For years, the subject of public sector pensions raised the ire of heard, but never seen, conspiracy theorists. As the years passed, public sector pensions continued to grow with no oversight and very little public pushback. In the shadows, they have grown into a ravaging monstrosity, a Frankenstein’s monster that is threatening the financial wellbeing of our local and state governments. It is pillaging and terrorizing the countryside.
Pensions weren’t created for the purpose of devouring our budgets. Like Frankenstein, government created its pension monster with good intentions. The idea was to provide government workers with a comparable retirement to private sector workers so that the government could be more competitive in luring talent from the private sector. But once government workers had a taste, they lobbied for more. Pensions grew, retirement ages shrunk, and the unfunded pension monster began to take shape. Now, it is threatening to tear our budgets apart at the seams, eating away at tax revenues, and bankrupting our cities and states.
While private sector union membership has dropped to 12.3%, public sector unions have grown exponentially. For the first time ever, there are more people in public sector unions than in private sector unions. Thirty-nine percent of state and local government workers now belong to unions. If you look outside of the South, the percentage is even higher. For instance, in New York 70% of government workers are in unions.
Public sector unions have been an incredible lobbying force, working from the inside out to push for more lavish pension packages for government workers. One of the biggest public sector unions is the American Federation of State, County, and Municipal Employees (AFSCME), which has openly declared that it has the power to determine elections. AFSCME was the biggest election spender between 1989 and 2004. It spent over $40 million on federal elections, with an astounding 98.5% of that money going to Democrats. Victor Gotbaum, former lead of AFSCME District Council 37, once declared, “We have the ability, in a sense, to elect our own boss.” The unions meet any effort to curb government growth with hostility. The California Teachers Association spent $57 million to stop a referendum that would have limited government growth and reduced union power.
Unfortunately, unions have been such successful parasites that they are threatening to kill their hosts. A new report finds that American cities face a $587 billion shortfall in pension funds. Some of our most iconic cities face the largest problems. Chicago has a $44.9 billion shortfall and New York City has a $122 billion shortfall. State governments are facing a similarly dire crisis, finding themselves $3 trillion in the hole in terms of pension liabilities. Even tiny states such as Rhode Island are over $6 billion in the hole. Meanwhile, California faces a seemingly insurmountable $75.5 billion shortfall.
We have already seen the wrangling of private companies by private sector unions. Some private industries now have three people receiving full pensions for every person they have actually working. Paying four people for the productivity of one person simply isn’t sustainable, and now we are seeing the government’s system falter under the same logic. But unlike private sector pensions, which rely on currently productive workers, public sector pensions rely on taxpayers.
Workers’ pensions are tied to the base salaries they earn right before they retire. As base salaries have grown, public sector pension have grown accordingly. Public sector unions have the unique ability to increase their wages without regard to their market value since their employer — the government — doesn’t have to worry about profit margins and is inclined to side with workers in wage disputes in order to keep them happy.
Public sector unions also have the ability to threaten the public more directly than private sector unions can. What if trash collectors or firemen went on strike? In the private sector, a strike means you can still get the goods; they will cost more, but they will still be made. If firemen or policemen go on strike, there will be destruction. The costs are much higher in a public sector strike.
This lobbying force can be used for some interesting and nefarious social engineering. For an example, look at the California Correctional Peace Officers Association, a union of correctional officers. It successfully lobbied for California to enact a three-strikes law in 1994, not necessarily with the goal of taking dangerous people off the streets, but because it would dramatically increase the number of inmates. Between 1980 and 2000, it lobbied for the creation of 22 new prisons, which were necessary to house the additional inmates. Before 1980, there were only 12 prisons in the state. Today, 11% of the state budget goes to the penal system, more than what goes to education! Through their lobbying efforts, the union was able to manipulate the supply of inmates (yes, we’re talking about people here), thus increasing the demand for prisons and correctional officers. More jobs, more union members — all paid for by higher taxes.
As unions wield their power, states are being forced to choose between upsetting unions and funding vital state functions like infrastructure and education. This is a problem — a monster — that has grown out of control. The public and its political representatives are essentially being extorted by a strong, unified group exercising its political clout from the inside out. When the economy was humming and budget surpluses were common, we could look the other way. But with the economy in the tank and state revenues unable to meet spending obligations, this is a problem that must be addressed. This is a monster that must be stopped.
Brandon Greife is the Political Director at the College Republican National Committee. He holds a J.D. from University of North Carolina at Chapel Hill, and a B.A. in Political Science and History from there as well.