Youth Poverty At An All-Time High

Empty Pockets (Image by barbaranixon from Flickr)

A new report from the Washington DC-based Urban Institute indicates that the overall percentage of wealth of those in their 20s and 30s has been dropping steadily and is now at its lowest level since records have been kept, the WSWS reports.

The study, “Lost Generation? Wealth Building Among Young Americans,” found that young people aged 29-37 saw a 21% decline in their accrued wealth over the past few decades, while those who are 74 and older saw their wealth increase by 150%. One explanation is that older Americans are more likely to have defined-benefit pensions, which have become increasingly rare for younger workers. Younger workers are also saddled withthe highest amount of student debt ever, with the average 25-year-old owing$25,000. Young people have also been particularly hard hit by the housing crisis and unemployment. The majority of new jobs created since the “recovery” started pay less than $15 per hour. Meanwhile, the number of mortgages held by 25-30 year-olds has dropped from 9% to 4% of all mortgages.

Chicago Schools CEO Brizard Out After 17 Months

Huck/Konopacki Labor Cartoons

Just like the CEO of a private company that fails to act aggressively enough to maximize profits or to suppress worker discontent, Chicago Public Schools CEO, Jean-Claude Brizard, is out after only 17 months on the job. He is leaving by “mutual agreement,” the Chicago Sun-Times reports. In all likelihood, however, he saw the writing on the wall (the mayor was pissed off) and, like a good capitalist soldier, took a dive for the team.

Brizard had been handpicked by Emanuel to push through the his corporate education agenda, including the massive conversion of public schools into private charters, the unilateral imposition of a longer workday without commensurate pay, evaluations based on student test scores and merit pay. The teachers, not surprisingly, resisted, launching the city’s first teacher strike in 25 years and successfully rolled back some of these reforms. In short, Brizard failed the mayor and made him look the fool.

Brizard will be replaced by Barbara Byrd-Bennett, a former teacher, principal and Cleveland schools CEO. She had also been filling in as Chicago’s interim chief education officer for the past six months, helping to negotiate the deal with the Chicago Teachers Union (CTU) that ultimately got the teachers to return to the classroom. The final terms of Brizard’s departure have not yet been disclosed, but are expected to include a year’s salary of $250,000, according to the Sun-Times.

The Chicago Tribune reports that business leaders told Brizard that the mayor would blame him if the struggle with the CTU got out of hand (i.e., not crushed quickly with a decisive victory for CPS). Not only did Brizard fail in this, but he enraged the mayor by going on a family vacation just prior to the strike and he was absent during much of the contract negotiations. The teachers’ ability to spin the strike as a struggle against standardized testing and privatization was certainly an embarrassment to the mayor and he likely blamed this on Brizard, as well.

Byrd-Bennett is not planning on filling the position she vacated to become CEO and is expected to serve both roles, thus consolidating her power and sending the message to the teachers that her rule will be autocratic and decisive. This is important for CPS and Emanuel, as many teachers are already grousing about the rotten deal they got with their new contract (e.g., the raise doesn’t cover the extra hours they’re being required to work and 25% of their evaluations will now be based on unreliable and inconsistent student test data). Furthermore, the district has been withholding pay from teachers who participated in the strike and it is doing little about the dilapidated facilities, including many schools that lack air conditioning. The new contract also gives principals greater leeway in hiring outsiders and ignoring the pool of recently laid off CTU members.

The last thing Emanuel wants is a renewed strike or an escalation of discontent. Yet he is setting the teachers up for this with his new pension plan (see accompanying article below), which would cut benefits, delay the retirement age and increase employee contributions, thus further eroding teachers’ take-home pay and living standards.

Pension Crisis for Affluent School Bosses

The Pension Crisis is not really a crisis at all in most states. It is true that if every state employee were to simultaneously retire, there would not be enough money to cover their guaranteed pensions. But this will not and cannot happen since employees aren’t even eligible to receive benefits until they’ve worked a minimum number of years. It is also true that most pension systems have lost considerable value as a result of the financial meltdown, but this was caused by Wall Street speculators, not greedy unions. This, too, should not be seen as a crisis, since the values are expected to gradually recover over time.

Fearful that the current losses in state pension plans might be replaced through increased taxes, the wealthy went on the offensive, blaming the unions (which they absurdly argue are the primary political powerhouse) for extracting extravagant benefits at taxpayers’ expense. The only solution, they argued, is cutting benefits, delaying when workers are eligible to receive those benefits, and forcing workers to pay more each month to bolster the funds.

One of the ways they are trying to cut benefits is by capping the maximum income that can be used to calculate future benefits. In California, the recently passed pension “reform” bill will cap benefits at $132,000.

In the long term, this will harm most employees, since, with inflation, $132k will eventually become a modest income, easily earned by bus drivers, teachers, and other moderate income state employees. At present, however, the majority of state employees earn far less than this.

School administrators, though, will feel the pinch of this new cap.

The San Francisco Chronicle reported today that there are 77 retired superintendents earning pensions of more than $200,000 a year. James Enochs, for example, who had been superintendent of the Modesto school system, tops the list with an annual pension of $301,000. Fredrick Wentworth, formally of the San Joaquin County Office of Education earns $296,000 per year and Edward Hernandez Jr., formally head of the Rancho Santiago Community College District brings in $291,000. Marilyn Miller, retired chief of the Hillsborough school district gets $268,000 per year and Johanna VanderMolen, who once headed the Campbell Union School District, retired at $267,000 per year.

Today in Labor History—September 2

September 2, 1872 – 1,200 workers struck the Cavite shipyards and arsenal in the Philippines — the first recorded strike in the nation's history. (From theDaily Bleed)

September 2, 1917 – Wobblies, (members of the Industrial Workers of the World) were mass arrested on orders of Attorney General Palmer. (From theDaily Bleed)

 

Sheriffs Getting Ready to Attack Miners During the Battle of Blair Mountain

One of the Bombs Dropped on Striking Miners

September 2, 1921 – The Battle of Blair Mountain ended on this date in 1921, with the U.S. government bombing striking coal miners by plane, the first time the U.S. government used planes to bomb its own citizens. The Battle of Blair Mountain was one of the largest civil uprisings in U.S. history and the largest armed insurrection since the Civil War. The uprising lasted 5 days and involved 10,000-15,000 coal miners confronting an army of scabs and police. The battle came as mine owners tried to crush attempts by coal miners to unionize the southwestern West Virginia coalfields. From the late 1800s, mine owners forced workers to live in company towns, where rent was deducted from their wages and they were paid in scrip, which was accepted only at the overpriced company stores and was worthless everywhere else. The work was very dangerous and safety equipment and precautions were minimal. The mine owners had a long tradition of using private detectives and goons to spy on workers, infiltrate their meetings, rough them up, and block any attempts to unionize. The battle began after Sheriff Sid Hatfield (an ally of the miners and hero from the Battle of Matewan) was assassinated by Baldwin-Felts agents. Much of the region was still under martial law as a result of the Battle of Matewan. Miners began to leave the mountains armed and ready for battle. Mother Jones tried to dissuade them from marching into Logan and Mingo Counties, fearing a bloodbath. Many accused her of losing her nerve. The miners ignored her and a battle ensued between miners and cops, private detectives, scabs and eventually the U.S. military. (From Workday Minnesota,Wikipedia and the Daily Bleed)

September 1936-May 1937 – There were 477 sit-down strikes, involving 500,000 American workers, between September 1936 and May 1937. (From the Daily Bleed)
September 2, 1936 – The Macbeth Mine exploded killing 10 workers at the Hutchinson Coal Company mine in Logan County, West Virginia (See Battle of Blair Mountain, above). Six months later it exploded again, on March 11, killing 18 more. (From the Daily Bleed)

September 2, 1945 -- Ho Chi Minh declared Vietnam independent from France. (From the Daily Bleed)
September 2, 1956 – National Guardsmen were dispatched to Clinton, Tennessee after a series of violent demonstrations made it impossible to carry out desegregation. (From the Daily Bleed)

September 2, 1963 – Alabama governor George C. Wallace blocked the integration of Tuskegee High School in Huntsville, Alabama, by encircling the building with state troopers. Eight days later, President John F. Kennedy federalized the Alabama National Guard, forcing Wallace to abandon his efforts to block the desegregation. (From the Daily Bleed)

Sep 2, 1974 – The Employee Retirement Income Security Act (ERISA) was enacted, setting minimum standards for most private-sector pension and health plans. (From Shmoop Labor History Calendar)

Hamlet Chicken Plant Disaster: Mojo Nixon and Jello Biafra

September 2, 1991 - Twenty-five workers were killed by a fire at the nonunion Imperial Foods poultry processing plant in Hamlet, North Carolina. Bosses had locked and blocked the doors in violation of the law, leaving the workers no escape. (From Workday Minnesota)

Bumper Crop of Working Seniors

“All Used Up,” performed by Utah Phillips

As pensions are gutted, retirement ages raised, and nest eggs still enfeebled by the recession, more and more people are finding they cannot afford to retire. The New York Times reported this week that recent Labor Department figures show that the percentage of workers toiling on past the age of 65 is at a record high.

For the first time in 30 years, more than 10% of men over the age of 75 were employed, while nearly 5% of women that age were working. At the same time, employment for men under 55 fell sharply during the recession and is only now starting to recover, while the number of unemployed women under the age 55 hit its lowest level in two decades.

The Times also reported that overall household net worth declined by 15% during the recession—one of the reasons why so many people no longer can afford to retire.

Weed Workers Unite!

Weed Workers Woof! (Image by Chris Yarzab, from Flickr)

Marijuana workers at 14 dispensaries in Los Angeles have formed the “medical cannabis and hemp division” of the United Food and Commercial Workers, Local 770, the Insurance Journal wrote this week. UFCW also represents grocery clerks, pharmacists and health care workers.

Local 770 President, Rick Icaza, said the union would use its political weight to pressure officials to find an alternative to a total ban on dispensaries. Los Angeles currently has a cap on the total number of dispensaries and, despite a state law legalizing marijuana for medicinal use, the dispensaries are still considered illegal under federal law. Roughly 140 dispensaries in more than 20 Southern California cities have been threatened by federal authorities since October, 2011.

Considering their fragile quasi-legal status, it is encouraging to see cannabis workers unionize and fight for the wellbeing of their clients and for the preservation of their jobs. However, if they limit themselves to using “political clout” and fighting for their existence, they are nothing more than a professional association.

Despite their public image as dens of debauchery, dispensaries are still businesses. Most marijuana workers are still employees and wage slaves, with compensation and working and living conditions issues similar to other workers. They still have an inferior social and economic status to the capitalist class. Many cannot afford to own their own homes. And many don’t even have health or pension benefits, things that Icaza hopes the union will be able to win for members.

Jerry Brown: Friend to Teachers Dumb Enough to Believe It

Despite ample evidence to the contrary, Jerry Brown continues to be called a friend of labor. This is probably because big unions like the California Teachers Association invested so much money into his campaign for governor that they can’t afford to criticize him out of fear that he won’t pay them back in kind (as if this were ever a possibility).

Some will say that Brown’s attempt to raise taxes and funnel the bulk of the new revenue into K-12 education is a form of payback. However, his plan, even if it is approved by voters, will not restore the more than $21 billion that has been slashed from K-12 education in California over the past three years, let alone bring annual revenues up to the level necessary to hire more teachers, reduce class sizes, offer raises, or rehire counselors, librarians and nurses.

At the same time, Brown has quietly been pushing a pension reform plan that will raise costs and slash benefits for thousands of public sector workers. He has joined the growing chorus of right wing ideologues, fiscal conservatives and millenarian Chicken Littles who are all screaming that the pension sky is falling and workers themselves must pay for it.

According to John Fensterwald - Educated Guess writing in TopEd, the California Public Employees Retirement System (CalPERS), the nation’s largest public pension plan, reported anemic returns of 1.1% last year, while the California State Teachers Retirement System (CalSTRS), number two behind CalPERS, reported a slightly less anemic 2.3%. Both of these are far below the 7.75% rate of return needed to meet payouts to retirees. Furthermore, CalSTRS’ 10-year return was only 5.4% and many financial analysts believe the next decade will be just as bad.

While the economic crisis can certainly be blamed for much of the problem (30% decline in the value of the CalSTRS portfolio), the state itself has failed to make its required payments to the pensions or to responsibly manage them, thus exacerbating the problem. In either case, it is not the fault of public sector workers that the pensions have so much unfunded liabilities (most teachers receive only $3,000 per month), yet they are the ones who will be forced to pay for it by being required to work longer before retiring (the retirement age will increase to 67 for new employees), paying more into the system and accepting smaller payouts.

Thus, in addition to accepting stagnant wages over the past three to four years (most teachers, for example haven’t seen a raise in that time) along with furloughs, layoffs and increased out-of-pocket costs for healthcare, public sector workers will see their paychecks shrink even more, with increased deductions for their pensions.

Virtually absent from the fear mongering and blaming is the fact that CalSTRS is 71% funded, which is actually pretty good compared with other pension plans. Furthermore, only if large numbers of teachers were able to simultaneously retire would the underfunded liability even matter. Only those near retirement age are in any position to take advantage of their pensions and they make up a small minority of those still paying into the system. CalSTRS is not in any danger of going belly up. In fact, it is not projected to become insolvent until 2042, leaving plenty of time to deal with its unfunded liabilities. Even CalSTRS CEO Jack Ehnes criticized the Little Hoover Commission’s recommendations to slash CalSTRS and called many of its suggestions naïve or impractical. He also pointed out that many of its premises are wrong.

Occupy Everything And Then?

Huck/Konopacki Labor Cartoons

Several major unions have given their support to the Occupy Wall Street movement, as have numerous activist and community-based organizations. Satellite actions are springing up across the country and in Canada and Australia. Clearly, ordinary citizens around the world are fed up with corporate greed, the growing wealth gap, corruption, and most of all, their own declining living standards. Inspired by the demonstrations and occupations of public squares in the Middle East and North Africa, the Wall Street “occupiers” have been making courageous sacrifices of time, comfort and personal safety, as many have been arrested, pepper sprayed and beaten by the police.

So what do they want?

This is not entirely clear. Participants come from a wide range of organizations and perspectives, including anarchists, liberals, 911 conspiracy theorists, environmental groups, labor organizations and advocates for the poor and homeless. However, a common theme heard throughout the nearly 3-week long action has been that Wall Street must pay. This might be a generic or symbolic demand that all the rich pay more in taxes, or it could be a demand that the government levy fees on certain stock market transactions. It might mean higher corporate taxes or a tax on millionaires.

Regardless of the specifics, few if any are calling for an end to Wall Street, banking, speculation, wage slavery or capitalism. Rather, most seem perfectly content with the existing socioeconomic system and share the classic liberal perspective that it just needs to be reformed. From a liberal perspective, increased taxes on the wealthy and their corporations could certainly help fund social programs like education, Medicare, assistance for the poor and for single parents. However, even this is a pretty weak demand.

Huck/Konopacki Labor Cartoons

If people are going to risk jail time and physical injury at the hands of the police, they ought to ask for a lot more than increased tax revenue that might or might not trickle back down to them in the form of government charity. Why not also demand a guaranteed minimum income of $60,000 per year and universal health care for all? This would increase life expectancy and decrease chronic and infectious disease, and it would benefit everyone, regardless of their employment status, while the guaranteed lower middle class income would virtually eliminate hunger, homelessness, material insecurity and privation.

While they’re at it, why not demand an end to the petroleum, coal and nuclear industries, and a reinvestment into energy sources and technologies that are safer and healthier for people and the environment. They could also demand an end to all U.S. military and counterinsurgency operations everywhere and subsidies for repressive regimes like Israel, Turkey, Saudi Arabia and Columbia. This would save trillions of tax dollars for domestic needs, while doing far more to curtail the threat of terrorism than continuing the bombings, assassinations and destruction, as it would satisfy many of the grievances that drive people to join terrorist organizations. In fact, the policies of the last ten years have increased the spread of terrorism by pissing people off and making them mistrust and hate the U.S. even more.

These liberal demands are perfectly in keeping with the perspective that our current economic and political systems are by and large good, but just in need of some minor tweaks. In fact, they leave the existing economic and political system intact and virtually unchanged. They allow the ruling elite to continue to rule, and the bosses to continue controlling economic relations, and the wealthy to remain considerably richer than the rest of us.

However, even these modest demands or the demand that Wall Street “pay” cannot be won by simply “occupying” Wall Street. (Massive work stoppages might possibly exert the kind of pressure necessary, but only if workers were able to resist the intense state violence that would be unleashed upon them).

More significantly, these modest liberal demands cannot end the continual cycles of boom and bust, foreclosures, bankruptcies, unemployment, workplace injury and death. These are all hallmarks of capitalism and necessarily result from the capitalist system. We can mitigate some of the negative effects of capitalism slightly for some people through increased social spending, but there will continue to be a small class of individuals who own all of the machinery of production and the overwhelming share of the wealth. They will continue to maintain a monopoly on political power and overwhelming control over our lives at work and in the streets. They will continue to exploit legal loopholes and break the law when they think they can get away with it, or when the cost of the penalties is lower than the profits to be earned. They will continue to pay us far less than the value of the goods and services we produce and pocket the difference as profits. They will continue to mechanize the workplace, speed up production, downsize staffs, and export jobs whenever this helps their bottom line. And we will continue to accept whatever conditions they establish just to ensure that we have a stable income to feed our children.

It is interesting that so many unions are suddenly jumping aboard the “Occupy Wall Street” movement. They had the opportunity to take a stand against corporate greed and criminality when the economic crisis first began. Instead, they accepted the bosses’ claims that it was a “natural disaster” and that “we all must tighten our belts.” Consequently, instead of going on the offensive and demanding higher wages, shorter hours, bigger pensions and better health care, they started from the very weak bargaining position that the best they could possibly get was an already weak status quo and maybe save a few jobs. As a result, they put all their energy into making compromises with the bosses that resulted in cuts to pay, benefits and working conditions, albeit the cuts were often smaller than the bosses had hoped for.

The unions have suddenly awoken to realize the train was about to leave without them. The Wall Street protesters have sparked the imaginations of millions of angry and struggling Americans in a way that the unions have not done for generations (and winning considerable positive press at a time when the unions are being vilified). Thus, they are throwing their weight behind the “occupiers” in hopes that they will become a new vanguard that will rouse and inspire the working class, even if they lack a coherent platform or a strategy for winning their demands (see the comments of Stuart Applebaum, president of the RWDSU, in the Indypendent).

Perhaps one reason for the affinity between unions and the “occupiers” is that neither group seems interested in organizing. The unions have relinquished this traditional and effective strategy in favor of lobbying and campaign contributions, as if they thought they could beat Wall Street and corporations at their own game. Perhaps they thought it was more expedient. After all, $100,000 buys a lot of quick political favors (supposedly), while going out and listening to the grievances of the rabble (er, union members) is a slow, tedious process.

The Wall Street “occupiers,” on the other hand, have confused facebook and twitter announcements with true organizing, assuming that if a few people showed up, others would join in. Of course more people did show up, but without any coherence and logic to their message. The organizers of the protest picked a convenient, easy to hate target that allows participants to feel righteous indignation, much like the attentat or “propaganda by the deed” did for anarchists in the late 19^th and early 20^th centuries. Like the political assassinations and bombings of those early days of capitalism, many feel exuberant and thrilled by the occupation, as if convinced it will lead to a positive change in their economic situation.

A problem with vanguardist actions like the attentat and the Wall Street occupation is that they expect millions to join in, without providing any well-articulated or rational critique of the thing they are fighting, as if the action itself explained everything. This is unlikely to happen, as most anarchists eventually recognized, causing the attentat to fall from favor. The assassination of McKinley (or the attempts on Frick and Roosevelt had they been successful) could not have ended wage slavery or even have convinced sufficient numbers of workers that wage slavery was worth ending.

However, let’s assume that millions of people do join the Occupy Wall Street movement and succeed in “making Wall Street pay.” In the end, they will all go home to their same lousy jobs, mass-produced plastic toys, chronic disease and rising sea levels, while the Wall Street bankers and other millionaires continue to live in luxury and security.

Today in Labor History—September 2

September 2, 1872 – 1,200 workers struck the Cavite shipyards and arsenal in the Philippines — the first recorded strike in the nation's history. (From the Daily Bleed)

September 2, 1917 – Wobblies, (members of the Industrial Workers of the World) were mass arrested on orders of Attorney General Palmer. (From the Daily Bleed)

 

Sheriffs Getting Ready to Attack Miners During the Battle of Blair Mountain

One of the Bombs Dropped on Striking Miners

September 2, 1921 – The Battle of Blair Mountain ended on this date in 1921, with the U.S. government bombing striking coal miners by plane, the first time the U.S. government used planes to bomb its own citizens. The Battle of Blair Mountain was one of the largest civil uprisings in U.S. history and the largest armed insurrection since the Civil War. The uprising lasted 5 days and involved 10,000-15,000 coal miners confronting an army of scabs and police. The battle came as mine owners tried to crush attempts by coal miners to unionize the southwestern West Virginia coalfields. From the late 1800s, mine owners forced workers to live in company towns, where rent was deducted from their wages and they were paid in scrip, which was accepted only at the overpriced company stores and was worthless everywhere else. The work was very dangerous and safety equipment and precautions were minimal. The mine owners had a long tradition of using private detectives and goons to spy on workers, infiltrate their meetings, rough them up, and block any attempts to unionize. The battle began after Sheriff Sid Hatfield (an ally of the miners and hero from the Battle of Matewan) was assassinated by Baldwin-Felts agents. Much of the region was still under martial law as a result of the Battle of Matewan. Miners began to leave the mountains armed and ready for battle. Mother Jones tried to dissuade them from marching into Logan and Mingo Counties, fearing a bloodbath. Many accused her of losing her nerve. The miners ignored her and a battle ensued between miners and cops, private detectives, scabs and eventually the U.S. military. (From Workday Minnesota, Wikipedia and the Daily Bleed)

September 1936-May 1937 – There were 477 sit-down strikes, involving 500,000 American workers, between September 1936 and May 1937. (From the Daily Bleed)

September 2, 1936 – The Macbeth Mine exploded killing 10 workers at the Hutchinson Coal Company mine in Logan County, West Virginia (See Battle of Blair Mountain, above). Six months later it exploded again, on March 11, killing 18 more. (From the Daily Bleed)

September 2, 1945 -- Ho Chi Minh declared Vietnam independent from France. (From the Daily Bleed)

September 2, 1956 – National Guardsmen were dispatched to Clinton, Tennessee after a series of violent demonstrations made it impossible to carry out desegregation. (From the Daily Bleed)

September 2, 1963 – Alabama governor George C. Wallace blocked the integration of Tuskegee High School in Huntsville, Alabama, by encircling the building with state troopers. Eight days later, President John F. Kennedy federalized the Alabama National Guard, forcing Wallace to abandon his efforts to block the desegregation. (From the Daily Bleed)

Sep 2, 1974 – The Employee Retirement Income Security Act (ERISA) was enacted, setting minimum standards for most private-sector pension and health plans. (From Shmoop Labor History Calendar)

Hamlet Chicken Plant Disaster: Mojo Nixon and Jello Biafra

September 2, 1991 - Twenty-five workers were killed by a fire at the nonunion Imperial Foods poultry processing plant in Hamlet, North Carolina. Bosses had locked and blocked the doors in violation of the law, leaving the workers no escape. (From Workday Minnesota)

Teachers’ Pensions Threatened in California

The California teachers’ pension fund, CalSTRS, has been placed on the state’s high-risk list by State Auditor Elaine Howle, according to a recent article, “State Auditor calls CalSTRS a high risk,” by John Fensterwald - Educated Guess.

The move was largely a capitulation to slash and burn bosses and millionaires who want to preserve their historically low tax rates, business subsidies and lavish lifestyles by imposing austerity on the rest of us. CalSTRS is actually reasonably healthy and able to make payouts to retirees for many years. It is NOT facing an impending catastrophe. In fact, it is not projected to become insolvent until 2042, leaving plenty of time to deal with its unfunded liabilities. Even CalSTRS CEO Jack Ehnes criticized the Little Hoover Commission’s recommendations to slash CalSTRS and called many of its suggestions naïve or impractical. He also pointed out that many of its premises are wrong.

However, this fabricated crisis (or exaggerated problem) is being used to justify benefits cuts for retirees and increased contributions by current employees (equivalent to pay cuts, since they would decrease take-home pay), slashing living standards for both groups. At the same time, these “reforms” would increase income to the state and decrease pressure to increase taxes, something that benefits the wealthy far more than the rest of us.

It is true that there are large unfunded liabilities. However, it is important to understand why and address these fundamental causes, not only to close the gap but to prevent it from growing or returning again later. None of the causes, by the way, has anything to do with teacher greed or luxury. In fact, most teachers receive only $3,000 per month, which is barely enough to live on in most parts of California without other supplemental income.

One major cause was the financial collapse, which resulted in a 30% drop in the value of the CalSTRS portfolio, Fensterwald wrote in his piece. This was an unnatural disaster caused by the greed and, in many cases, criminal behavior of bankers, insurance giants and finance capitalists who, instead of being punished and forced to pay restitution, have received generous taxpayer funded bailouts that have enabled them to grow even wealthier. One obvious solution to any pension woes is to have the rich or, more specifically, bankers and financial giants, pay greater taxes and use the increase revenue to help bail states out of all their financial problems, including their unfunded public employee pensions.

Another major cause of the unfunded liabilities has been states’ refusals to make the required payments on time. Unfortunately, none of the states are in any position right now to pay for their past mistakes (they can’t afford to pay for their current ones). Their biggest mistake was to buy into the anti-tax orgy and allow their own budgets to be decimated through declining corporate and marginal rate personal income taxes.

When we hear pundits demand that the state learn to live within its means, they are implying cuts, and nothing but cuts. However, the metaphor is meant to appeal to working families who must budget according to their incomes. Obviously, when one has a low wage job, one must make many sacrifices at home in order to make ends meet. However, with higher wages or investment income (as is common among the wealthy), one can spend more lavishly and carelessly. The state does not have to slash social programs and job creating spending in order to live within it means. It could (indeed, it must) increase its income, not just to live within its means, but to solve its myriad problems, like funding its pensions, paying decent wages to its employees, improving its schools, caring for its children, elders and infirm.

Pension Reform: A Union-Busting Trojan Horse

Attacking teachers’ pensions is a Trojan horse in the war against teachers unions. Any attack on pensions takes time and energy away from other important battles, of course. However, the attacks also serve to divide and conquer teachers as they generally offer existing and/or veteran teachers a more generous benefit than younger teachers and future hires.

An example of this is SB 27 , which would eliminate spiking – the practice of bolstering employees’ pay in their final year in order to increase their annual pensions. This is generally done by getting a promotion and pay increase or taking on additional work for extra pay. It would also stop double dipping—the practice of coming back to work as a contractor (e.g., substitute teaching) while still collecting a pension.

The bill has passed the Senate, but is being opposed by roughly a dozen public employee groups, including the CalSTRS board and the CTA. They argue that the bill would take away benefits already promised to and earned by existing employees. Proponents say that applying the “reforms” to all employees, current and future, is the only way to get the house back in order. The alternative, which they would probably accept, and CTA would likely concede, would be to apply the new rules only to future employees, effectively creating a two-tiered benefits package in which younger teachers get a much worse stake than their veteran colleagues. This would exacerbate generational tensions that already exist within the union and significantly reduce the chances for effective organizing and mobilization around other important issues.