A Tale of Two Chicagos – RealClearPolitics

There are two Chicagos, and Mayor Lori Lightfoot declared her sacrificial commitment to one last week. 

In one Chicago, half of the households earn less than $65,000. Forty-five percent own their own home; half of those homes are currently valued at less than $260,000. These homeowners pay property taxes at the second highest rate in the country, and most are seeing home values stagnate or fall. For the remainder of these Chicagoans — those who rent — they are paying an average of just under $2,000 per month for 750 square feet. 

Relatively few of these Chicagoans have much in the way of savings. For most of those with a positive net worth, their home is their most important asset and a likely (if increasingly uncertain) source for retirement income. Almost none of these Chicagoans have a defined benefit pension to pay them a “guaranteed” income when they retire. While many of them have 401(k)s, the vast majority don’t know if they will ever be able to retire. 

The other Chicago is a smaller world with notable privileges.  Nearly half make over $100,000 a year and have among the best health and other benefits available. They have job security — once hired, it is almost impossible for them to be fired — and generous work rules. 

This smaller group is permitted to retire starting in their 50s, and when they retire they are entitled to pensions starting at 70% to 80% of their highest earning years — which is calculated including overtime as well as base pay. Plus, many are given large raises at the end of their (short) working careers, which allows them to “spike” their earnings for purposes of calculating their pension. 

When they “retire” in their 50s, many of these Chicagoans are paid at or above their base pay while working.

Plus, that amount goes up 3% each year, no matter what. 

These folks are very active politically. They give the vast majority of money that city politicians raise — and the same is true for those who run the state of Illinois. 

So perhaps it’s no surprise that Illinois doesn’t tax pension income; after tax, some workers are better off “retired” than working!

But who wants to sit around in their 50s? Most of these Chicagoans are vigorous — and obtain new employment, the pay for which does not offset or reduce their “retirement” pay. Some of these new jobs carry the right to be paid even more when they do actually retire. And they pay no state income tax on the second retirement income either. 

The lowest paid of these Chicagoans are granted a lifetime income that has a present value of over $1 million. Higher-ranking members of this group will retire with lifetime income approaching $10 million. 

These are Chicago’s “Tier 1” workers. We appreciate their service and want to be generous to each of them. But our city’s “Tier 1” compensation structure is, as Mayor Lightfoot has acknowledged, unsustainable; city worker compensation and benefits for older workers need to be equitable relative to younger workers and consistent with serving residents, not hurting or exploiting or driving them away. 

Here’s the rub: trying to pay for the imprudent promises that politicians have made to the good people who are city workers is hurting many more good people who have less, far less — and that’s unjust.  

Some say that high-income Chicagoans who don’t work for the city should pay, but they are too few, too mobile and already too taxed.

There’s only one answer: Chicago needs to prudently modify city workers’ lifelong income in order to lower the tax burden on the many. 

Mayor Lightfoot disagrees: “Let me be clear: I don’t see the provision of pensions or city workers as the problem.” 

She acknowledges that “for every dollar you pay to the city, 80 cents goes to pay for the cost of personnel and benefits, along with pensions,” but she doesn’t acknowledge that half of that amount — literally half — is spent to pay former city workers not to work starting in their late middle age. 

Mayor Lightfoot is unambiguously on the side of the Chicagoans in government: “I have made clear many times, pension obligations are a challenge we must meet. Dedicated city workers have fulfilled their careers with the agreement that they will retire with the dignity and the certainty pensions afford.”

Indeed, she says she is willing to fight to the death of her political career; though “Give me pensions or give me political death” may stir the souls of those with pensions, it’s not very inspiring to the rest of us. 

Yes, great leaders are loyal to their troops, but leaders are judged ultimately by the goals they set and achieve. Mayor Lightfoot’s goal is to convince Chicagoans to sacrifice more, save less and work longer so her troops who make more for life won’t have to sacrifice at all. 

If ever-increasing lifetime pay is their right and ever-increasing service to the government is our duty, then what has become of us — and is it any wonder that Chicago and Illinois shrink as other cities and states grow?

It doesn’t have to be this way.  A hypothetical mayor with courage would fight the politically powerful on behalf of all Chicagoans. This bold mayor would convince her allies running Illinois to grant legal authority for the city to seek a fresh start, cutting Wall Street debt and restructuring the lifelong pay and benefits of municipal workers into a more equitable, means-tested, sustainable and only slightly less generous overall package, in order to freeze or lower taxes while improving services for the benefit of all. 

Apparently, Lori Lightfoot is not that mayor. 

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