“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Tuesday, March 15, 2011

Public Sector Union Bosses & Pensions: Who's To Blame?

I've long contended that much of the mess experienced by both private and public sector union members in America with respect to deferred, defined-benefit pensions are largely the result of poor union leadership.
For example, in this post from late 2005, the second one on my business blog, I wrote,

"Two major US airlines filed for bankruptcy protection this week- Northwest and Delta. In the former case, their machinists union is already on strike.

What I find ironic is that, while so much of this week’s, and many prior years’ focus, is on union leaders squaring off against company managements, nobody has bothered to ask how it is that the unions got themselves in this mess in the first place?

Why did unions ever begin taking future pension contributions from the companies for which their members worked, instead of cash compensation?

Why is this relevant today? For two reasons. First, it’s the private sector version of the social security mess. What makes sense and works here should inform our solutions for social security. Second, it should inform labor’s current choices and negotiations, so as not to make the same mistakes twice. Especially now, in the airline and automobile manufacturing sectors.

Where is the expose on the union leaders who foolishly negotiated, on behalf of their members, to accept unsecured IOUs from companies on terms that the companies’ banks would never have lent them the money?"

I have a friend who is a public sector teacher. He and I have been discussing this topic frequently over the past year- since Chris Christie was elected governor of New Jersey.

Last week, we had another conversation sparked by the events in Madison, Wisconsin. He had been talking with a retired local police chief, apparently who is without his full pension, who groused that the mayors and other locally-elected politicians who promised defined-benefit pensions which are now underfunded should be tried and imprisoned for their criminal fraud.

I replied with my now years-old belief that his own union leaders should join those local officials in the hoosegow. I asked why his union leaders allowed the state and towns to offer deferred, defined-benefit pensions? He didn't know.

When I asked, he admitted he doesn't know how much his union boss in Trenton makes.

He initially argued that the teachers' union boss didn't know the promised pensions were not being fully-funded, but I pointed out that he'd told me he knew that Christie Whitman borrowed from the fund over a decade ago. Surely, his union chief knew that, as well. And that the state of New Jersey hasn't been fully-funding its pension obligations for years.

Why, I asked, did he continue to vote for his union chief?

He then suddenly gushed that he'd always wanted to be a teacher. That in order to teach, he had to begin in the public system. That meant joining a closed union shop, i.e., joining the teachers' union local. And voting for whomever was put on the ballot to head it. He didn't feel he ever had a choice. And wasn't happy about it.

I replied that, by remaining a public system teacher, he's pretty much made his choices. He offered explanations as to why he didn't apply to teach at one of the well-regarded, well-paying large private schools in the area. But each time, I countered his arguments. Essentially, he was so used to a guaranteed unionized job in the public school system that the specter of venturing out into the private education sector posed too much uncertainty.

He said you had to 'know someone' to get hired at one of the best local private schools. But that's not true. He's chosen special education.

Too bad, during his 25-year career, when he completed several other Masters' degrees, he hadn't observed what I saw as far back as 1979, i.e., science and math teachers vacating their jobs to join technology firms.

For at least the last 15 years, which was sufficient time for my friend to earn a BA in Mathematics or a BS in some science field, there have been constant openings in good local private schools. One which my daughters have attended has had a perennial opening for either a middle or upper school math teacher for the last six consecutive years. It became so bad a decade ago that the school was hiring young teachers right out of college to teach upper school science. That's how it became embroiled in a scandal when the 25-year old male science teacher was apprehended having sex with underage students.

Most recently, the same school hired a retired local public school math teacher.

My friend wouldn't have had to know anyone, had he simply chosen to pursue a career teaching math or science locally in a private school.

The current pension problems in the public sector in New Jersey are certainly at least half the fault of the union bosses who agreed to those terms.

When my friend complains that he had no choice, and couldn't get a job in a private school, without making sacrifices or taking risks, I say,

"Welcome to the real world. The business world that the rest of us taxpayers face all the time."

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