Eyesight to the Blind

It’s the day after Labor Day – the official start of ‘silly season’ and the sillies are out in full force. Over on BlueOregon – a reputedly ‘progressive’ political website, a Hillsboro lawyer named Robert Harris published his screed on PERS benefits. To get on BlueOregon, Mr. Harris had to claim his liberal credentials, which he did by admitting he was a Hubert Humphrey liberal. No matter that Mr. Harris was probably a teenager or younger during Mr. Humphrey’s span as a senator, a Vice President of the US, and the democratic Presidential nominee (who lost to Richard Nixon in 1968). All this is really irrelevant to Mr. Harris’ polemic, which is to call for further reductions to Tier 1 PERS member retirement benefits. Mr. Harris repeats the tiresome canard that PERS members retire at 55 and draw 105% of their final salary in retirement. Mr. Harris even adds to the calaloo of misinformation by implying that retirees somehow get Cadillac medical benefits – a point on which I demand to see proof (there isn’t any, by the way. Retiree medical benefits are paid for entirely by retirees and they are expensive, increasing in cost, and anything but lavish).

I want to point out that Mr. Harris’ (and the Oregonian's) continued perpetuation of the myth that PERS members retire at 105% of FAS is misleading in extremis. First, Mr. Harris speaks of the retirement benefit of 105% as an average. This is technically correct, but FIRST: it only applies to PERS members who retire with 30+ years of service. According to the PERS Comprehensive Annual Financial Report (CAFR), 30+ year service retirements only account for about 10% of ALL PERS retirements. Mr. Harris and every reporter who has recited this or similar statistics are ignoring 90% of the data to get to this particular “fact”. SECOND: while the CAFR only reports averages, averages are completely misleading and are strongly affected by “outliers”. To give a simple example, suppose we have 10 people, each of whom earns $25,000 per year. The average salary is $25,000; the median salary is $25,000. Now, suppose we add Phil Knight to the room with his $50,000,000 annual salary (I don’t actually know Phil Knight’s salary, but it hardly matters to make my point). Now, the median remains at $25,000 but the average salary has risen to $4,568,181. Which figure more accurately portrays the typical salary of our group of 11 people? So, the PERS figures for 30+ year retirees may be computationally accurate, but totally misleading. Why is it that the Bureau of Labor Statistics normally reports medians rather than averages. I submit that this is one of the primary reasons.

I also want to publicly ask Mr. Harris and all the various reporters for the Oregonian who’ve covered PERS issues (Jim Mayer, Betsy Hammond, Brent Walth) why they never include information about the benefits of the 90% of PERS retirees who don’t put in 30+ years before retiring? Is it because your argument would be undermined by all those folks who retired at something closer to 40 or 50% of FAS? Why don’t you dig deeper to find out why PERS insists on using averages instead of medians? Why aren’t you interested in figuring out whether the 105% average is applicable only to members who participated in the variable program, and whether anyone who participated only in the regular PERS Tier 1 accounts ever retired at more than 100% of salary. There are lots of interesting stories out there, but none have done more unnecessary damage to Tier 1 members and fueled public policy decisions than the most misleading of all statistics – the continued assertion that typical PERS members retire at more than 100% of their salaries. This is NOT TRUE of typical PERS members. It applies to a tiny subset of retirees in any given year. People who continue to perpetuate this untruth fall into the category of “lies, damned lies, and statistics”. Time to put your glasses back on and see again.