By Tim Hunt
Repeal the law instead of extending itUploaded: Nov 5, 2015
Eric Swalwell and many of his colleagues are barking up the wrong tree with their call to extend student loan forgiveness to employees at Lawrence Livermore National Laboratory and Sandia Livermore.
The 2007 law that allows students loans to be forgiven if graduates work in the public sector for 10 years and made regular payments was ill-advised back then and is even more so now. Instead of extending it to more people, it should be repealed.
The state of California and many of its cities and counties are in deep trouble financially because of the combination of generous pay for employees, coupled with expansive benefits and defined benefit pension packages that cannot be found in the private sector.
Twenty or more years ago, there was an understanding that working in the public sector meant great benefits, job security and lower pay than what was available in the private sector for similar jobs. That changed 180 degrees.
To recruit “quality candidates” cities started paying private sector level wages for many positions. What did not change was the great benefits and great retirement—when cities and counties ran into financial downturns, there was less job security although if you were a long-term employee, you were golden.
Surveys taken in the last few years show public employees earn more money, with better benefits and with a huge advantage in retirement with defined pensions, than the private sector.
It is upside down.
There is an element of fairness in the call by Swalwell and his colleagues that other labs in the Energy Department’s nuclear weapons complex receive the benefit and the privately managed Lawrence Livermore and Sandia labs do not. Sandia has always been privately managed, but the University of California managed both Lawrence Livermore and Los Alamos national labs until Congress forced the Energy Department to put them out for bid.
The university, in a consortium of companies, won the right to continue to manage the labs, but it was through a private corporation subject to taxes. That also shifted employees from the very rich defined benefit retirement plans from the university (retiring at 90 percent or more of salary) to a defined contribution plan (a 401-K in the private sector).
What is out of whack here is the federal law—it was poor policy and should be repealed for the public sector. The premise still applies to most of the traditional non-profit sector.