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Latest News - January 2011

January 12, 2011
Yes, Unions, Pension Reform is Coming
Source: Sunshine State News
By: Kenric 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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