LaborPains.org

Is there a coming class war between public-sector workers and private-sector workers? Here’s William McGurn in the Wall Street Journal:

The notion that Wall Street and Main Street are fundamentally at odds with one another remains a popular orthodoxy. So much so that we may be missing the first stirrings of a true American class war: between workers in government unions and their union counterparts in the private sector.

That led Mike Elk of the pro-labor In These Times to wonder if just such a class war is happening with unions in New York City. He elaborates:

However, Gary LaBarbera, the president of the Building and Construction Trades Council of New York recently signed on to the Committee to Save New York, a coalition of business and real estate executives that seek to raise $10 million to raise a campaign in support of incoming New York Governor Andrew Cuomo’s plan to take on government employees in New York State by cutting wages and pensions.

Several New York City labor activists who spoke off the record said that LaBarbera is willing to take on public employees over pay and wages in order to free up money from the state budgets to go toward construction projects.

These conflicts are less visible at the national level where private-sector and public-sector union leaders are almost always in agreement with each other. But at the state level, where unions compete over a more limited pot of government money, the divisions are becoming much more stark. Both private and public unions agree that more revenue is needed, preferably from tax increases on the rich. But public-sector unions want that money to go toward lavish pension plans for government employees, while private-sector unions want more infrastructure projects to get their members back to work.

This is what happens when you tie your union’s success to the government, rather than working with businesses to create new jobs and opportunities. Eventually the money runs out.

Image courtesy of Profound Whatever.

It’s hard to imagine a more disastrous public pension system than California (although Illinois is trying). According to a Stanford analysis, the state’s public pensions are underfunded by at least $500 billion, or roughly one-fifth of the revenue taken in by the entire federal government last year. This disaster was caused by an incestuous relationship between California’s government and public-sector unions, and a willingness to spend profligately.

But not all the news from California is bad news. Here are three rays of sunshine in a state that desperately needs it:

The SEC is investigating California’s public pension fund. This might seem like a black mark for California; after all, the only other state pension fund ever targeted by the SEC was New Jersey’s. But as the Contra Costa Times notes, “If federal investigators are able to make a case that CalPERS [the pension fund] misled investors about the risk in its pension fund, it would send a powerful signal to other public funds, which almost without exception base their financial reporting on average annual investment returns of about 8 percent a year”. Scaring states into abandoning the 8 percent figure and calculating reasonable risk would be a huge step forward.

San Diego is leading the way in pension reforms. San Diego Mayor Jerry Sanders has said, “We’ll be rethinking literally everything we do.” That includes ambitious reforms for public-employee retirees. The new plan hasn’t been written yet, but Sanders has indicated it will shift all new government hires to a 401(K)-style pension plan (excluding public safety workers). Sanders wants the issue on the ballot during the next election — which means he can expect a fierce fight from organized labor.

Governor Jerry Brown wants to cut spending. Brown is an unlikely savior for California’s pension system. He was elected with massive union support and has been criticized for ignoring the state ‘s pension problems. But his latest proposal cuts $12.5 billion in spending, including 8-12 percent of public employee compensation. At the very least, this suggests that Brown acknowledges there’s a problem, something many of his predecessors refused to do.

Image courtesy of Thomas Hawk.

As the Florida state legislature looks into reforming its pension system, a war of words has erupted between Sunshine State lawmakers and public-sector unions:

Unions have rebuffed reform efforts, pointing to reports showing that state and local retirement plans made up 2.37 percent of expenditures in 2008, while some municipalities throughout Florida contend retirement benefits exceed 50 percent of their payrolls.

[Democratic State Sen. Jeremy] Ring said that unions are looking at it the wrong way, and that retirement benefits take up an average of 20 to 25 percent of local government payrolls statewide.

Not to give away the ending, but it’s the unions that are wrong here. As a recent report from the James Madison Institute revealed, many (though not all of) Florida municipalities have unsustainable pension systems. Miami’s budget is 20 percent pension debt, or about $101 million this year alone. The report calculates that the average funded ratio of Miami’s pension plans is about 68.8 percent, but this number is based on incomplete information, much of which dates back before the recession hit. This misinformation isn’t just limited to Miami. According to the National Center for Policy Analysis, Florida’s pension system, which was supposedly fully funded in 2008, was actually underfunded by about 11 percent.

Of course Florida is nowhere near as bad as, say, New Jersey. But its municipalities still went through the typical pension promise, making overly generous promises to government workers and assuming an absurd 8 percent rate of return (in most cases). The Sunshine State should make some serious reality-based reforms to its pensions — and the unions should stop distorting the truth.

Image courtesy of Express Monorail.

As President Barack Obama said two years ago, “Elections have consequences”. He’s probably less enthusiastic about that bromide today — as are the unions who campaigned on his behalf. As the New York Times reports, state officials are gearing up to take on organized labor:

State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.

The explanation for all this from the unions is that newly-elected Republicans are looking to exact revenge because organized labor spent so much money on Democrats in 2010. But that doesn’t explain Cuomo. It also doesn’t explain the massive public pension problems facing state lawmakers. The aforementioned Indiana, for example, has more than $442 million in unfunded public-sector pension liabilities as of last year.

It’s not all bad news for labor though. There will still be jobs for union hotshots in the New York Attorney General office.

Image courtesy of James Durkee.

It’s being called a “one-sided report” by the AFSCME. The AFL-CIO says it “could have been written by anti-worker, anti-union New Jersey Gov. Chris Christie.” As far as we’re concerned, those are fantastic reviews. The report in question is a 60 Minutes piece from Sunday that broke through the union spin and told the truth about how public-sector unions are helping bankrupt states across the nation via pensions plans and more.

The video is a little long, but a must-see. Click here to watch.

The AFL-CIO links to a blog post by left-wing watchdog Media Matters that attacks 60 Minutes for never mentioning the words “tax cuts” in regards to New Jersey’s pension woes. (Because we all know what a low-tax haven New Jersey is.) The post quotes a New York Times article mentioning that tax cuts enacted in New Jersey in 1995 diverted money from the state pension fund.

But as is also stated in the Times article, New Jersey more recently raised pension benefits 9 percent and lowered the retirement age to 55. These giveaways were so absurd that the Securities and Exchange Commission later charged New Jersey with fraud for falsely claiming it had the resources to fund its generous pensions. (Pensions were later curbed a bit when it became evident a crisis was looming.) Oddly, these details never made it into the Media Matters report.

Also overlooked by the left: New Jersey has the highest tax burden in the nation. And yet the state’s pension system was so unsustainable that even those tax rates couldn’t prop it up. New Jersey’s pension system is underfunded by more than $170 billion, or 44 percent of New Jersey’s gross state product, according to the Mercatus Center. How exactly are state taxes supposed to fill such a massive gap?

Media Matters concludes by accusing 60 Minutes of having a “conservative framing.” But there’s nothing conservative about it. The fact is that the pro-union, big-government position on pensions is such blatant political spin that it’s not worth reporting.

Image courtesy of joiseyshowaa.

As cities across California and moreover, the entire state face financial obligations they can’t meet, the city of LA was on the cusp of reducing costs when the SEIU stepped in to bully another union.

Heaven forbid that the city of LA should be able to reign in employment costs and that another union be able to accept a deal the SEIU isn’t happy with.

According the the LA Times:

“Los Angeles Mayor Antonio Villaraigosa and his top budget advisers thought they negotiated a labor contract last week that would begin to address the steadily rising cost of employee healthcare benefits. But that deal, reached with the 4,800-member Engineers and Architects Assn., has come under attack from members of another civilian employee union, which contends that the agreement contains “unprecedented and dangerous” concessions and should be rejected.

With the Engineers and Architects voting on the tentative agreement this week, organizers with Service Employees International Union Local 721 have begun warning that the proposed pact is part of a larger effort to “divide and conquer” the city’s civilian employee groups.”

The head of the beleaguered union says that behind the SEIU’s interest in the deal is their ongoing attempts to raid his union. So much for the “new directions” under Mary Kay Henry:

“Any move by one union to interfere with the negotiations of another union will ultimately backfire,” Szabo said, “because the city is likely to impose these healthcare provisions and more on those who opt out of the deal.” Michael Davies, interim executive director of the Engineers and Architects, said the Service Employees International Union is opposing the deal as part of its push to raid his union’s membership. Last fall, nearly 2,000 workers from his organization moved to the SEIU.

While unions will not let their hopes and dreams for the Employee Free Choice Act, or EFCA, go, arguing for the “freest and fairest elections,” they seem quite content to deny taxpayers (the ones footing the bill) the ability to vote on pension reforms. I guess fairness isn’t what EFCA was about after all. From the Silicon Valley Mercury News:

Unions representing Menlo Park city workers are expected to file a lawsuit today in an effort to prevent a pension reform initiative from going before voters on the November ballot. The ballot initiative, spearheaded by Citizens for Fair and Responsible Pension Reform, would reduce pension benefits for new city employees. The organization gathered 2,788 signatures, more than the 1,884 needed to qualify for the ballot. The council in May approved the initiative for the Nov. 2 ballot.

Today at noon, representatives of the local chapters of the Service Employees International Union, which represents non-management city employees, and the American Federation of State, County and Municipal Employees, along with some residents and city workers, are scheduled to hold a news conference outside Menlo Park City Hall after the lawsuit has been filed. An SEIU representative called the initiative unlawful, but wouldn’t elaborate on the legal grounds for the lawsuit against Menlo Park. In the past, AFSCME representatives have said the ballot measure violates a state law that prohibits amending retirement contracts through initiatives.

Image from Dean Terry.

It’s summer time, and that means it’s time for America’s children to get to their summer reading!

That is, unless you live in Santa Cruz, California, where the SEIU’s negotiations with the city may shut down local libraries for three months:

“All but one county library could close for three months, smaller branches could be shuttered permanently or hours at all branches slashed further if managers and union workers do not reach an agreement to save money on this year’s budget. [...] Basically we’re coming up with plan B or C or D,” said Library Director Teresa Landers. “We have our fingers crossed that the city and SEIU will be able to come to an agreement.”

“Library leaders find themselves in a unique position because while the Joint Powers Board governs 10 branches from Santa Cruz to La Selva Beach, library workers belong to the city of Santa Cruz chapter of SEIU. Therefore employees negotiate their contracts with city leaders, not library leaders. As a result, Landers said, issues that hold up talks at the city level affect the libraries, too. Santa Cruz is in talks with SEIU to help save $3.7 million from next year’s city budget.

“Landers said she and board members are hoping that SEIU agrees to continue concessions made to save money last year, which include postponing 5 percent raises and taking an unpaid day off each week. The library’s budget next year is just under $11 million, a drop from $11.3 million.”

Given what happened in Palo Alto in the fall when another library closed due to a strike, I recommend that California’s children save themselves and horde books. Perhaps they could pick up my Grandfather’s book, “Unions–Who Needs Them?”