…How did we get into such a mess? States have always had to cope with volatility in the size and composition of their populations. Now we have shrinking tax bases caused by recession and extra costs imposed on states to pay for Medicaid in the federal healthcare program. The straw (well, more like an iron beam) that breaks the camel’s back is the unfunded portions of state pension plans, healthcare, and other retirement benefits promised to public sector employees at a time when federal government assistance to states is falling—down by roughly half in the next fiscal year beginning Oct. 1.
It is galling for private sector workers to see so many public sector workers thriving because of the power their unions exercise. Take California. Investigative journalist Steve Malanga point out in the City Journal that California’s schoolteachers are the nation’s highest paid; its prison guards can make six-figure salaries; many state workers retire at 55 with pensions that are higher than the base pay they got most of their working lives. All this when California endures an unemployment rate steeper than the nation’s. It will get worse. There’s an exodus of firms that want to escape California’s high taxes, stifling regulations, and recurring budget crises. When Cisco’s CEO, John Chambers, says he will not build any more facilities in California, you know the state is in trouble.
Mort Zuckerman: The Crippling Price of Public Employee Unions – Mort Zuckerman, U.S. News
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