In a commentary published in Garden State newspapers early this week (first link below), Steve Malanga of the Manhattan calls his readers’ attention to a survey of state pension woes recently prepared for the firm S & P Global (second link below).
While politicians and/or their appointees in every single state have improvidently promised civil servants retirement benefits in excess of what government pension systems have set aside to pay for them, assuming a reasonable return on investments, the problem is generally far more severe in forced-unionism states, especially those, like New Jersey, where public-sector union bosses wield extensive monopoly-bargaining privileges.
As Malanga points out, the S & P Global analysis shows that per capita pension debt in the Garden State is now greater than $15,000. That’s the most gaping pension shortfall in the nation. In New Jersey and other Big Labor-dominated states, billions of dollars in putative retirement-fund investments that are now supposed to be earning solid returns haven’t even been set aside yet. The only way to make up the difference is with “additional government and worker contributions,” but the amount of money necessary to close the gap “has become staggering.”
Chart 7 in the S & P Global report offers compelling evidence that compulsory unionism is a key factor behind underfunded public retirement benefits in state after state.
It shows that, among the 12 states with the smallest amount of state debt and liabilities as a share of Gross State Product (GSP) per capita, every single one — Nebraska, Idaho, South Dakota, Wyoming, Iowa, North Dakota, Tennessee, Oklahoma, Arizona, Utah, Arkansas and Nevada — has a longstanding Right to Work law.
Meanwhile, among the 14 state with the highest state debt and liabilities as a share of per capita GSP — New Jersey, Connecticut, Alaska, Hawaii, Illinois, Massachusetts, Kentucky, Delaware, Vermont, Maryland, New York, California, Rhode Island and New Mexico — not one has a Right to Work law. And 13 of these 14 states (all except Kentucky, that is) authorize monopoly bargaining and forced union dues and fees in the public sector in addition to failing to protect private- sector employees’ Right to Work.
It will be very difficult for states like New Jersey, Connecticut and Illinois to get out of the fiscal holes into which they have dug themselves, but one indispensable step in the right direction would be for them to curtail sharply the “exclusive” bargaining privileges of government union bosses, and restore public employees’ Right to Work, as Wisconsin did in 2011 with its famous Act 10 reform.
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