Hmm... If you wanna take your car from NJ to downtown NYC during rush hour by crossing a bridge or a tunnel, be my guest. You'll be sorry you didn't take the public transportation.
Trump’s SALT Cap Fuels a Wealth Exodus from High-Tax States
- Thread starter dealmaker
- Start date
I saw them but I thought they were possums.
I've lived in Seattle as well and consider it also to be a high cost of living city along with Portland. Phoenix I don't see many software types "fleeing to" from the Bay Area just because it's a pretty inferior place to live in almost every respect for that type of person. Austin is a bit of a surprise, I would have thought the delta would be bigger. I played around with the numbers some and found that I have a bit of a blind spot in that the delta is more pronounced in companies that match my size and hiring level experience, so I'll take that as a learning experience. On the flip side, do this exercise for me. Pretend you're moving to a job in Palo Alto, CA. Assume that traffic is horrendous and public transportation suck there (both true) so you have to live between Millbrae and Sunnyvale for a decent commute and don't want to cross any bridges. Go on Zillow and find the cheapest house that is roughly equivalent to yours in size, type (detached, townhouse....), condition, lot size, neighborhood.... What is the delta there?
If the optics of telling people who risk their life for a wealthy community that they're not wanted there after retirement isn't enough for you, then maybe the hiring/workforce situation that results in is. If that's the message and the reality you're sending, you don't get quality folks applying for those jobs or not even enough folks at all. They're ironically both boring and dangerous somewhat crappy jobs with shitty hours and not a lot of control over your work schedule that often times ruin your body and you're often understaffed and under budgeted. Police departments especially often have a decent number of unfilled spots because of this reality. Providing a "guarantee as to the quality of life the worker will enjoy after retirement" is to many people a very valuable thing, even if it may not be to you or I. In many cases you can heap a lot of current abuse of folks in exchange for that, and in some cases it may actually be the cheaper option overall.
I think we're specifically talking about gaming the retirement system which for them is often times poorly set up in that it is X% of what you were actually paid in your last year or your last 2 or 3 years on the job, not X% of your base pay. I've got no problem with overtime, although I'd argue that after 60 hours you're paying time and a half or double time and getting half a person because they're completely strung out from fatigue. I do have a problem with manipulating the retirement system by an internal tacit agreement that we give huge amounts of overtime to the folks in their last year before retirement so they can get that base for the rest of their life.
90% of statistics are made up
Yes, housing is a lot more expensive in San Jose than other places. However, people moving there often make compromises and don't get the same size of home that they had in cheaper places. I know one person who took a job in San Jose who moved from roughly a 2500-3000 sq ft house in Portland suburbs to a roughly 1000 sq ft townhome in San Jose for about 50% more than he was able to get for his home. However, housing including property taxes are the highest cost of living delta between California and Portland. Income taxes in CA are actually a little less than Portland until you get to $550k for married, $275k single.
Get rid of the pensions and increase salary to a market-determined rate sufficient to fill jobs. Since police and fire do not require a college degree, I suspect that the amount of salary increase necessary to fill the jobs is less than you think. Despite the strong market returns over the last decade, most states have pension funding issues. The idea that someone (other tax-payers) will pay an indefinite amount of money (often adjusted for inflation) over an indefinite amount of time for a finite amount of work done over a finite amount of time is crazy. The only reason to argue for a pension would be the belief that the recipients are not capable of managing their own retirement unlike pretty much everyone in the public sector. Even if that's true, there are other ways to address that problem such as forced contributions to 401k.
I'd encourage you to actually seriously do the exercise, I think you'll enjoy it and find it eye opening.
A defined benefit pension isn't a bad thing per se. I think several other posters in this thread have it right, if you actually fund the pension it's just a cost the same as 401k matching and all your other costs. In fact there are plenty of private sector companies that will give out a lifetime annuity for a given stream of initial payments, so it's not even necessary that the municipality take on the risk. The question is what is the NPV of the increase in salary, 401K match, and the cost to improve working conditions to attract enough quality staff today versus the cost of the pensions. The NPV part it what gets you, because you have to incur those costs now vs put that money into a growing fund that pays out much later. Plus the life insurance part of the equation is to your benefit, cops and firefighters probably have a shorter life expectancy than your average American. I don't know what the numbers work out to, although I can say I was surprised when looking into offering a defined benefit plan for my company (mostly as a way to shield more of my income given the 401k limits which are pretty low). After believing that they were always an inferior choice, I might actually go that direction although for somewhat different reasons. And don't forget the realpolitik of it all, you can't terminate the benefit you're contractually obligated to for your current workforce, so you don't even start see any benefit even if one exists for 20 years. Long tail, back to the original point of the conversation.
Ok. Here's a 2-bedroom 1,296 sqft home in Sunnyvale, CA for under $200k:
https://www.zillow.com/homedetails/1225-Vienna-Dr-952-Sunnyvale-CA-94089/153147149_zpid/?
So there are cheap options. But I think it makes more sense to compare rent vs. rent instead of home cost as comparing rents show all costs included and more directly show the delta in housing cost per year. So here's one home for rent in Portland:
$3,300/mo
4 bd2.5 ba2,659 sqft
https://www.zillow.com/homedetails/13490-NW-Manzoni-St-Portland-OR-97229/89708158_zpid/?
Here's a 4 bedroom home in Sunnyvale for $4,450 / month although significantly less sq ft.
https://www.zillow.com/homedetails/568-Saco-Ter-Sunnyvale-CA-94089/82956431_zpid/
This one is closer in sq ft and has an extra bedroom ($4950 / month):
https://www.zillow.com/homedetails/1029-Bluebonnet-Dr-Sunnyvale-CA-94086/19548306_zpid/?
Worst case, here's one that is as nice, within 200 sq ft, same number of bedrooms with garage and large back and front yard, and better schools than the Portland home - $6500 / month:
https://www.zillow.com/homedetails/1381-Bedford-Ave-Sunnyvale-CA-94087/19622870_zpid/?
For the first home, the owner pays a (4,450 - 3,300 = 1150 / month) $13800 / year premium over Portland for housing. But even in the worst case, if they are unwilling to give up any space over what they had in Portland (200 less sq ft, but larger yard), they would be paying a (6500 - 3300 = 3200) $38,400 premium over what they had in Portland...but again though, even that is not a fair comparison because the weather is vastly better and schools are better in Sunnyvale. For example, if they had kids, they might need to put the kids in private school to get an education comparable to public school in Sunnyvale. That's also a lot of money. Also, that's for a 4-bedroom home. Families with 0-2 kids don't really need 4 bedrooms. Notice the property tax on that last Sunnyvale home for 2019, only $2,766. That's prop 13. At this point, the home is likely fully paid off, he'll take in $6500 / month (figure $4000 after taxes), but only pay $2766 in property taxes. The Portland house property taxes are about 3x more. Shows just how badly the new CA homeowners are getting screwed in property taxes. They are subsidizing that guy's rental property.
My argument is that it's not necessary to offer a pension. Raise the salary to a market-determined amount necessary to attract the right talent. If an individual wants an annuity, they can buy an annuity. The only reason for an employer to offer a pension would be if he believes that his employees won't live anywhere near as long as they think they will live. No one knows how long the average 18 year old starting work today as a police officer will live. As demographics around the world continue to age -- shifting to a higher average age, people might actually gain more of an interest in figuring out how to help people live longer. Who knows what science breakthroughs there will be over the next 40 years. It doesn't make any sense to take that unnecessary risk.
I haven't heard of that happening in my area as the rules prevent it. Even if someone makes 3X their annual salary, the retirement calculation is based on the annual salary. I would have to believe that any jurisdiction that has rules to the contrary would quickly resolve such a loophole. The Feds and most law enforcement and firefighting agencies generally use the base salary amount times a high 3/high 5 to get the primary amount that goes into the pension formula. I would also have a problem with someone gaming the system in that way - although it's hard to blame them if the rules allow it!