TEXT OF COMMENTARY
Kai Ryssdal: April in Paris might be great, but I’d bet October 2010 is completely miserable.
Millions of people have joined street protests over the government’s plan to raise the retirement age. Airports are blocked. A quarter of all French gas stations are literally out of gas. Union leaders want to make it worse. They’re calling for two more days of protests.
Commentator Susan Lee says retirement benefits aren’t a problem just for the French.
Susan Lee: For the past several months, commentators have enjoyed playing the “U.S.-is-like” game. For example: the U.S. is like Japan — where misguided monetary policy resulted in a decade of deflation and slower growth. Or, the U.S. is like Greece — where big debts have shaken investor confidence.
But people are missing the obvious and scary comparison — the U.S. is also a lot like France.
Consider France’s public-sector employees, often described as living in a worker’s paradise. Civil servants in France work less, yet their pay and retirement benefits are richer than in the private sector. But there’s big trouble in this paradise. France can’t afford its generous retirement benefits. Simply put, it’s pension system is in danger of collapse.
The same goes for the U.S. Here, public-sector employees also live in a paradise. They earn, on average, more per hour than their counterparts in the private sector. And their pension benefits are also fabulous. Just look at California: some employees can retire at age 55 and it’s a rich retirement with a monthly, inflation-adjusted check for $3,000. That amounts to $1 million for each retiree.
And it’s pretty bad in the other states, too. Most of the public-sector pension plans are in deep trouble.
The Pew Foundation estimates that there’s a $1 trillion gap between what the states have promised their workers and what they have in the bank to satisfy those promises.
No question — we need to reduce benefits to avoid gigantic, taxpayer bailouts.
French workers have taken to the streets when faced with cuts to their retirement benefits. They’re staging a series of strikes, and it’s easy to roll our eyes at the French strikers, but our own day of reckoning is at hand.
Ryssdal: Economist Susan Lee lives in New York City. Send us your comments.
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