NY State cuts public pensions

It was the classic New York State backroom deal. In a session starting late at night on March 14, the State Legislature cut pensions for public employees not already covered, mainly new hires. The body also redrew election district lines required by the 2010 census and expanded the DNA archives to force anyone convicted of a misdemeanor to provide a DNA sample.

The final vote didn’t take place until 7:30 a.m. the next morning. Legislators didn’t have a chance to read the bill before voting to pass it.

New York — which sets its pensions by legislation, not by collective bargaining — joined 43 other states that have cut public pensions since 2009, according to the National Conference of State Legislatures (NCSL). New York’s constitution divides public pensions into different groups called tiers; each new tier is worse than the preceding one.

The union movement was very angry about this attack — especially since some of the lawmakers they had helped elect passed it. Most of the Democratic members of the Senate walked out in a vain attempt to deny a quorum. However, in the Assembly, where Democrats have a majority, the vote was 93 in favor to 45 opposed.

‘Requiring 99% to pay for sins of 1%’

Lillian Roberts, executive director of American Federation of State, County and Municipal Employees DC 37 — which represents 120,000 city workers — issued a strong statement as the pension bill went to a vote. She said, “Gov. Andrew Cuomo’s proposed Tier 6 is an outrageously inadequate plan that would cut members’ lifetime retirement benefits by 40 percent, while it conceals a time bomb that could cut benefits and even destroy the pension system for current workers and retirees in all tiers, as well as newcomers.

“Tier 6 is actually a sneaky way to privatize the state and city pension systems — modeled on George W. Bush’s defeated plan to privatize Social Security. It would funnel huge profits to the bankers who sent our economy into recession and leave retirees at the mercy of the stock market.”

Richard Ianuzzi, president of New York State United Teachers — the largest union in the state, which represents 600,000 workers — called on the state government to make a better choice: close corporate tax loopholes to bring in billions of dollars to invest in jobs and education. He also called for legislation to recoup from Wall Street the $100 billion in pension losses stemming from abuses that crashed the state’s economy in 2008.

“It is very simple: Those who chose this path are requiring the 99% to pay for the sins of the 1%,” Ianuzzi said.

Danny Donohue, president of the Civil Service Employees Association, the largest union of state employees, said: “This deal is about politicians standing with the 1% — the wealthiest New Yorkers — to give them a better break while telling nurses, bus drivers, teachers, secretaries and laborers to put up and shut up.”

The NCSL says that pensions in most states are termed “defined benefits,” in which each pensioner gets a fixed amount of money per month. Most private pensions are “defined contributions,” a fixed amount of money allotted to invest with a bank or a brokerage firm.

Even though pensions are part of employee wages, held until retirement from working full-time, many states only funded them as their employees retired, relying on small payments to investment funds to cover pension costs.

When the stock market tanked in 2008, so did the pension funds. This gave states the excuse to cut what they had promised and what their employees had earned.

While the details are preliminary, because union lawyers and staff haven’t finished analyzing the pension bill, billionaire New York City Mayor Michael Bloomberg estimates the city’s “savings” to be $21 billion over the next 30 years. The state’s estimated “savings” range from $30 billion to $121 billion.

From the workers’ perspective, city workers’ wages will be cut by $21 billion over 30 years, and state workers will see cuts ranging from $30 billion to $121 billion.

There are many obnoxious wrinkles in this pension bill: age of retirement, how to calculate overtime pay and so on. The one that will affect a large number of part-time higher education workers is vesting — how long workers have to be on the job before they qualify for pensions. Now it is 10 years, but under the new bill, it will be 20 years. That means that thousands of part-time teachers in the City University of New York and State University of New York systems will not get pensions.

The Center for Retirement Research at Boston College reports that nearly two-thirds of households will probably face declining living standards in retirement over the next 15 years. Attacks on workers’ wages, disguised as attacks on their “too generous” pensions, only contribute to this problem.

The more productive capitalism becomes, the more workers lose their jobs and future security. It is this irrational system of private ownership of the economy that dooms older workers to poverty while the 1% amass ever more wealth. If the wealth created by the workers belonged to them collectively, there would be more than enough for all retirees to live in comfort.