- Associated Press - Sunday, March 13, 2011

When Erin McFarlane, 36, looks at public workers, she sees lucrative pension benefits she doesn’t ever expect to get. And it makes her angry.

“I don’t think that a federal employee or government employee is worth any more than anybody else who does their job and does it well,” said the Slinger, Wis., woman. She’s been working a couple of bartending jobs since January, when she was laid off from her job at a Harley-Davidson plant after almost a decade.

She’s not alone in seeing public servants as public enemies in some ways.

It’s a case of pension envy. And it’s the center of some of the biggest political battles playing out in state capitals across the country as governors say their states can no longer afford the benefits that public employees have been promised.

Government workers in Miss McFarlane’s state have rallied for weeks against Wisconsin Gov. Scott Walker’s efforts to take away many collective-bargaining rights, saying that would amount to killing the middle class.

A USA Today/Gallup poll last month found show that Americans largely side with the employees, though about two in five want government pay and benefits reined in.

Barbara Davis, a retiree from Cherry Hill, N.J., has been watching public employees in rallies in Madison, Wis., as well as Trenton, N.J. She says the protesters are wrong about tightening benefits hurting the middle class.

“I’m sorry, but what they’re doing is telling off the middle class,” said Mrs. Davis, 76, and a co-chairwoman of the Cherry Hill Area Tea Party. “The middle-class people don’t get all the goodies that they do.”

At its heart, the issue is this: Some public employees get a sweet deal compared with other workers. And it’s taxpayers who pay for it.

That’s set off resentment in a time when economic doldrums have left practically everyone tightening their belts. Many people have found their tax bills rising even if their earnings haven’t.

In Mrs. Davis‘ case, it’s the property tax that smarts. She and her husband pay about $12,000 per year for the house she describes as a three-bedroom “tract home.” That’s a high tax even in New Jersey, where the average property tax bill tops $7,000 and where the Tax Foundation has found homeowners pay 3½ times the national median.

A half century ago, industrial jobs at car and steel plants provided high salaries and rich benefits. But as manufacturing moved overseas, many formerly well-paid workers had to take lower-paying jobs. By the end of the Great Recession, the economic order was undeniably changed.

“It’s the government-sector worker who’s the new elite, the highest-paid worker on the block,” said David Gregory, who teaches labor and employment law at New York’s St. John’s University.

For instance, most non-uniformed public employees who have worked in New Jersey for 30 years with an ending salary of $85,000 can look forward to retiring at 55 with an annual pension of about $46,000. Working until age 60 and a salary of $90,000 can bring a pension of $57,000. And many of the New Jersey’s public-sector retirees have no or low premiums for their health insurance.

For a private-sector worker who retires at 55, relying solely on a 401(k) without an employer match, it would take a $100 contribution to a plan every week for 30 years and getting an annual return of more than 7 percent to get to the same level of pension benefit as the public worker retiring at that age. Those benefits would run out after 25 years for the 401(k) retiree.

To be fair, most public-sector retirees don’t get such rich pensions. New Jersey’s Treasury Department says the average annual pension due state workers who retired between July 2009 and June 2010 was just over $30,000 per year; for local government employees, it was about $20,000.

And the members of the state’s two biggest public-employee retirement systems are required to pay 5.5 percent of their base salaries into the pension funds.

Mr. Gregory says the rest of the benefits are deferred compensation promised to workers instead of better salaries.

National data compiled by the U.S. Bureau of Labor Statistics confirms that public-sector workers do better when it comes to pensions and benefits.

As of September 2010, professional and management workers in the private sector were making $34.91 in hourly salary; public-sector professionals made $33.17 an hour.

The government entities spent 1.7 times as much on health care per employee-hour worked and nearly twice as much on retirement costs. Public-sector workers, who are more often represented by unions, are far more likely to have defined-benefit pensions with promises to pay for the retirees’ whole lives.

Olivia Mitchell, a professor of insurance and risk management at the University of Pennsylvania’s Wharton School, says the data isn’t perfect. It doesn’t compare workers with the same education or experience levels, and it covers a broad range of jobs. Also, she said, it doesn’t take into account that about one-fourth of public emplyees aren’t covered by Social Security.

There’s one clear downside for public employees: “We also know that the public-sector pensions are in deep trouble financially,” Miss Mitchell said, pointing to studies that suggest that they’re underfunded by a total of $3 trillion, largely because governments have skipped payments.

Unchanged, those retirement systems could eventually stop paying entirely.

“One way or another, if we don’t make changes, the government will collapse,” said Abel Stewart, 36, of Toledo, Ohio.

Mr. Stewart, director of contemporary worship at a Methodist church in suburban Toledo, says he has a hard time conjuring up sympathy for government and private-sector workers he’s seen protesting because of all the time he’s spent working with struggling immigrants.

“These are middle-class people who have a house, who have enough food, who are complaining they don’t have enough,” he said. “Instead of fighting for the piece of the political pie, we’d be better off looking at how to live within our means.”

AP writers Carrie Antlfinger and John Seewer contributed to this report.