[evgen]

> I'm not sure how you can justify pensions for government workers when most workers in the private sector have no pension plans at all.

This is because until just recently most private sector workers had similar pension plans. These plans enabled companies to push their costs into the future and appear to be "saving" money by getting workers to accept smaller wage increases in return for better benefits. Fast forward to the 80s & 90s and the overhang from these plans started to come due; large companies were discovering that it was easier to declare bankruptcy and reorganize rather than live up to their prior commitments.

The problem is that it is harder for governmental entities to declare bankruptcy so that they can skip out on their obligations, the public also seems loathe to actually pay for the services they demand so the day of reckoning was pushed further ahead -- we have now reached the point where it is no longer realistic to continue this practice.

You may not have ever been offered a defined-benefit pension, but that just reveals your youth more than anything else. The tax code changes that allowed 401(k) plans to exist did not happen until 1980 and they were rather rare until the early 90s. The process of converting pre-existing defined-benefit plans into defined-contribution plans (aka "cash balance plans") was the source of a great deal of legal wrangling and numerous court cases.

As to why a union would prefer layoffs instead of salary cuts it is a rather simple logic. Salary cuts put the cost of decreasing payroll expenses entirely upon the workers, the business still gets the benefit of the larger workforce at a lower cost. By forcing layoffs the union seeks to make the business share in the pain: they pay less to their employees, but end up with fewer employees and a diminished capacity to operate the business. If the economy picks up again the business has to hire new workers and these workers join at the higher salary, while if the workers had accepted a pay cut they would have to once again fight the company management to get salaries increased to the point they were at before the cuts.

[jacoblyles]

But pension problems are not just a legacy issue. Payments have increased recklessly in recent years. California's 3% at 50 law, which allows many public employees to retire with 3% of their final pay for every year worked at age 50, was passed in 1999. In 2005, BussinessWeek found that state and local pension obligations increased by 50% over the previous 5 years (source: http://reason.com/archives/2010/01/12/class-war).

[balding_n_tired]

Federal workers are also in a niche where it is hard to beat down wages. You can't send their jobs overseas as you could with steel workers or call center workers. You can't usually hire illegal immigrants (or non-citizens generally) as you can with painters, construction workers, etc. So their wages have been resistant to some of the trends that have hammered other wage-earners.

[SamAtt]

Actually as of right now it is easier for governments to get out of their obligations in that they can legally void union contracts (private companies can't do that according to federal law).

http://www.law.com/jsp/article.jsp?id=1202429132330