State pension funds are another time bomb of malaise (to the tune of a $1.4 trillion shortfall) waiting to explode, and Rhode Island provides an example of the difficulty we each, in our own state, face in defusing it.
Rhode Island passed a massive overhaul (as such things go; they have a long way, yet, before they’ve completely cured their problem) of their state retirement system last year, including such unheard-ofs as raising the retirement age, suspending pension increases for several years, and generating a hybrid retirement plan that combines traditional pensions with 401(k)-like accounts. Rhode Island’s General Treasurer, Gina Raimondo, says that this reform will save Rhode Islanders $4 billion over the next 20 years (compared to a 2013 budget that proposes spending $8 billion in that year alone, small potatoes, indeed, but a critical start). This minor reform also seeks to redress astonishing conditions that include 58 percent of retired teachers and 48 percent of state retirees receiving more in their pensions than in their final years of work.
But it’s too much change for some. The public “service” unions (service: you service me) object: it’s somehow wrong for their members to be responsible for their own retirement funding. Even a little bit. Instead, these public “service” unions protest that it’s all unfair. Rhode Island is reneging on promises to workers, they say. Bob Walsh, Executive Director of the National Education Association of Rhode Island, goes so far as to insist
What they did was illegal. We’re deep into a real assault on labor. It worries me that people who purport themselves as Democrats do this.
Never mind that there’s nothing at all illegal about these changes. It’s a well-established principle in American jurisprudence that when the conditions extant when a contract was agreed (stipulating arguendo that the agreement was made in good faith by all parties) no longer exist, or have so radically changed that the terms can no longer be met, the contract can be abrogated and either a new one negotiated or the parties involved go their separate ways. In extreme cases, this is what bankruptcy achieves; although, when the conditions have changed as radically as these have, bankruptcy isn’t necessary.
Never mind, also, these are promises that couldn’t be kept in any event, and both the state government and the public “service” unions at the time knew they could not be kept. Or they blindly believed real hard in government’s ability to keep collecting funds from…somewhere. Tinker Bell is alive and well in Public Service Land.
Never mind, finally, that this public “service” union greed at the expense of taxpayers makes “labor” a valid target.
One tear-jerker that the unions are trotting out is this:
North Providence retiree Jamie Reilly left her job as a secretary at age 50 [remember that raising of the retirement age?], thinking her 30 years of state employment would mean good benefits during her later years. But now she said she may be forced to re-enter the workforce at age 55 because the state has put off pension increases.
“I counted on that money,” Reilly said…. ”You work all your life and you plan, and they take it away from you.”
Worked all her life? She worked 30 years and wanted to be retired for 40. Workers in the private sector don’t get it that easy; they work until they’re in their mid-60s—a working life 50% longer.
And this one:
Cranston firefighter Dean Brockway said higher retirement ages mean he will have to work several years longer than he expected, and he wonders how he’ll climb stairs in heavy gear in his 60s.
“Could I do something else? I don’t know,” he said. “A lot of us chose to dedicate our lives to public service because to us it’s an honor. Could I be a carpenter? I don’t think so. This is what I do.”
Brockway has a legitimate concern, but it’s no different from the concerns of a private sector employee whose work is primarily physical labor. But if he’s not going to look for alternatives, if he’s not going to try to retrain into something less physically demanding (certainly no stroll in the park for a middle-aged or older person, but assuredly not impossible), he loses sympathy for his plight, which begins to be self-imposed. Certainly, there’s no more obligation for Rhode Island’s citizens to indemnify him against the outcomes of his choices than there is for them to indemnify similarly situated private sector employees.
Raimondo understands this in all its practicalities—how affordable are the existing programs:
These problems won’t go away. The longer you wait, the bigger the problems get. People looking for easy, short-term solutions. … Well, there are none.
Raimondo doesn’t believe in Tinker Bell.