Sunday, July 21, 2013

How Detroit came to betray its retirees: The city has just 9,700 workers but 21,000 retirees drawing benefits.

The Detroit Free Press reports:
By 1991, for instance, a Wayne County Circuit Court judge was forcing then-Mayor Coleman Young to make $53 million in overdue payments to the pension funds. Young, attempting to plug a $50-million deficit, had delayed the payment pending a tax-credit sale. Detroit officials have also made a habit of convincing unions to accept pension sweeteners — shorter terms of employment required, more generous multipliers, or a “13th check,” essentially an annual bonus — rather than pay increases. But that has raised pensions costs and had the unintended effect of shrinking the city’s work force to the point where employee contributions can’t keep pace with the needs of current pension recipients. The city has just 9,700 workers but 21,000 retirees drawing benefits.
Math catches up with Blue America.