Corporate leaders hope to eliminate public pensions in Texas

The Austin American Statesman recently reported that a group of Houston corporate executives want to eliminate public pensions for future teachers, fire fighters, police, and other state and local government workers. Bill King, an investor and principal in several companies including Global FBO Holding, Inc., Politicalendar, LLC, and EmLogis, told the Statesman that public pensions are too risky for taxpayers.

King is heading a group of business people in the Houston area who are forming Texans for Public Pension Reform. The group is composed of Houston-area business people, who own assets totalling $1.5 trillion. The group plans to initiate a public relations campaign to build support for ending public defined benefit pension plans, which guarantee retirement security, and replacing them with defined contribution plans such as 401(k) plans, whose value depends on the ups and downs of the stock market.

If King and his well-heeled group succeed, Texas taxpayers could be the biggest losers. For one thing, public pension funds pump billions of dollars into local economies. The Perryman Group, an economic and financial firm based in Waco,  reported in 2009 that pension payments to members of the Texas Teachers Retirement System are “a notable economic stimulus to communities across the state,” generating $12 billion a year in business activity, 87,000 jobs, and $8.5 billion in state and local tax revenue.

Other public pensions such as the Texas Employee Retirement System for state workers and local government pension plans while not as large as the teachers’ pension system also pump billions of dollars into local economies of all 254 Texas counties.

If the state and local governments stop or reduce funding for pensions as would happen if King’s proposal succeeds, pension payments for millions of Texans would either be substantially reduced or possibly eliminated, hurting not only those who receive pensions but local businesses where retirees spend their money as well.

Maintaining public pensions, on the other hand, is a good bargain for taxpayers. The promise of a secure pension and other benefits help attract and retain qualified people to teach our children, protect public safety, and provide other essential services. These benefits help offset the lower pay that public service workers receive. The Center for State and Local Government Excellence estimates that public service wages in Texas are 16 percent to 17 percent lower than pay for comparable work in the private sector.

Furthermore, the pension benefit comes with a very low price tag. According to the National Association of State Retirement Administrators, public pension contributions comprise only 1.95 percent of state and local government budgets in Texas.

And as far as risk to the taxpayer goes, in Texas that risk is very low. Both the Texas Teachers Retirement System and the Texas Employee Retirement System have more than 80 percent of the cash and assets on hand right now to pay their future obligations.

Finally, it will cost quite a bit to eliminate public pensions and replace them with defined contribution plans. During the last session of the Texas Legislature, Rep. Warren Chisum sponsored HB 2506, which would have converted teachers’ and state employees’ pension plans to defined contribution plans. The Legislative Budget Board estimated that doing so would cost Texas taxpayers $3.1 billion over just a two-year period between fiscal years 2012 and 2013.

US/Colombia trade pact hurts workers in both countries

As Congress returns to work after Labor Day, there will likely be a big push to get new trade agreements, like the one with Colombia, ratified. Proponents of the Colombia agreement are worried that US grain exporters will miss out on opportunities to increase corn, wheat, and soybean exports. To build pressure on Congress to act quickly, their lobbyists are touting the Colombia agreement as a way to create badly needed jobs.

But as the Economic Policy Institute (EPI) points out, if the Colombia agreement turns out to be anything like NAFTA and other trade pacts, more jobs will be lost than gained; furthermore, the impact of the Colombian trade agreement could disrupt the lives of millions of poor Colombians and further destabilize a country that already suffers from plenty of instability. Unions in both countries are opposing the pact because it does nothing to stop the violence against Colombian trade union activists that has become pandemic.

Proponents of the pact say that lower Colombian tariffs will increase export jobs in the US; however, according to EPI, increased imports of cheaply made goods from Colombia will likely offset any gains derived from exports. EPI estimates that imported Colombian goods could displace 127,000 US jobs while exports to Colombia could create 99,000 creating a net loss of 28,000 jobs.

If the impact of the trade deal with Colombia is similar to the impact of NAFTA, it will cause the US trade deficit with Colombia to increase significantly, which will result in the loss of another 55,000 US jobs.

The impact on workers in Colombia will be even greater. Should the pact be ratified, subsidized US grain imports will substantially increase, affecting the lives of small farmers and agricultural workers. Economists Luis Garay Salmanza, Fernando Barberi Gomez, and Ivan Cardona Landinez estimate that cheap grain from the US will cause a 16 percent decline to the income of small Colombian farmers, many of whom are already poor.

The Colombian Ministry of Agriculture and Rural Affairs estimates that the pact if ratified will cause a 35 percent decline in agricultural employment, which is likely to generate social unrest and food insecurity. The poorest of the poor, Afro-Colombians, indigenous peoples, and those who have already been displaced by the country’s ongoing civil war, will bear the brunt of the cost of the pact.

Colombia’s two labor confederations, the United Center for Workers (CUT, the Spanish acronym) and the Confederation of Workers (CTC) oppose the pact because it does nothing to curb the violence against union members that has made Colombia the most dangerous country in the world to be a union member.

More than 2,800 union members have been murdered in Colombia since 1986 as part of a brutal union avoidance strategy practiced by Colombian employers. In the last month, Rafael Tobon Zea, Wilmar Serna, Eduardo Fabian Zuniga, and Luis Medrano Prens, all of whom were either actively organizing a union or were activists in an already existing union, were murdered.

International Trade Union Confederation (ITUC) General Secretary Sharan Burrow reports that “as many as 19 trade unionists have already been murdered during 2011” in spite of promises to reduce violence and promote worker rights in the Labor Action Plan signed by the U.S. and Colombia in April 2011.

The violence against Colombian union members makes it harder for unions to operate in Colombia, which lowers wages and invites companies seeking to lower labor costs to move their operations to Colombia, prompting US unions to urge Congress to oppose the pact.

Richard Trumka head of the US AFL-CIO said in a letter to Congress that the AFL-CIO opposed the trade pact with Colombia because the government has not enforced the Labor Action Plan designed to protect Columbian workers’ right to free association and has allowed violence against union members to continue with impunity.

Trumka also said that the pact does not encourage development that benefits workers. Such development “will require a safe and stable society and adequate investment in infrastructure, training, and education as well as the opportunity for workers to meet, organize and engage in collective action to improve pay, benefits, and conditions of employment.”

Corporations spend excess money on stock repurchases instead of jobs

As working people struggle to find jobs and protect their living standard from corporations like Verizon, which is demanding huge concessions from its union workers, corporations in the US are sitting on more than a $1 trillion in cash stockpiles. This large amount of excess cash instead of being invested in new factories and new jobs is being used by companies to repurchase shares of their own stock.

Bloomberg.com earlier this month reported that corporate boards so far this year have authorized $324 billion in stock buybacks, and if this trend continues that amount will increase to $554 billion by the end of 2011, making this year the third highest year since 1985 for stock repurchase authorizations. The only higher years were 2006 ($665 billion) and 2007 ($863 billion).

“Corporate America has a lot of money,” said Rob Leiphart of Birinyi Associates to Bloomberg.com. “Buybacks offer the ultimate flexibility in that you deploy capital and you aren’t restrained going forward.”

Leiphart was right about corporate America having a lot of money. According to the Wall Street Journal, non-financial companies in the Standard & Poor’s 500-stock index were holding $1.12 trillion in cash and short-term investments at the beginning of August. That’s up 59 percent from $703 billion in 2008.

With unemployment hovering around 9 percent, the housing market in the doldrums, and consumers still trying to reduce their debt obligations, there hasn’t been enough demand to fuel serious economic expansion. As a result, corporations haven’t been spending as much on innovation, capital expansion, or job growth, which has left them with this large hoard of cash.

Stock repurchases, that is agreeing to buy a certain amount stock at a slight premium, are one way that corporations can spend their excess cash and make their company look good in the eyes of shareholders.  Doug Henwood, business writer and editor of the Left Business Observer, says that stock repurchases along with mergers and acquisitions and dividends serve as “a conduit for stuffing money into shareholders’ pockets.”

The list of companies that have authorized stock repurchases is quite extensive and includes companies like Lockheed Martin, Southwest Airlines, Lowes, Disney, AOL, Home Deport, Best Buy, Capital One, and Verizon.

Last February, a few months before Verizon demanded compensation cuts totaling $20,000 per worker per year from its union workers, the company announced that its board of directors had authorized the repurchase of 100 million Verizon stock shares at a cost of $3.62 billion.

In Chile workers, students join general strike for economic democracy

About 175,000 people across Chile on Thursday marched and rallied in dozens of towns and cities in support of a two-day general strike called by Chile’s union confederation, the Workers Unity Center (CUT, the Spanish acronym). The general strike, which was scheduled for August 24 and 25, was called to support students who for the last three months have been engaged in a struggle with the government for education reform and to demand economic democracy.

Unions and students who supported the general strike are demanding improved health care, an end to Chile’s privatized social security system, a new labor code that gives workers more rights, and replacing Chile’s for-profit education system with free public education and higher education, which students have been demanding since June.

Before the general strike began, CUT President Arturo Martínez told theSantiago Times that the strike “will express the demands of all sectors of society for the respect of social and civil rights and will reiterate the need for a new economic model, a new constitutional policy, and a new labor code in this country.”

Many of the changes that unions and students are demanding are directed at policies that have their origins with the deposed dictator Augusto Pinochet. For example, Pinochet in 1981 began privatizing education by creating a voucher system that encouraged the creation of for-profit schools. By 2009, 44 percent of Chile’s students were enrolled in either for-profit voucher schools or for-profit non-voucher schools.

The best schools cost the most, which means that only the very wealthy can afford to enroll their children in them. Students in the highest quality for-proft schools have an easy track to admission in Chile’s highest quality universities, a degree from which pretty much guarantees a good paying job. Chile’s universities are also very expensive, which makes them inaccessible for many working-class students.

Back in June, members of the Chilean Student Federation and the Teachers’ Association began a campaign to end Chile’s for-profit, elitist education system and to replace it with one that provides free public education and higher education. The campaign has shut down schools and universities across the country.

Chile’s for-profit education system isn’t the only institution that helps channel the nation’s wealth into the hands of a privileged few. The current labor code also gives employers an unfair advantage, and Chile’s health care system is badly stratified. For those who work for a living, retirement security is difficult because Chile privatized its social security system during the Pinochet regime.

All of these things have caused union and student leaders to demand a more equitable distribution of the nation’s wealth. “It’s time to change the political system, the economic system, so there is a fairer redistribution of power and of wealth,” said student leader Camila Vallejo to the BBC. “All this (market-oriented) development model has done is make a few grossly rich.”

Raul de la Puente, president of National Association of Public Employees told Morning Star that Chile’s current constitution should be replaced by a new one that is “more democratic, social, and redistributive.”

On Thursday about 50,000 people marched through the streets of Santiago to support the genral strike. For the most part, the march was peaceful, but near its end violence erupted between police and some marchers leaving one student dead.

Maria Eugenia Puelma, president of the Santiago public workers association, compared the two-day general strike to one that took place near the end of Pinochet’s rule. “What is happening today is very similar to the first protests against the dictatorship,” said Puelma to the Buenos Aries Herald. “The government has not been able to respond to the demands of social movements in Chile. It’s time for a change in the constitution and better distribution of wealth.”

Unfair labor practices cause work stoppage by Michigan faculty

As Central Michigan University students arrived for the their day of class on August 22, they were greeted by picketing members of CMU’s Faculty Association, which represents more than 600 tenured and tenure-track professors. Members of the Faculty Association had authorized their executive board to call a job action if the CMU administration continued to bargain in bad faith over a new faculty contract, and when the administration demanded that faculty accept a wage freeze and benefit cuts that had remained unchanged after months of bargaining, the executive board called for a work stoppage.

“This take it or leave it attitude is what we’ve faced all along,” said Laura Frey, president of the CMU Faculty Association. “We’ve filed unfair labor practices against the university citing their refusal to bargain in good faith. This is why the faculty is not where it wants to be–with their students.”

The administration is insisting that faculty members make benefit concessions and forego a raise for the first year of a three-year contract. Frey told Michigan Radio, a part of the NPR digital network, that faculty members were willing to forego a raise if the administration agreed not raise student tuition, which according to Frey, has increased 200 percent over the last ten years. But the administration raised tuition anyway.

CMU administration said that it is demanding cuts to benefits and a wage freeze because the state has cut funding to the university. But “CMU is financially flourishing,” Frey said. “CMU last year put away an additional $30 million in unrestricted surplus assets for a total of at least $228 million in unrestricted surplus assets, those surplus assets could be used any way (the university) wants.”

While CMU is demanding concessions and a pay freeze of its faculty, it has been more generous with its top administrators. According to Bryan Gibson, a professor in the Philosophy Department and Faculty Association member, “Salaries of upper administrators have exploded in the past 10 years. In 2000, the CMU president earned $200,000. In 2010, George Ross (current CMU president) earned $350,000, a 75 percent increase (and that doesn’t include the $50,000 bonus he received!). The Provost’s salary is up 63 percent in those 10 years.”

The administration declared the work stoppage illegal and asked a circuit judge to order faculty members back to work. The judged issued a temporary restraining order requiring faculty members to return to work, which they did on Tuesday. A show cause hearing on the merits of the administration’s request is scheduled to take place on Friday.

Frey said that the work stoppage is legal because it is a job action opposing unfair labor practices. Michigan law prohibits public employees from striking over economic issues such as wages and benefits but not over unfair labor practices.

Most likely the dispute will be settled by a fact finder, who has been empowered by the Michigan Employment Relations Commission, to hear both sides of the dispute and issue recommendations based on the information he gathers. Both sides will meet with the fact finder on September 7, 9, and 13.

“In the past, we have always been able to reach a settlement, but it seems that this new administration isn’t looking to work with faculty to settle a contract,” Frey said.

Nurses to Congress: Invest in working America, support Wall Street tax

National Nurses United (NNU) announced yesterday that on September 1, its members will deliver this message to members of Congress: People are hurting because of the fallout from the financial crisis caused by Wall Street speculation. We need a huge public investment to end this pain. Tax Wall Street’s speculative financial transactions to pay for this investment.

“It’s time for Wall Street financiers, who created this crisis and continue to hold so much of the nation’s wealth, to start contributing to rebuild this country, and for the American people to reclaim our future,” said NNU Executive Director Rose Ann DeMoro.

Members of NNU, the nation’s largest union and professional association of nurses, will visit local offices of 60 members of Congress and ask them to sign a pledge to “support a Wall Street transaction tax that will raise sufficient revenue to make Wall Street pay for the devastation it has caused on Main Street.”

Nancy Folbre, an economist at the University of Massachusetts at Amherst, wrote Monday in the New York Times that a 0.5 percent tax on trades of stocks, bonds, derivatives, currencies, credit default swaps, future options, and other exotic speculative transactions could generate up to $175 billion annually.

Money raised by the Wall Street tax could be used to upgrade our country’s decaying infrastructure, build schools, provide health care, and make thousands of other public investments that create jobs and improve the lives of working Americans. Public investment is “desperately needed to reduce the pain and suffering felt by so many families who feel abandoned in communities across this nation,” said NNU Co-President Deborah Burger, RN.

Opponents of a Wall Street tax say that it will discourage investment, but economist Mark Thoma, who blogs daily at Economist’s View, says that the only trades affected by the tax will be short-term speculation, much of which has little social value. Short-term speculation, according to Thoma, “pushes money around among winners and losers, and traders like it for that reason, but if this activity is discouraged through taxation it would have little effect on long-term investment decisions by firms.”

A tax on speculation has even won favor among conservative governments in France and Germany. The Wall Street Journal reports that French Prime Minister Nicolas Sarkozy and German Chancellor Angela Merkel will propose a plan for taxing financial transaction to European institutions in September. The United Kingdom already has a financial transaction tax in place that generates $40 billion a year.

In addition to converging on local congressional offices, NNU will also hold rallies, speak-outs, and street theater in urban areas throughout the nation. They will also staff soup kitchens to feed the hungry and homeless.

NNU’s September 1 activity is part of the union’s ongoing campaign to “Heal America; Make Wall Street Pay,” whose purpose is to get Americans back to work, provide health care to all, and help the working class regain some of the ground we’ve lost over the last 30 years by generating funding for public investments.

“America’s nurses see every day the broad declines in health and living standards that are a direct result of patients and families struggling with lack of jobs, un-payable medical bills, hunger and homelessness. We know where to find the resources to bring them hope and real solutions,” said NNU Co-president Karen Higgins, RN.

Wisconsin unions work to regain lost ground

Wisconsin’s new law that severely restricts collective bargaining for public workers took effect June 29. Since then unions have been working to regain the power they lost as a result of the new law, also known as Act 10. Besides limiting collective bargaining, Act 10 limits the power of unions in other ways.

For example in order to engage in the limited collective bargaining allowed by Act 10, unions must be recertified in annual elections. One union, the University of Wisconsin Teaching Assistants’ Association, AFT in a recent statement called the re-certification requirement “illegitimate and purposefully constructed to focus all union energies and resources toward election procedures and away from . . . employee representation.”

As a result, TAA’s membership recently voted not to participate in re-certification elections. TAA’s co-president said that even though TAA would not participate in re-certification elections, it will continue exist as a union and will continue to advocate for the interests of the 3,000 teaching assistants and project assistants on the Madison campus.

“No law, including one that grants an organization to the right to collectively bargain, makes us a union,” said Adrienne Pagac, co-president of the TAA. “Unions existed prior to the implementation of such laws and unions will remain even though (Gov.) Scott Walker and Republican legislators have taken our rights from us.”

Act 10 also seeks to curb union power by restricting funding for unions. Before Act 10 passed, public employers collected union dues for unions. They also collected fees from non-union members who benefited from union services. This reliable funding stream gave unions the ability to hire staff to represent workers in grievance hearings, conduct research on issues affecting public sector workers, communicate with members about how issues affect them, advocate for worker rights, and organize and mobilize members to fight attacks and improve living standards.

Without such a reliable funding stream, it will be difficult for unions to be an effective voice on the job, which is more important now than ever because local governments, school districts, and the state are in the process of developing new grievance procedures and changing benefits and working condition.

To ensure that public workers continue to have a voice on the job, AFSCME and other public sector unions have launched  campaigns to get members to continue their union membership by paying their dues by other means. As part of its REJOIN Membership Drive, the Wisconsin State Employees Union AFSCME Council 24, which consists of 53 locals, is holding solidarity lunches to give members the opportunity to sign authorization cards that allow the union to collect dues by bank draft, credit card, or debit card. The union has also developed a web page that allows members to authorize dues deductions online.

On Thursday, August 25, Wisconsin state workers will begin paying more for health care and pension benefits. These increases, required by Act 10, will, according to AFSCME, mean a 13 percent cut in take home pay. To protest this pay cut and to drive home the message that union members need to rejoin their unions, unions are urging members to wear their union colors to work to show solidarity.  At the end of the work day, public sector unions will hold a  solidarity rally and march in Madison that begins at the university campus and ends at the state Capitol.

Unions representing state workers have just begun their efforts to authorize dues collections by bank draft and other means because for most of the summer they’ve been focused on the recall elections for nine Wisconsin state senate seats. But efforts by unions representing local government have been underway for a while with good results.

Leaders of AFSCME Local 655, which represents highway workers in Jefferson County, about 40 miles east of Madison, told the Wisconsin State Journal that so far 70 percent of its members have reauthorized dues collection.

In Grant County, about 40 miles southwest of Madison, AFSCME Local 918 has signed up just under 50 percent of its members. Some members have been reluctant to rejoin because they view the loss of collective bargaining rights as the end of their voice on the job. But Local 918 trustee Chris Marfilius told the Journal that he’s confident that when these workers see the union fighting back, many will rejoin. “The more we stand up and fight, the more (members) we’ll get,” Marfilius said.