For my last full year as a public servant (2006), my base salary was $76K. Add overtime and benefits, and I easily cost the taxpayers more than a hundred grand.
Was I worth it? In other words, did my skills warrant compensation in excess of a hundred grand? Let’s look at the facts.
My title was Construction Inspector One, but I was no longer inspecting construction work for the Highway Division. I was developing and maintaining Access databases.
Was I good? Yes. But I wasn’t great. I was a self-taught ham-and-egger who had an intermediate level of database skills at best. I could craft a normalized Access database and write all the queries and VBA code necessary to ensure data integrity and spit out management-friendly reports. But I knew nothing about big-boy databases such as SQL Server or DB2. And I certainly couldn’t design a front-end application written in C++.
Did I have a degree in computer science? No. I had a master’s degree in public administration.
Did I have a Microsoft certification in Access database development? No.
Were Access database dudes so scarce that my hundred grand compensation was a bargain for the Highway Division? No. Intermediate-level Access database developers were not in short supply—at least not in New York. In fact, the 19-year-old son of one of our municipality’s muckety-mucks was a computer science major who worked for us between semesters, and his database and programming skills blew mine away. The Highway Division could have easily saved itself thirty or forty grand by firing my arse and hiring him.
So why was my compensation over one hundred grand?
It’s simple. That’s what our union contract stipulated. Anyone who was in his or her fourteenth year as a Construction Inspector One was paid a base salary of $76K. It had nothing to do with merit. It was all based on time served. I could have been the worst database developer in the world and I still would have been paid $76K—and provided with free health care, copious amounts of PTO, and a very enviable pension.
In effect, my compensation was a lie. It was false wealth. And I knew it. That’s part of the reason why Mrs. Groovy and I moved to North Carolina. Yes, we grew tired of New York snow, taxes, and traffic. More importantly, though, I loathed the municipality I work for and desperately needed to move on. But there was no way I could start a new career on Long Island. The drop in compensation would have been too great. My skills, database or otherwise, just weren’t worth a hundred grand a year in the real world. So I needed a place where my true worth in the labor market comfortably exceeded the cost of living. Fortunately for Mrs. Groovy and me, Charlotte, North Carolina fit that bill.
Is There False Wealth in Your Life?
In 2034, the Social Security trust fund will be depleted. The money coming into the system from payroll taxes will only be able to pay for 79% of promised benefits.
According to my last Social Security statement, my monthly benefit would be $2,400 if I waited until I was 70 before collecting. But that $2,400 is false wealth. A more honest monthly benefit would be $1,896 ($2,400 x .79).
Social Security, of course, affects nearly everyone. For those collecting Social Security now, you need not worry about false wealth. Your benefits are secure. But for those of you who are my age (55) or younger, you have false wealth in your life. Unless there are some fairly bold adjustments to the law, promised Social Security benefits are unsustainable.
Are you a state employee? Congratulations. You have even more false wealth in your life. Every state pension in the union is underfunded. On average, states have only funded 74% of their pension liabilities. Some states are particularly bad. Rhode Island, 59%. Connecticut, 55%. Kentucky 51%. Illinois, 43%. Ouch.
Are you a government employee who is being promised paid healthcare in retirement? Hello, false wealth. State healthcare obligations are even more underfunded than state pension obligations. Only seven states have funded more than 30% of their healthcare liabilities. And healthcare benefits aren’t nearly as secure as pension benefits. In New York, for instance, public pensions are protected by the state constitution. Any shortfall in pension fund payouts will be made up by the taxpayers, either through greater taxation or through reduced spending on schools, roads, parks, and social services. There’s no constitutional protection for retiree healthcare, however. If New York’s fiscal health deteriorates badly, retiree healthcare will become an easy target.
Do you telecommute? If you do, be brutally honest with yourself. Are you doing anything special? If not, you’re more than likely the recipient of false wealth. Your job can easily be performed by someone in Bangalore for a third of the cost.
Do you work in a factory or perform grunt work (i.e., cut grass, clean hotel rooms, lay brick, etc.)? Beware false wealth. Robots, outsourcing, and temporary work visas are relentlessly eroding your job security. When I was growing up, for instance, landscaping jobs were dominated by high school and college kids off for the summer. No more. A good percentage of those jobs are now filled by foreign labor, legally and illegally. The guy who does the landscaping for my development gets all his laborers from Mexico. Every year he pays $20K for twenty temporary work visas.
Do you work in higher education, healthcare, or the defense industry? The federal government is $19 trillion in debt. At some point it will no longer be able to pay for $100K bachelor degrees, $100K cancer treatments, and billion dollar fighter jets. The amount of false wealth in your field is therefore immense. Beware.
What to Do?
The point of this post is not to scare you. I’m just trying to raise your awareness. A lot of us have jobs, incomes, and benefits that are unsustainable. Governments can only borrow so much. Employers can only ignore labor costs for so long. At some point, the day of reckoning will arrive, and the false wealth will disappear. And all I want you to do is to be cognizant of this and prepare for it.
First, get out debt. When the false wealth goes away, those with no debt will fare a lot better than those with debt up to their eyeballs.
Second, make a mental calculation of your false wealth. Is it 10% of your income? Is it 25% percent? Then, whatever that calculation may be, live below it. If you take home $5K a month and 20% of that is a lie, spend like you take home $4K and save an extra $1K. Again, those who do this will fare a lot better than those who don’t when the false wealth goes away.
Okay, groovy freedomists, that’s all I got. How much false wealth is in your life? Are you preparing for it? Or is my idea of false wealth total flapdoodle?* Let me know what you think when you get a chance.
And have a groovy weekend.
* I used the word “flapdoodle” in honor of Penny’s one year blogiversary over at Shepicksuppennies. Penny has such a wonderful vocabulary, and I try every now and then to match her linguistic heights. So thank you Penny for inspiring my writing. And for those of you who are curious, “flapdoodle” is a ten-dollar word for “bullshit.”