Pensions Crises Introduce Unions to New Realities

Daily Oklahoman

Brother, can you spare $3.6 trillion?

Currently in the United States, state and local government employees’ pension and retiree health-benefit plans are under water to the tune of some $3.6 trillion, according to researchers at the Kellogg School of Management.

With government workers now comprising more than half of labor union membership in the United States, the priorities of current union leadership may be more at odds with those of average working Americans than at any time previously.

For the most part, public-sector workers enjoy more paid leave and vacation time, more job security, better benefits for which they pay less, and in many cases higher salaries than private sector employees.

Historically, the mission of public-employee unions has been to preserve and augment the benefits of teachers, police officers, firefighters, and others in their ranks who serve the public. However, the budgetary crisis that is nudging many state and local governments closer to bankruptcy is making many union rallying cries ring more hollow by the day.

While most states have considered, and nearly half of states have passed, pension reform plans this year, public-sector unions have fiercely opposed such measures, and generally succeeded in rolling them back. And union leaders have not been shy about bringing lawsuits over pensions.

Meanwhile, if the question is attracting the best candidates into the classroom or other public-sector positions, it is reasonable to wonder how teacher union insistence on preserving tenure and seniority-based pay scales promotes that cause. At a time when minority achievement gaps have magnified the urgency of quality teaching, both national teacher unions continue to offer fierce resistance to most reform proposals that would include evaluating teacher effectiveness.

Union obstructionism poses barriers to hard-working young teachers eager to prove their mettle in raising student achievement, and undermines confidence among parents and other taxpayers who are called upon to support the system. After all, government employees want to send their children to good schools, too.

Recent developments indicate that unions are going to have a hard time holding the line against sensible revision of public-employee pensions. Six newly elected governors ran and won by defying organized labor and pushing for some form of 401(k)-style retirement plans in place of traditional defined-benefit pensions for government workers.

In California and Illinois, the two states with the lowest credit ratings, voters sent clear messages about public-sector pensions. In nine California cities and counties, they approved measures to slash public-pension benefits. In 40 suburban Chicago communities, voters backed a ballot initiative pressing the Illinois legislature to lower benefits for future state workers.

Some unions have adopted fallback positions, like accepting pension benefit cuts for new hires while holding the line on benefits for current workers and retirees. However, many lawmakers and pension administrators have concluded that such half measures will be insufficient to keep pension plans solvent in the long term.