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Gilt-Edged Pensions
Don't let anyone tell you the American dream has faded. the truth is the U.S. is still minting lots of millionaires. Glenn Goss is one of them.

Goss retired four years ago, at 42, from a $90,000 job as a police commander in Delray Beach, Fla. He immediately began drawing a $65,000 annual pension that is guaranteed for life, is indexed to keep up with inflation and comes with full health benefits.

Goss promptly took a new job as police chief in nearby Highland Beach. One big lure: the benefits.

Given that the average man his age will live to 78, Goss is already worth nearly $2 million, based on the present value of his vested retirement benefits. Looked at another way, he is a $2 million liability to Florida taxpayers....

...They're creating a nasty social problem as well. America, in case you hadn't noticed, is dividing into two nations. The 22.5-million-strong public sector (that includes retirees) is growing ever larger, and enjoying ever greater wages and benefits often guaranteed by state constitutions.

In private-sector America your job, assuming you still have one, hangs on the fate of the economy. If your employer ever offered a pension for life, like young officer Goss is receiving, odds are it has stopped doing so, or soon will. Those retirement accounts you scrimped and saved to assemble? Unless they are invested in Treasurys, they aren't doing too well. In private-sector America the math leads to the grim prospect of working longer and living poorer.

In public-sector America things just get better and better. The common presumption is that public servants forgo high wages in exchange for safe jobs and benefits. The reality is they get all three. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector's $19, according to Bureau of Labor Statistics data. Throw in pensions and other benefits and the gap widens to 42%.

For New York City's 281,000 employees, average compensation has risen 63% since 2000 to $107,000 a year. New Jersey teaching veterans receive $80,000 to $100,000 for ten months' work. In California prison guards can sock away $300,000 a year with overtime pay.

Four in five public-sector workers have lifetime pensions, versus only one in five in the private sector. The difference shifts huge risks from government to private-sector workers....