Columns

Yes, Unions, Pension Reform is Coming

Private-sector awakens to a growing disconnect over public perks
By: Kenric Ward | Posted: January 12, 2011 3:55 AM
Kenric WardKenric Ward
The Florida AFL-CIO calls contemplated changes to the state's pension system "radical." It's long past time the union started being honest with its members.

Pension reform is coming to the public sector, just as it has to the private sector. As former New York City school chancellor Joel Klein wrote the other day:

"Defined-benefit pensions helped bring the once-vibrant U.S. auto industry to its knees. The promised benefits just proved too costly. In that industry such pensions are mostly a thing of the past. Global competition eventually demanded as much."

In Florida, most local and state politicians have arrived at the same conclusion. Government workers may not feel "global competition" the way auto workers do, but they are part of the labor market. And that market is changing, rapidly.

As the pension debate heats up, wages in the real world (outside government) are being driven down. The U.S. Department of Labor found that between 2007 and 2009, more than half of the full-time private-sector workers who lost jobs that they had held for at least three years and then found new full-time work reported wage declines. Thirty-six percent of those reported earning more than 20 percent less.

Contrast this with Florida's public sector, where layoffs are rare and salary scales remain impervious to market realities. As for pensions, the state's $124 billion retirement program remains one of just seven state systems that requires no employee contributions. Such lush treatment seems incongruous, if not wholly unfair, in a "right-to-work" state.

Though many of Florida's public-sector workers haven't received cost-of-living increases in recent years (when inflation has been low), few have been subjected to the severe buffetings suffered by their private-sector counterparts. Private-sector unions have begun to notice the disparate treatment.

In an article titled "Labor's Coming Class War," the Wall Street Journal's William McGurn reports that the 100,000-member Building and Construction Trades Council of New York is warming to Gov. Andrew Cuomo's call for a public-sector wage freeze.

This break in union solidarity isn't so surprising, given that unemployment among Trades Council members currently stands at 20 percent. Surely, Florida's anemic private-sector unions see a similar disconnect here.

Across the country, private-sector workers (union and nonunion) sense that their states' public-employee perks, including fully paid pension plans, are simply not sustainable.

Govs. Mitch Daniels (Indiana) and Matt Blunt (Missouri) issued executive orders to end collective bargaining. Newly elected Govs. John Kasich (Ohio) and Scott Walker (Wisconsin) are targeting collective bargaining, as well.

Florida Gov. Rick Scott, a multimillionaire businessman, sees this state's pension program as low-hanging fruit ripe for reform. Florida could net $1.3 billion in annual savings if government employees were required to contribute just 5 percent of their salaries.

Scott hasn't expressly called for an end to collective bargaining -- which could begin to effect such changes -- but the writing is on the wall.

Actually, it's been on the wall for some time. Franklin Delano Roosevelt warned back in 1937 that collective bargaining "cannot be transplanted into the public service."

He could have said the same about gold-plated pension programs that impose ever-greater tax burdens on the economy's productive private sector and taxpayers at large.

FDR was, in fact, a radical. But compared to the reactionary and self-serving bluster coming from Florida's AFL-CIO, he sounds positively pragmatic. The more public unions fight reform, the less support they'll receive from the public that pays the bills.

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Reach Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.



Comments (4)

Rich
12:35PM JAN 14TH 2011
Wow. As the person who drafted the statement referenced in the above article I find it interesting that one word, one single word, was mentioned about our statement. There is no mention about the reams of independent, publicly available data we shared with the press about the excellent condition of Florida's Retirement System. For example, there was a 14% return on FRS just last year according to the state. The individual writing this piece never contacted me, asked me any questions and refused to cite anything from our statement or the discussion we facilitated with independent actuaries and other professionals at our press conference. Except that one word, taken out of context. According to Webster’s “Radical” means “very different from usual or traditional” which is exactly what is being proposed. Is this journalism? Is this even responsible commentary? The cherry picked data employed in the above piece is not even consistent. I would hope that this publication would provide its readers with ALL of the facts in the future on this important issue. The Florida AFL-CIO stands ready to assist. Of course, that relies on the author being interested in “Fair and Balanced Coverage for Florida.”
owkrender
3:11PM JAN 12TH 2011
Pension funds are in trouble for two reasons: 1) during the tech bubble, they were judged to be super-funded, and employers demanded and were granted several years long holiday from making contributions; and 2) because of the across the board decline in market values caused by the recent financial meltdown. Neither of these are the fault of either public employees or unions.
Wait until the next valuation: you will see that the fund have gotten significantly well.
BM
6:31AM JAN 12TH 2011
Maybe if people understood the roles of the unions and the Governor it would be a little easier.

The union bosses have but one goal, to get every dime possible out of the pocket of the employer and into the pockets of the union employee and of course their own. They never want to hear reasons for pay or benefit cuts. To come back with less in a contract means they have failed and their cushy job is on the line.

The role of the Governor is to protect the interests of ALL citizens and not just those of the unions. He must realize that those who actually pay the bills (taxpayers) have less money in which the state can lawfully take to supply unions with their pensions. Thus, if he does his job properly the unions must take less, make do with less and realize that what they are asking for simply cannot continue.
Emma
12:26PM JAN 12TH 2011
I can't think of a more appropriate name (BM) to be associated the first comment to this article. Your outdated rhetoric about unions shows that you know little about them or their purpose. Many union leaders in Florida are volunteers. That's right, they volunteer to negotiate contracts for better wages, heath care and the pensions that the Governor is chomping at the bit to do away with. This false crisis reminds me a little of the build up to the Iraq war. Well, folks, there were no weapons of mass destruction and there is no looming crisis with FRS.

Perhaps the Governor could protect the interests of ALL citizens, as opposed to just those of the wealthy few and their corporate masters.