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Labor Is Saying the Right Things on Pensions. Will They Act?

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    NEWSLETTERS

    During a brief conversation recently with a Southern California labor leader, I complained that public employee unions had failed on the pension issue by being too selfish.

    Instead of fighting just to protect public employee pensions, they should be pushing legislation to provide the same defined benefit pensions for private workers on the same terms that public workers get.

    The labor leader didn’t like this. “But we’re talking about just that issue,” she said.

    She was right. Public employee unions are talking about extending public pension plans to private workers. Emphasis on talking.

    The talking point of private pensions has recently become a staple of union statements on pensions. Dave Low, the thoughtful chairman of the labor-backed Californians for Health Care and Retirement Security, wrote recently about the need to extend and protect defined benefit retirements for private workers.

    But there’s a big “but.”

    Low’s statements – and other labor talk in this area – don’t go much beyond talk about the need for someone else (Low suggests corporations) to give everyone a pension.

    Too many of these statements feel like political boilerplate – and a way to criticize conservative critics of public pension benefits and to take shots at Wall Street.

    Labor would show seriousness in this matter if it were to be specific – and show a willingness to sacrifice a little in the public sector for the benefit of the private sector.

    What does that mean?

    It means that unions should be proposing specific plans that would protect defined pension benefits for public workers – but reduce the risks and rate of returns to sustainable levels.

    These new public pensions would be so safe and conservatively managed that the public pension system could be opened up to private workers.

    There could be a number of different ways to do this – and to fund it, but the essential point is that public pensions should be the same as private pensions.

    Many folks in labor would see this as a giveback, since public workers would get less. But in fact, this kind of proposal would be a huge victory.

    Since most people aren’t in public unions, millions of Californians would have greater retirement security – and they would have labor to thank for it. Governments would be in a stronger fiscal position, with less lavish public pensions. (Fiscally healthy government should be a goal of wise public unions).

    Defined benefit pensions would be preserved and expanded. Politically, conservative critics of public pensions – who capitalize on private sector envy of public sector pensions – would lose an issue they’ve used to argue against other public investments and against tax increases.

    There’s a big victory to be grabbed here. But it will take more than just talk to get there. 

    Let us know what you think. Comment below, send us your thoughts via Twitter @PropZero or add your comment to our Facebook page.