The Pension Pinch: Public-Sector Unions Grapple With Rhetoric and Rollbacks

[Omaha Steve]

http://www.inthesetimes.com/working/entry/6551/public_sector_unions_grapple_with_pension_rhetoric_and_rollbacks/

Thursday 14 Oct 10 11:42 am

By Akito Yoshikane


The same old problem: Members of the National Treasury Employees Union (NTEU) protest congressional proposals to cut federal employee pension and health benefits in May 1995, at the U.S. Capitol. (Photo by DAVID AKE/AFP/Getty Images)


Some of the nation's largest municipalities face huge pension shortfalls that could hinder local and state governments’ ability to operate, according to a new study. Around the country, unions are facing mounting pressure to accept benefit rollbacks—and many already have.

“The Crisis in Local Government Pensions in the United States,” released Tuesday by Northwestern university, says that city and counties across the country are liable for $574 billion in pension plans in addition to an estimated $3 trillion in unfunded state pensions. The grim result: U.S. households owe on average $15,000 each to former and current municipal workers. The numbers are even higher in places like Chicago, where the average is almost $42,000.

The findings come as many states have began or are strongly considering pension rollbacks, setting the stage for tenuous negotiations with labor unions representing the 7.9 million public-sector workers. Many discussions have already begun with changes to agreements that include increasing the retirement age, furloughs, pension cuts and freezes. With elections and budget crises looming, public unions have entered the spotlight once again, providing much fodder for critics who say labor costs are above budget levels.

The research, led by academics from Northwestern University and the University of Rochester, is based on an analysis of pension plans in 50 major cities covering 2 million local government workers—roughly two-thirds of municipal employees.

According to the Associated Press, in the past two years, more than 19 states have either considered or instituted pension cutbacks for current and new hires. Six major cities—Philadelphia, Boston, Chicago, Cincinnati, Jacksonville and St. Paul—can only pay for pensions through 2020, the study's authors say.

“The fact that there is such a large burden of public employee pensions concentrated in urban metropolitan areas threatens the long-run economic viability of these cities, as residents can potentially move elsewhere to escape the situation,” the report said.

Concession pressure

FULL story at link.