State of Chaos: California Collapsing Before Our Eyes Thanks to Public Sector Unions. But They're Doing It For the Children.

It doesn't take a crystal ball to visualize California's future. All it takes is a quick scan of world headlines to see how public sector unions have destroyed economies around the globe.

Yesterday in Ireland

Unionized public sector employees announced that they are planning "indefinite strikes".

Crippling strike action over public sector pay cuts moved closer last night... The Civil, Public and Services Union (CPSU), which represents 13,000 lower paid staff, served notice of strike action of indefinite or limited duration and a four-week ban on overtime from Monday week. It has also threatened to immediately place pickets on any location if a member is removed from the payroll... Members of other public sector unions -- including the PSEU, Impact, SIPTU and the AHCPS -- are unlikely to pass pickets mounted by colleagues.

...Strike action could shut down public offices including social welfare, passport, and revenue departments; the courts; and the Oireachtas, which is already struggling due to counter closures, disruption to phone and email services, and a refusal by workers to handle parliamentary questions, speeches and ministerial reports...

And the health sector may also be in the grip of sporadic work stoppages.

Health care strikes? Can you see where we are headed, thanks to the brilliance of the SEIU-controlled Democrat Party?

Yesterday in Greece

Public sector unions executed a three-hour work stoppage yesterday, warning of more to come should Greece enforce austerity measures related to its massive debts.

...About 70 communist trade unionists occupied the finance ministry on Thursday, preventing workers from entering the building, police said, in the latest protest action against pay cuts and a pensions freeze ordered by the Socialist government... The two main unions, which represent 2.5 million workers or half of Greece's workforce, say extra public sector wage cuts and tax hikes announced on Wednesday to tackle a 300 billion euro ($410 billion) debt mountain will only hurt the poor...

...In 2001, GSEE strikes and rallies helped thwart the then Socialist government's attempt to reform the country's pension system... GSEE opposes the austerity measures... [and in] December, GSEE demanded wage increases of about 8 percent for those on the minimum monthly salary of 740 euros ($1,012) and a 2 percent wage rise for all other private sector workers.

The Communist-controlled public sector unions have called for a 24-hour strike on March 11th.

And In California

Public sector unions are bankrupting the state, which is currently projecting revenues that are 50% lower than the current spending forecast. That's right: fifty percent. And the situation is even more dire than a quick glance at the balance sheet would indicate. Barron's makes note of underfunded pensions that will crush the states -- especially California -- in the months and years to come.

The disparity between private- and public-sector funds is so serious because a large part of state pension benefits are unfunded and uninsured. Consequently, states, most of which also run their localities' retirement plans, have played fast and loose with their pension promises.

One of the less-noticed causes of the worldwide financial crisis was a desperate search for yield that was led by pension funds and, in turn, by state and local government pension funds. Many maintained unrealistically high expectations of future investment earnings, rushing into high-yield securities and high-risk investments in hedge funds and private equity and real estate just in time to take a big hit.

A sensible person would say to themselves: gee, I can't continue to make $100K a year and retire after 25 years with 90% pay along with cost-of-living allowances. The math won't work, especially when I could easily live another 40 or more years.

But California's legions of state political hacks, agencies, commissions, regulators, offices and union bosses haven't been reading the papers, it would seem.

Compare and contrast: private security guards in California make about $25,950-a-year.

Yet... state prison guards, who can, with overtime, easily earn more than $100,000 a year... If that makes you crazy, try this statistic on for size: Fully 9.5% of the California state budget is allocated toward prisons. Only 5.7%, by comparison, goes to universities.

Twenty-five years ago, prisons were 4% of the budget. Higher education represented 11% of the state budget...

The prison guards union has historically been one of the most powerful in the state. No one pays guards more. And these jobs are very secure: If Sacramento is facing the squeeze and has to furlough state workers, prison guards are one of the few groups that are exempt and must stay on the job.

Wages are only the tip of the compensation iceberg: Guards also receive generous health care and retirement benefits.

You won't get 90% of your salary in retirement. A prison guard in California, however, absolutely will.

When it comes to California's state government, reality still hasn't quite set in.

Consider Assembly Speaker Karen Bass, who just gave 20-or-so Democrat Caucus staffers 10% raises. In fact, Bass bumped one one senior assistant to principal assistant, which translates to an $9,000-a-year hike to $96,000.

As for the teachers' unions, they haven't quite gotten the memo either. Bakersfield's Greenfield Union School District has requested that teachers take an 11.5% pay cut to help prevent layoffs. This would save the district $2.5 million a year.

By March 15th, the district must make its decision, because the state has assigned that as an arbitrary drop-dead date for teacher layoffs. Mike Ford, a 40-year representative with the California Teachers Association, who deals with the Greenfield District, is telling the system to go pound sand.

"At this point we're not negotiating." Ford said he hoped Greenfield could cut other things before teacher pay.

Considering salaries make up 80 to 90% of a typical school's budget in California, that should be quite a trick.

There is only one answer

If Greece, Spain, Ireland and Italy are any indication, the public-sector unions won't agree to drastic pay cuts, though they're desperately needed.

The answer for state government is to crush the public sector unions, once and for all. States must privatize prisons (e.g.,: Correctional Corporation of America (NYSE: CXW)) and other services that can be better delivered by private enterprise. They must, one industry at a time, outlaw public sector unions at the state and local levels. They must terminate the insanity of underfunded defined-benefit pension plans in favor of more reasonable defined-contribution retirement plans of the sort that almost everyone in the real world has.

This kind of approach may be the only way for states to avoid their imminent and respective fiscal calamities.


Related: Time For Action, Not Looking --- Call Governor Christie.