The Terrible Public Pension Threat

Source: Natasha Chart, Today’s Workplace Blog, August 27th, 2010

Despite defined benefit (DB) pensions, like the ones public employees get, being more economically efficient [pdf] and offering better returns, private employers have mostly switched to 401(k) plans, or defined contribution (DC) plans [pdf], because they’re cheaper. Between 1979 and 2001, the portion of the workforce covered by defined benefit pensions dropped by half. By 2008, only 20 percent of private workers had such a pension.

Businesses saved a lot of money by either switching to low cost 401(k) plans or dumping their pension obligations on the government [pdf]. Did they use their savings to create jobs? Not lately. These days, businesses are firing more people than they need to and sitting on the cash.
See also:
More Salvos in the False “Class War” on Public Pensions
Source: Amy Traub, Today’s Workplace, August 26th, 2010

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