Andrew Biggs has an excellent assessment of state pension funds. The sad news for taxpayers:
My research indicates that overall underfunding tops $3 trillion.
Vested pension benefits are constitutionally guaranteed in eight states and protected by law in two dozen more. And in most every state politics makes accrued benefits impossible to cut.
He also notes that the responsible way to fund defined-benefit pensions is one in which taxpayers are not on the hook for the rosy assumptions politicians make about future market returns. Especially since markets provide assets (e.g., treasury bonds) that can be purchased to fully cover pension liabilities with zero risk.
“Senior citizens living on fixed incomes” is a common refrain of the powerful pensioners’ special interest groups, and it seems to never go rebutted. It’s practically the slogan of The Most Selfish Generation: The Baby Boomers who are willing to pile debt upon their children and grandchildren in order to enjoy 30+ years of healthy and unproductive “retirement.”
For the record: None of us working citizens has unlimited income, and unlike retirees we don’t have guaranteed fixed incomes from the federal government in the form of social security, medicare, and (in many cases) government-backed pensions. Nor do we have disposable time that we could devote to earning extra income to make up a shortfall, as do retirees.
Unions negotiate the conditions of employment and work performance for their members, typically in an adversarial relationship with an employer. If unions truly represent their members, then why don’t they accrue any liability for their members’ work behavior?
After all, if an employee causes some injury or damage in the course of employment, tort law generally puts the employer right near the head of the chain of liability. But when a union has negotiated the circumstances and rules of employment and work, why aren’t they more liable than the employer? (Assuming, of course, that the employer is in compliance with the labor contract.)
I raised the question in response to a strange and unfortunate case mentioned in the Independent blog.
But I am truly confused: For union shops in general why isn’t the chain of accountability — and hence, liability — Employee -> Union -> Managers -> Corporation -> Shareholders?
It used to be that government workers earned lower salaries that were offset by more generous non-salary compensation, job security, working conditions, and other benefits. Now they have actually pulled ahead in nominal salary terms, while still enjoying non-salary compensation (like healthcare and pensions) that is on average quadruple that of comparable private sector workers!
Not that this should surprise us, given the extraordinary power public employee unions and bureaucrats have accrued….