the problem starts when the tax income shrinks
Everyone here complains people haven't saved enough, yet wages have been stagnant for decades.
"In fact, the size and amenities of the average middle-class family home have increased only modestly. The median owner-occupied home grew from 5.7 rooms in 1975 to 6.1 rooms in the late 1990s—an increase of less than half of a room in more than two decades. What was this half a room used for? Was it an “exercise room,” a “media room,” or any of the other exotic uses of space that critics have so widely mocked? Nope. The data show that most often that extra room was a second bathroom or a third bedroom.
The wealthy may be living in spacious new digs, but middle-class families are not. The proportion of families living in older homes has increased by nearly 50 percent over the past generation, leaving a growing number of homeowners grappling with deteriorating roofs, peeling paint, and old wiring. Today, nearly six out of ten families own a home that is more than 25 years old, and nearly a quarter own a home that is more than 50 years old."
Dowwie: Let's all just get paid more!
apsec112: Just paying everyone more when everyone buys things in inelastic markets like housing doesn't make anyone richer. This can be observed empirically with two-income households in 1975 vs today; people pay more today for the same thing they had in 1975.
alasdair_: Houses are bigger today (perhaps he meant to imply that actually we all are richer today because we're actually paying more for something better)
apsec112: A small number of houses today are bigger, but most people live in old houses that aren't any bigger; IOW we are paying more for the same as what we had in 1975.
blackguard: Old houses are ok too! (yes they are, but that's not germane...)
While some houses are built to last and worth saving (e.g. most houses you see still standing 150 years later) - most are definitely not. Trying to maintain a typical poorly constructed wood frame McMansion for 100 years probably doesn't make a lot of sense.
Plus I've lived in old crappy houses. Old wiring definitely sucks - you may be limited in a room you want to do something else in, and then realize you can't do much due to the plaster walls to fix it short of gutting the entire area. Most plumbing is only really rated at 20-30 years, but it's rare to ever see anyone replace it wholesale.
I've lived in crappy yet well maintained (but not updated) houses and it's not that much fun.
This is a situation where the group of people who make the rules are the people who will benefit from the rules, and someone else foots the bill.
Except that will cause a tax increase now rather than a tax increase twenty years from now, and is political suicide.
Underpay during working years and promise an outsized pension to make up for it (since that passes the buck of having to fund it to some other sucker who's in office much later on) is a common pattern in the public sector. If you want to end it, you can simply pay competitive wages up-front (and no, pointing to a handful of outliers does not indicate that the average public-sector salary is competitive with private sector).
Government would be so much cheaper if they didn't pay the workers and instead just made them straight up slaves! Also, they need to find workers that don't need food or energy, since those cost money.
Citizens and their representatives aren't paying attention, don't care about pension issues, or don't understand them/aren't having the costs explained. Investors are buying bonds from the state either without performing due diligence or assuming that the state will get bailed out if they do run out of money.
In relative terms it's effectively the same thing.
-> Public sector employees are generally paid too much for the value that they produce.
It's a function of power: their unions are the most powerful organizations on the planet.
They will pay themselves whatever they want.
http://www.fin.gov.on.ca/en/publications/salarydisclosure/ps...
Police Officers in places like Cornwall, Ontario, pretty far out there, where the average home price is probably just above $100K ... often earn well over $100K.
Nurses, Teachers, a plethora of questionable Directors (the Director for 'Clergy Services' the hospital earns a lot. How many staff? And how big is that responsibility?) all earning well north of $100K, esp. in rural areas where cost of living is low. Private sector salaries will be lower to reflect lower cost of living, but public sector wages are not.
Average wage in Canada is just above $40K.
See the groupings by trade:
http://www.livingin-canada.com/work-salaries-wages-canada.ht...
Note that 'public sector' employees are near the top.
The group earning more is 'utilities' - which in Canada are 'Crown Corporations' (or de-facto), meaning essentially public sector.
Where I live in Quebec, the 'best career path' for most people is 'Government', as it turns out, we have almost the lowest wages in North America, just ahead of the other Canadian Maritime provinces.
One of the most overlooked factors in government work is the 'riskless' nature of it. In finance, we learn that 'consistent payments' have quite a lot of value, which is why companies that pay very consistent dividends are worth more. That you have 'a zero chance of layoff, and a very low chance of being fired' is actually a benefit, and it's economically measurable. It's a premium and it's worth a lot.