California’s Union Lessons

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BY JOHN FUND – A recent statewide poll in California shows just how much pension scandals involving government workers has shifted the political ground on the issue.

The latest Field poll finds that 46% of Golden State residents believe unions do more good than harm versus only 35% who think the opposite. By a roughly similar margin, respondents also think public employee pensions are too generous, a reversal of how they responded in 2009. But that was before scandals such as the one in Bell, Califorina showed how feckless and even corrupt government officials were rigging the pension game.


When it comes to solutions, the public appears ready to embrace dramatic reforms. A narrow majority supports the recent recommendation of the state’s Little Hoover Commission to reduce pension payout promises for current government employees.

Even normally union-sympathetic Democrats have woken up to the fact that growing pension obligations threaten to crowd out spending for essential government services from police to filling potholes. Field found that 68% of registered Democrats want to establish a ceiling on pension payouts. Two-thirds of Democrats want state and local government employees to pitch in more towards their own retirement.

Even more surprising, 50% of Democrats back the Little Hoover Commission’s proposal to create a 401(k)-type defined contribution plan to go along with a reduction in the current defined benefit plan that government workers currently enjoy. Almost everyone in the private sector now relies on 401(k) plans. Only public sector union workers now routinely enjoy defined benefit plans that guarantee a certain income upon retirement.

But public-sector unions are digging their heels in and opposing any significant pension reforms. Governor Jerry Brown has privately told GOP state legislators he is negotiating with over the budget that the unions will not bend on key issues.

Marcia Fritz, a Democrat who heads the California Foundation for Fiscal Responsibility, says if the impasse continues there is likely to be a ballot measure put before voters to roll back pension promises. “The taxpayer as well as essential government services are being crushed by unsustainable pension obligations,” she told me.