then there's the pension - a generous defined benefits plan, guaranteed by you and me.

A stunning piece of research by the Canadian Federation of Independent Business has chronicled the public/private wage gap. It found that public-sector workers across Canada earn 8 per cent to 17 per cent more than people with similar jobs in the private sector. The public-sector wage advantage is now 11.9 per cent for municipal workers, 7.9 per cent for provincial workers and 17.3 per cent for federal workers.

That's just half the story. They also get better benefits and pensions. Their work weeks are shorter (typically 33.5 hours, versus 37.3 in the private sector), and they get more vacation and sick leave. Once you calculate the value of the benefits and shorter work time, the total compensation advantage adds up to 35.9 per cent for municipal workers, 24.9 per cent for provincial workers and 41.7 per cent for federal workers.

There used to be a deal that everyone understood: Public-sector work didn't pay a lot, but there were good benefits and job security. Now, people are forking over tax dollars so government workers doing essentially the same jobs can make a lot more than they do.

The inequities are greatest when it comes to pensions. That's because the tax system is biased against the private sector. Think of a pair of teachers who retire at 55 and live happily ever after on their guaranteed, indexed pensions. You have good reason to envy them. Not only do public-sector workers retire four years earlier (58 versus 62 in the private sector), they can build up pension wealth in a way the rest of us are not allowed to.

In a paper for the C.D. Howe Institute, pension lawyer James Pierlot calculated the difference. A pair of middle-income public-sector workers can retire at 58 with retirement savings of $1.3-million or more. A private-sector couple with the same work history will typically retire at 62 with savings of $244,800. The public-sector couple work four years less and get five times more retirement income.

On top of that, sweetheart deals for retiring government bureaucrats are a way of life. Although the details are fiendishly opaque, these deals are not available to you. “It's the Latin American general syndrome,” says one pension expert. “They feather their own nests and don't worry about anybody else.”

Governments across the country have lost control of benefit costs. Sick days are easier to give out than raises because the true cost of sick days can be indefinitely deferred. Pension promises were easy because people figured the good times would last forever.

But, eventually, someone will have to pay. C.D. Howe president William Robson figures that Canada's net liability for unfunded pension promises to all those government workers and bureaucrats amounts to a staggering $422-billion. Unlike private-sector pension plans, however, these plans will never fail, because they're backstopped by the taxpayers.

http://www.theglobeandmail.com/news/opinions/someone-will-have-to-pay-for-a-two-tier-job-system/article1219654/

July 16 (Bloomberg) -- U.S. foreclosure filings hit a record in the first half, a sign that job losses and falling property prices deepened the housing recession, according to RealtyTrac Inc.

More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, the Irvine, California-based seller of default data said today in a statement. That’s a 15 percent increase from the year earlier. One in 84 U.S. households received a filing.

“People are losing their jobs, seeing their income go down and are underwater on their mortgage,” Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles, said in an interview. “It’s a toxic combination.”

Home prices in 20 major U.S. metropolitan areas dropped 18.1 percent in April from a year earlier, according to the S&P/Case-Shiller index. The unemployment rate rose to 9.5 percent in June, the highest since 1983, bringing the total number of lost jobs to about 6.5 million since the recession started in December 2007, the Labor Department said.

Defaults by subprime borrowers with poor credit histories spurred the housing recession and spread to prime borrowers as home prices and sales declined. The Mortgage Bankers Association said May 28 that prime fixed-rate home loans to the most creditworthy borrowers accounted for 29 percent of new foreclosures in the first quarter, the biggest share of any type of loan.

One in eight Americans is now late on a payment or already in foreclosure, the Washington-based mortgage group said.

“I don’t see any turning of the tide,” said Donald Haurin, an economics professor at Ohio State University in Columbus. “The effect of more foreclosures will be continued downward pressure on house prices, and lead to difficulty making mortgage payments that are continuing to reset.”

Payment-option adjustable rate mortgages will contribute to higher defaults, said Rick Sharga, executive vice president of RealtyTrac. Option ARMs allow borrowers to pay less than the interest they owe each month, tacking on the difference to their total debt and creating the potential for bigger bills in the future.

About three quarters of those loans will adjust to require higher payments next year and in 2011, with the peak coming in August 2011 when about 54,000 loans recast, according to data from First American CoreLogic of Santa Ana, California.

http://www.bloomberg.com/apps/newspid=20601087&sid=aHAbmgVoHjA4

I'm wondering about the berries.... I notice the blue berries are nearly ready in the next few weeks.... mmm blue berries.....

Friggen government workers can't tax our blue berries... lol.

Great articles Charles... good information for people to think about.

Poor Charles, maybe its the private sector that needs fixing up. Business owners raking it off the top giving the employees nothing. But I do not think you have it quite right those that are well educated do quite well in the private sector. What about the rewards perks and pay ceo's and upper management get, can be quite insane.

I am a government worker and if I wasen't well rewarded I would jump to the private sector. In my occupation private sector types generally do better.

Instead of 'Friday Free For All' why not call this 'Gleamings by Charles' or something along that line?
Good articles though.

Hopefully "eagleone" has gotten enough of a spanking to close down his/her bear feeding station!

"Now, people are forking over tax dollars so government workers doing essentially the same jobs can make a lot more than they do."

Let me see. If I make $60 thousand as a public sector employee doing the same job as a private sector employee, do I not pay more tax for the same work I do?

I do not believe that public sector employees have any benefits that reduce their tax percentages.
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"Someone will have to pay for a two-tier job system."

I vote we get rid of the two tier job system and get some reasonable employment standards into North America.

Here is the German standard, as a for instance. Keep in mind that when you read them, that Germany is supposed to be more productive than Canada.

http://www.wilmerhale.com/publications/whPubsDetail.aspx?publication=159

20 days per year vacation rather than 10 in Canada. As it says, the norm is more like 25 to 30 days. That is for ALL people working, not a select few who have good contracts in either the private or public sector.

Charles, the only sector that is lagging is labour in the private sector.

Politicians have given themselves huge pay raises.

The public sector labour has fought with the self serving politicians to maintain compensation thru tough economic times.

Private sector senior management has continued to reward themselves thru huge compensation and bonuses that make professional athletes look like minimum wage.

So out of the four stated above your solution is to waterbed all labour in the country. Then continue with the system of self serve senior management in both public and private sector.

(By private sector I mean companies that are publically traded)

Vacation + paid holiday time chart, by law in the OECD countries.

http://andrewhammel.typepad.com/.shared/image.html?/photos/uncategorized/2007/05/18/vacation_time_chart.jpg

Finland leads the pack with 30 + 9 = 39

The USA has no laws in that regard.

Canada = 10 + 8 = 18

As I said, time to give ALL working people in Canada the same work conditions. Otherwise it is the strongest "negotiatior" (union or individual worker) that wins over those less well protected.

Time we took a look at how much companies like Canfor pays to its middle management "professionals". I would say in the range of $70,000 to $150,000 depending on years of experience and type of work.

Perhaps someone with some more detailed and current knowledge of that can post something with some more solid information.

I won't agrue that there are people out ther being paid more than should be paid...
a good example...professional sports...millions of dollars a year...for what?
yes they play well..but really....

Did you see the new logo the City of Kelowna got for $80,000.00. Wow, I could have done that when I was 8 years old with a spiral set.

"Wow, I could have done that when I was 8 years old with a spiral set."

You have identified one of the key differences between those who are imaginative and those who are not. As we get older, the innocent imagination that people have is lost in amny cases because our real life experiences start to get in the way of free flowing thinking. Thus, seeing what others have done and agreeing that it is excellent, will stop many people from attempting to let their imagination flow freely.

BTW, which logo are you talking about? District of West Kelowna?
http://www.century21.ca/jason.neumann/Blog/District_of_West_Kelowna_has_conceptual_logo_in_the_works

Whatever the cost is, it includes the various application of the logo for business cards, letterhead, flags, web pages, gifts, monochrome, engraving on gifts gifts, etc. etc. and may, for all I know, also include some production of these items.

There is much more to this than meets the eye, including conultation with various committees, various alternate designs, fine tuning the final selection.

If you are interested in the business of graphic design, perhaps you can do some exploration of what it actually takes to produce the full range of work required to fulfill a contract of that nature.

I don't put too much store in what the Canadian Federation of Independent Business says. Of course studies are biased in favour of those who commission them.

Aren't these the same people who said that if they would be allowed to pay $1.00 per hour instead of the current minimum wage, that there would immediately be 100,000 jobs created? They neglected to say for whose benefit.

If you put in the house, two cars or SUV, the kids, The electronics, this wife with the expensive taste, The husband that needs every tool known to mankind. The expensive trips overseas or to the tropics twice a year. The keeping up with the Jones kind of lifestyle then yeah you will need very high wages to handle the lifestyle. To me people want to much. They need to much. That is why we have fat stressed out folks that will need every dime to keep them alive soon because they wanted this life. I say go for it but don't except me to feel for your fat ass. Oh and most of these people smoke because they are under so much pressure ooooo poooor them.

"Not only do public-sector workers retire four years earlier"

Retirement with a full pension would completely depend on the terms of the pension agreement, the persons years of service in the plan, etc. It's not a given that they will retire at 58 with a full pension and in fact, I'd hazard a guess that most public servants wouldn't be in that position since it would likely mean that they have been working in that position for 30+ years. That doesn't happen too often these days, especially when most people change careers 4-5 times in their lifetime.

"They (public sector workers) can build up pension wealth in a way the rest of us are not allowed to"

Pension wealth yes. Wealth in RRSP's, no. That's because people with healthy pension plans are severely limited by the amount they can contribute to sheltered plans like RRSP's, as compared to folks without a healthy pension plan making the same wage. Funny how that tidbit never gets much press.

"A pair of middle-income public-sector workers can retire at 58 with retirement savings of $1.3-million or more. A private-sector couple with the same work history will typically retire at 62 with savings of $244,800. The public-sector couple work four years less and get five times more retirement income"

I'd LOVE to dig into the details on this one. Are they saying that the present value of the pension benefits at 58 would be worth 1.3 million? Are they saying that's what the people could have put aside in addition to their pension? What exactly are they talking about? Have they compared the amount of pension contributions those folks made to the amounts that the private sector couple invested, to see if they are even close to being apples to apples? $244K for a couple at age 62 means $122K per person. Assuming that person started investing at age 22, it means they would have averaged a monthly contribution of basically $100 a month into an RRSP making a modest 4% to get their $122K after 40 years. No kidding there is no savings if that's all they managed to invest over their lifetime.

"On top of that, sweetheart deals for retiring government bureaucrats are a way of life"

Nope. The vast majority would be bound by the rather boring terms of their collective agreements, much like any union worker.

"Although the details are fiendishly opaque, these deals are not available to you"

I have a hard time believing that the average person posting on Opinion 250 couldn't find the collective agreements and pension plan guidelines for the public sector employees they are talking about. Heck, they can probably even find their wage scales if they know what to look for. This stuff isn't exactly top secret.

I don't even know why people get into these highly generalized discussions about the "private sector" or the "public sector". The specific situations will be drastically different depending on which pension plan you are talking about, which specific type of government worker, what level of government, etc. A statement like "provincial workers make 7.9% more than private sector workers" is meaningless without context. So often that context is absent because including it would allow the initial claim to be rebutted rather easily. It's all about the spin.

This is the new logo for Kelowna that $80,000 got them..

http://www.am1150.ca/node/961234

and I am in the graphic design business. Kelowna got hosed... but they must have put it out to tender for a contract that large.

Has anyone else had problems with the online fishing license system? They charged me twice for one licence on April 30 and I still don't have my credit card refunded. They just say "it's a process and it takes time".

"The compensation gap between the public and private sectors is growing ever wider."

What about the unskilled union versus unskilled non union compensation gap? Can anyone explain that one?

For a look at what a union can do, check out this story.
http://thetyee.ca/News/2009/07/17/PollutionFight/

Charles, since your Gordon Campbell empire is crumbling, I guess it is time to attack public sector unions and blame all the problems on them rather than the ineptitude of the govt leaders.

What about the gap between public sector management to public sector labour, compaired to public traded/private sector management to public traded/private sector labour.

NMG. The question you asked in your post is answered if you go to the link at the end of my post. The following is taken from this link:

After an experiment lasting almost two decades, we can also say that Pension Reform has proven perversely inequitable in that it prevents most private sector workers from accumulating the pensions
enjoyed by their public sector counterparts. But the solution is not to dismantle the successful public sector pension model or reduce pensions of public
sector workers. Rather, let’s have regulatory change so that something like the public sector model can become practically available in the private sector. This would give all Canadians the same opportunity to prepare for retirement, with or without the assistance of an employer. Two key hurdles need to be overcome to ensure that Pillar 3 retirement savings vehicles can work as they should:

• Tax rules need to be reformed to equalize access to tax-deferred retirement saving so that all Canadian workers can save what they need to, when they can.

• Pension standards rules need to be made more flexible to accommodate new, more flexible pension plan designs and to promote multisponsor pooled pension arrangements that leverage the successful design features of public sector, multi-employer pension plans. If policymakers commit to making these changes, more Canadians really will have better pensions.

http://www.cdhowe.org/pdf/Commentary_275.pdf

The thing I hate the most is casinos. Our governments are are causing the gambling problems in this country and the poverty that goes with it. I really want to see the New Brunswick government crumble under the class action against casinos. Maybe the rest of us will follow and the elected government will have to rely on honesty in order to balance the books. It is criminal what they are doing.

Government Worker is an Oxymoron, much like Military Intelligence. All Governments should reduce their staff by a minimum of 10% this would include MLA"s MP's etc;

Government entities like BC Ferries, ICBC, WCB, BC Hydro, BC Transit, BC Safety, and all the other hidden troughers should also be reduced by a like amount.


I agree with foxtrapper. Gambling sucks. a few years ago it was illegal, and then the **Stupid** Government makes it legal, but only legal for the Government.

I havent spent one red cent in the local sucker shop and have no intention of doing so. For those that do, you may as well make out a cheque to the Provincial Government and mail it to them. This would save you a lot of time and effort, because at the end of the day they are going to get your money.

Gambling in Government owned Casinos is nothing more than a voluntary tax. Who in their right mind would voluntarily give money to the Government.

The local Casinso takes in about $40 Million per year, so we can safely assume that there are a hell of a lot of losers out there.

Wow - the RCMP musical ride held in Fort St. James this evening was so worth the drive up!
The volunteers must have worked for weeks getting everything ready - thumbs up to them all.

Just what are you folks promoting? Closing down the casinos to protect folks from themselves? Seems to me people ought to have a right to spend their money as they see fit, as long as it doesnt hurt anyone. Got a problem with that? then advocate bans on smoking, drinking, fast cars, fast food and fast women. Abolish expensive restaurants luxury cars and holidays overseas. these are all areas of spending which give pleasure but which also fall into at least someones category of wasteful or harmful uses of money.
There are alot of losers out there. Most of them are losers because they blame the govt for all their troubles.