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Public Pensions are Trying to Boost Big Labor

Posted: May 6, 2024

On Tuesday, the White House convened a gathering of five major pension funds to promote adoption of what the Biden administration and The Washington Post would describe as “stronger labor standards” for firms in which the funds invest.

Any time this administration touches pension policy, taxpayers should be skeptical, even if the press is not. The “stronger labor standards” promoted by the White House and the public pension funds have little to do with workers, and everything to do with, as ever, lending an official helping hand to labor unions. According to the Post, this effort includes: “standards that promote unionization” as well as “the ability to negotiate union contracts.” In addition, as part of this initiative, these public pension funds will “encourage their portfolio companies to remain neutral when workers unionize.”

This policy is simply an effort to expand the ranks of labor unions in sectors where workers have overwhelmingly chosen not to join or otherwise be represented by labor unions.

A graph of a graph showing the number of workers represented by labor unions

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In 2023, less than 7 percent of all private sector workers were represented by a union (a lower threshold for union affiliation than membership), while 36 percent of all government workers were represented by labor unions. It is worth noting that the five pension funds convened by the White House were: The New York State public sector workers pension fund, California’s public worker pension fund (CALPERS), as well as the public worker pension funds for New York City and the State of Illinois. The pension fund for the International Brotherhood of Electrical Workers (IBEW) union was also represented. 

Thus, the actual reality is that four public sector funds, and a union pension fund banded together under the auspices of the White House to promote increased unionization in private sector firms. 

Workers and taxpayers should take a dim view of this initiative. This effort is part of an overall campaign waged in regulatory agencies, through proposed legislation, and now through blue-state public and union pension funds, to limit workers’ freedom to choose their union affiliation. Research has shown that employment and labor force participation is higher in right to work states. 

Meanwhile, the record on public and union pension management is less than stellar. The California and Illinois state pensions ranked first and second, respectively, in terms of accrued, unfunded liabilities. Combined, these state pensions are responsible for 28 percent of the $1.3 trillion in unfunded state pension obligations across the U.S. today. Union pensions meanwhile, recently benefited from a taxpayer bailout that cost the Treasury $94 billion. Despite the taxpayer bailout, many nevertheless are likely to go insolvent eventually.

A critical press would challenge some of the arguments made by the White House and its guests, including typical critiques of the private sector. Specifically, state pension representatives announced their push for more unionization in companies in which they’re invested as part of increasing worker protections in firms owned by private equity. It is important to note that research has found that private equity acquisitions of firms were associated with increased – not decreased – workplace safety.

One won’t hear that from President Biden, who has celebrated being the most “pro-union president in history,” and one certainly won’t hear that from blue-state government and union pension managers, who may just be waiting for another bailout.