Secure Government Workers Now Lead Labor Day Parade

Published: Sep 3, 2007

The celebration of Labor Day is muted this year for most workers. Union membership is down, pay is flat and pensions are rare.

The one place unions are strong, pay is up and pensions are fat is public service. Local, state and federal employees now receive raises and benefits that are the envy of most taxpayers who pay for it all.

Most private employers have replaced costly pensions with investment accounts, such as the 401(k), because pension plans paid from future profits have proved disastrous.

Indeed, generous union-won pensions helped drive steel companies and airlines into bankruptcy. Now the auto industry is fighting for its life with a pension yoke around its neck. Consider that General Motors now pays four pensions for every worker on its payroll. Ford carries a similar burden, which adds about $1,700 to the cost of a new car.

What seemed smart corporate strategy in the 1950s and '60s became a crushing burden as payrolls were cut, ranks of retirees grew and foreign competition increased.

Pensions, and the unions that advocate them, are fading away everywhere except in government.

Last year, only 7.4 percent of wage-earners in private industry belonged to a union. But among government workers, union membership was 36.2 percent. At the local government level, the rate was 41.9 percent.

These unions, which represent teachers, firefighters, police and service workers, aggressively lobby for increased benefits every year.

And elected officials, fearful of the unions' political clout, routinely grant higher pay and higher pensions linked to that pay.

Problem is, no one's looking out for taxpayers because elected officials get the same pension benefits given government workers and so have little incentive to rein in costs.

Somehow, Florida decided to give all of its "citizen legislators" entry into the pension pool, increasing the burden on taxpayers.

The Florida Retirement System has 692,000 active members and supports 250,000 retirees. While well funded and financially sound, it still requires taxpayer support. Last year's required contribution from local government increased a significant 10 percent.

Consider that increase in the face of service cuts for needy people because of a tax shortfall. It gives you a clear sense of politicians' priorities.

As the ranks of public-service retirees grow, reforms will be needed to shield taxpayers from the higher costs as higher-paid public servants begin to retire. Gov. Charlie Crist tells us he is firmly supportive of the pensions received by public safety workers, but is willing to explore less-costly retirement options for rank-and-file employees. We urge him to do so.

Pensions were defensible years ago, when job security and a solid retirement were offered public servants in exchange for lower-than-average pay.

Now, pay has caught up. This year, even with tax cuts forcing some layoffs in Hillsborough County government, pay has increased 3.5 percent.

Workers in general aren't doing that well. Adjusted for inflation, the national median income last year was $1,000 less than in 1999.

And most Americans lack pensions and are having trouble saving enough for a comfortable retirement. The Center for Retirement Research at Boston College finds that for people on the verge of retirement, the median balance in their 401(k) plans and Individual Retirement Accounts is only $60,000.

Longtime government workers will get retirement checks that exceed that amount every year.

Government perks need to be brought in line with what is offered in the private sector. The new theme for Labor Day should be the protection of the most vulnerable worker, the privately employed taxpayer.