An Empty Victory for Ohio Unions; Big Labor's Advance Only Drives Business Opportunity from the State

Article excerpt


Unions are rejoicing at last week's referendum vote repealing restrictions on collective bargaining for public-sector employees in Ohio. Gov. John Kasich, a Republican, had backed the state law, S.B. 5, saying it was necessary to help balance a budget facing serious shortfalls. Voters rejected the legislation by an almost 2-1 margin.

Unions spent big money for this victory, which they think reflects a resurgence in their power. Democrats are also hoping the vote is a sign that the state might swing blue next year. This is all short-term thinking. Scrapping of this very modest reform is bad news for Ohio.

The Buckeye State's public pension funds are awash in red ink. According to a 2011 study by Dean Baker of the Center for Economic and Public Policy Research, the Ohio teachers' fund had an actuarial funding ratio of 60 percent, and the Ohio police and firefighters' fund was slightly better at 65 percent. Even the most solvent plan, for Ohio school employees, is at 82 percent with $4.5 million in unfunded obligations. If the stock market tanks, those grim numbers will look even worse. If public-sector employees continue enjoying gold-plated benefits, paying far less into the system than private-sector workers, taxpayers will suffer.

This is not just Ohio's problem. The same scenario is being played out in state after state. Virtually everywhere across the land, pension-plan balance sheets don't add up, a problem exacerbated by Wall Street's turmoil. …