California Voters Will Judge Government Pay and Pension ‘Reform’

By SETH SANDRONSKY

The politics of government pay and pension reform is moving forward in the big, blue state of California. On the surface, this shapes up as a bipartisan affair.

Former San Jose Mayor Chuck Reed (D), past San Diego Councilman Carl DeMaio (R) and four others in early June filed a proposed California ballot initiative, The Voter Empowerment Act of 2016. The initiative would reform the pay and pensions of government workers.

State Attorney General Kamala D. Harris, a Democrat with aspirations to replace US Sen. Barbara Boxer (D), changed the measure’s full title and summarized it in six-sentences totaling 100 words about five weeks later.

Her wording to sum up the measure begins: “Eliminates constitutional protections for vested pension and retiree healthcare benefits for current public employees, including those working in K-12 schools, higher education, hospitals and police protection, for future work performed. Adds initiative/referendum powers to Constitution, for determining public employee compensation and retirement benefits.”

Reed and DeMaio plan to legally review Harris’ title and summary of their proposed initiative.

Clark Kelso is University of Pacific McGeorge Law School Professor in the north-central California city of Stockton. “The Attorney General got it right,” he said in a statement. “The ‘Voter Empowerment Act of 2016’ removes the constitutional prohibition on making prospective reductions to statutory retirement benefits to public employees.”

Reed and DeMaio’s foes include Democratic lawmakers and labor unions. The latter group features the American Federation of State, County and Municipal Employees, and the Service Employees International Union, a partial list.

The two sides facing off over the California government pay and pension reform measure are in part waging a battle of ideas. One think tank source with the reformers is Steven Eide of the Manhattan Institute.

Eide suggests that government workers’ pay and pensions “crowd out” local and state funding of public services. Long story short is Californians can have one or the other, but not both.

Eide’s idea seeks to pit 2.4 million state government workers against 16.5 million members of the state’s private-sector labor force. This is a bid to drive a wedge between the public-sector workforce and its private counterpart.

In and out of the US, there is a history of power and privilege using working-class division as a strategy to fragment labor. When a smaller group of workers has what a larger group of them largely lacks, tapping the politics of resentment emerges as a top-down economic solution.

Over the years across the US, private employers have striped their employees of defined-benefit pensions, which provide retirement security, a steady source of pay for a retiree’s post-work lifespan.

“For those lucky enough to work for an employer providing a pension, the nature of employer-sponsored plans has changed dramatically over the last 30 years,” writes Alicia H. Munnell, director of the Center for Retirement Research at Boston College and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management. “Whereas, in the early 1980s, most workers were covered by a defined benefit plan, today most workers have a 401(k) as their primary or only plan.”

Private-sector workers lack the retirement security of defined-contribution plans that provide a fixed amount of savings that can and do run out during retirement. Moving California government employees into 401(k) accounts would make financial firms billions of dollars.

Do the math. These companies would charge hefty management fees to future government retirees in the Golden State pushed into 401(k) defined-contribution plans.

Currently, in the post-Great Recession moment, public-sector workers, thanks to Tea Party rhetoric and some Democratic Party compliance, are scapegoats for tax-revenue shortfalls of government budgets. Reed and DeMaio’s current ballot-box proposal would deprive current and future workers of the money they legally earned, annulling their contractual and fiduciary agreements.

In sum, government pay and pension reformers want to impose austerity in California. That is, they pursue the policies and politics to reduce taxpayer spending on people and public services, including government workers, which in Greece are punishing working people.

Back in California, Reed et al.’s proposed measure requires 585,407 valid voter signatures to qualify for the state ballot of November 2016.

“This type of extreme measure will be unacceptable to California voters and is doomed to fail,” said Dave Low of Californians for Retirement Security, with 1.6 million members, in a statement.

Seth Sandronsky is a journalist and member of the Pacific Media Workers Guild. Email sethsandronsky@gmail.com.

From The Progressive Populist, September 15, 2015

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