How Have Pension Cuts Affected Public Sector Competitiveness?

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The brief’s key findings are:

  • To improve the funded status of state and local pensions, many plan sponsors have cut benefits, particularly for new hires.
  • Such cuts, without offsetting increases in wages, could potentially make government employment less attractive to workers.
  • The analysis found that workers joining the public sector after benefit cuts had earned less in the private sector than those hired before the cuts.
  • This result suggests that pension cuts may have hurt governments’ ability to compete with the private sector for workers.