It’s Time to Rein in the Public Employee Unions
A recent report in Forbes again brings the American taxpayer’s attention to another gigantic fiscal emergency-in-waiting: the unfunded liabilities of state and local governments due to the unfunded pension liabilities of the public employee unions. According to former California Assemblyman Chuck DeVore, these unfunded liabilities now exceed $5.2 trillion, more than the size of the entire federal budget. In California, this unfunded liability amounts to more than $86,000 per household. In Alaska, it’s over $100,000. Nationwide, it’s about $50,000 per household. Let’s remember that’s for the retirement of government employees; it doesn’t build one school, one hospital, one airplane, or one ship.
The emergence of public employee unions is itself a relatively new phenomenon, starting in Wisconsin in 1959 and then spreading across the country to include teachers, clerks, firefighters, prison guards, and the police. In California, public employees got the “right” to bargain collectively during Jerry Brown’s first administration in the mid-1970s. Today, California has an estimated $846 billion in unfunded pension liabilities.
We know that it is an inherent conflict-of-interest to allow politicians whose elections are funded by public sector unions to vote on the pay and benefit packages proposed by those unions. Yet, that is what is happening all across America and has been for decades. Have you ever heard of schemes such as 3% at 30? That means a government employee, for example, can retired after thirty years ( perhaps at age 55 or maybe younger ) and earn – as his pension — 3% of the highest wage he was paid for each of those 30 years or 90% of his top salary working. Have you ever seen a deal like that in private industry? One state employee in Massachusetts took home $308,000 in his annual pension. Almost 80,000 retired government workers in California are collecting pensions of over $100,000 per year.
Due to the way that “defined benefit” pension programs are funded in the public sector, the retirements of public employees are heavily dependent on investment returns in the stock market. As Assemblyman DeVore states:
“In good times, pension fund investment income from Wall Street and other investment pours in, making the pension fund look fiscally sound. Politicians are reluctant to salt away added funds when the pension balance sheet looks strong. But in bad times, when investment returns go negative, government income also tends to be weak, leaving legislators with little appetite to put more money in to the pension fund.”
When the stock market collapses and local governments are financially-strapped, who is on the hook for these obligations? It is you and me, the American taxpayer. Taxpayer support of state pensions for teachers rose from $611 million in 2001 to $3.5 billion in 2010 at the height of the Wall Street crash. In the city of San Jose, pension expenses more than tripled between 2001 and 2010. This led to Mayor Chuck Reed’s successful campaign to reform pensions two years later. What happens when local governments are forced to bail out these enormous retirement liabilities: less money for essential public services like libraries, roads, and general maintenance or the inevitable tax increases.
It is estimated that these unions spend in excess of $1 billion annually at the federal, state, and local levels to keep the pensions rolling along. And, these same unions will fight ferociously against any political leaders or initiatives who seek to upend their lucrative system. Just ask former Governor Arnold Schwarzenegger or the proponents of paycheck protection. The teacher’s unions are especially notorious as they resist any attempts to improve public education and insist on an ossified adherence to the status quo. They have resisted tenure reform, increased teacher testing, better credentialing, and, of course, school choice. They claim to represent teachers, but really only represent their own highly-compensated union bosses. Instead of championing our kids in the classroom, the NEA and AFT send about 95% of their union-confiscated dues to Democrats and engage in campaigns to repeal Proposition 13 in California. The California Teachers’ Association donated almost $1.2 million to Gavin Newsom in his 2018 campaign for the state’s top position.
State and local governments have been writing blank checks to the public sector unions for too long. Another blank check will be arriving soon from the Biden regime as a bailout to blue state governors who have empowered these unions. Why do we accept legalized bribery in the form of their political contributions to the favored politicians who negotiate their contracts? As it’s actually the taxpayers who are paying the bills, why aren’t taxpayer advocates also at the negotiating table? At least when the UAW sits down with General Motors executives to hammer out their new contract, they are actually across the table from the folks who are signing their paychecks.
With this nation’s debt on a glide path to $30 trillion, can we afford to be sacrificing our fiscal stability on an altar of unsustainable public pensions? Should our hard-working government employees continue to be victimized by a system that could eventually wind up leaving them high and dry, with no money to sustain them in their retirement years? And, do the public employee unions have the right to continue in engage in reckless political lobbying and campaigning, despite the 2018 Supreme Court decision and even against the wishes of many of their own members? We need some answers to these questions and we need them now.
Dr. James Veltmeyer is a prominent La Jolla physician voted “Top Doctor” in San Diego County in 2012, 2014, 2016, 2017, and 2019. Dr. Veltmeyer can be reached at email@example.com and by visiting his website at drveltmeyer.com
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