The Common Good, a non-partisan organization that facilitates debate on politicized issues, recently held a discussion in New York City on the Wisconsin protests and their broader implications for the country. Leading the discussion were Congressman George Miller (D – CA) of California and Steven Malanga, Senior Fellow at the conservative economic think-tank, the Manhattan Institute. Miller, a longtime Democrat representing the East Bay of San Francisco is a leading advocate in Congress on traditionally liberal issues: labor, education, and the environment. Malanga, on the other hand, whose writing can be found in the Wall Street Journal, RealClearMarkets and the Washington Examiner, is generally a more conservative thinker and tends to be critical of the size of government.
Congressman Miller led the discussion by cogently explaining how Governor Walker’s actions in Wisconsin, namely stripping public sector unions of their ability to have a say about their work environment, is a complete repudiation of basic civil rights. Miller has been outspoken, on the assault of Wisconsin workers’ rights and the larger impact on the American middle class. However, he quickly refocused his message during the discussion and honed in on the tenuous condition of state pension funds. He went on to address the reality that there are no easy fixes for state budget gaps. But, he noted the obligation that state governments have to ensure that their pensions are funded.
Malanga picked up where Miller left off and delved into examples of state fiscal crises across the country to show the varied nature of the economic issues that states face. Malanga found common ground with the Miller in discussing the general mismanagement of state pension funds. He cited the state of Washington as a perfect example, explaining that in past instances, the formula that states used to estimate their annual pension obligation simply assumed that public employees would work longer, and then die sooner after they retired. Hence, by inflating the number of years they assume public employees will work and deflating the number of years they will live after retirement, Washington effectively lessened the amount of money they needed to fund the pension for a given year. And that is how they, mathematically, closed their budget shortfall.
The reality, Malanga rightly noted, is that this number fudging just defers the problem to a later day, and therefore is clearly not a solution. He expressed optimism about hybrid pension schemes, a system that combines the features of defined benefit and defined contribution plan designs. That said, Malanga ultimately noted that given the uniqueness of states’ pension systems and fiscal difficulties, there is simply no universal solution to fix the mess.
While there are no universal solutions to state and municipal pension crises, many would agree that there are universal priorities to which states must adhere, one of which is for their public workers to have a voice when it comes to the conditions in which they work. What was disconcerting about the debate that emerged out of the Wisconsin protests was that the right for public sector unions to collectively bargain became framed as a zero-sum debate, i.e. should the right exist or shouldn’t it. Quite frankly, that is unacceptable.
As the Supreme Court in Canada noted in a 2007 case, “Collective bargaining is not simply an instrument for pursuing external ends … rather it is intrinsically valuable as an experience in self-government … Collective bargaining permits workers to achieve a form of workplace democracy and to ensure the role of law in the workplace.”
Miller and Malanga were right to direct their discussion to one of the most salient and pressing issues that arose out of the protests: how to deal with our state pension systems. Malanga took the conversation a step further and touched on hybrid systems, which are potentially real, viable solutions for many of the current pension woes. If the debate about public sector unions can be shifted away from whether collective bargaining is necessary for public workers (which it is) and more toward thinking of creative ways for states to meet their pension obligations, it will not only be in the best interest of Wisconsin, but also of the country.
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