There’s a bigger problem. Lord Keynes famously said that, “In the long run, we’re all dead.” But before they die, millions of retired state and local bureaucrats will drain trillions of dollars from taxpayers.
A report by Robert Novy-Marx and Joshua Rauh found that government pension funds are unfunded by some $3.2 trillion. That’s an extra $27,000 that each American household will need to pony up in the decades ahead.
The price tag is so large because more than 80 percent of government workers are still eligible for old fashioned defined-benefit retirement programs. State and local governments are making massive spending promises, and taxpayers will have to pick up the tab. By contrast, such pension funds are only available to 20 percent of private-sector workers.
Civil service workers are also a throwback because they’re heavily unionized. Last year some 7.9 million public-sector employees were in a union, while only 7.4 million private-sector workers were. More than a third of government workers pay union dues, while just 7 percent of the rest of the workforce is unionized.
Dan Henninger of The Wall Street Journal writes that the unionization of government workers dates to a 1962 executive order issued by President Kennedy. As a cost-saving measure, President Obama could lift that order, since government employees would still enjoy the protection of civil service laws and greater job security than most private-sector workers.
It’s time governments took control of their payrolls . After all, we’ll all be paying for these decisions for decades to come.