June 8, 2011

An Acute Example of the Broader System

Justin Katz

If you skipped the historical essay to which Marc linked on Monday, give it a read. It concerns the making of the pension mess in Providence, and its most valuable insight, in my view, is the light that it shines on the entire dynamic created by public sector unions.

The defining statement comes from firefighter and Local 799 union President Stephen Day, who was a member of the 1989 Providence Retirement Board that then Chief of Administration John Simmons said "broke the city":

"All we did" on Dec. 6, 1989, says Day, "was vote in broad daylight and do what we had the right to do. If we had the authority to do this, we were going to do it. You can't fault someone for being aware" of the laws. "I don't regret it at all."

Of course, union leaders typically have good reason to be aware of the law, because they work so hard in such a long-term coordinated fashion. Step one was to give the unions the controlling hand on the Retirement Board:

During the 1970s, Senate Majority Leader John P. Hawkins, a former Providence firefighter himself, and other senators began advocating legislation that would add two union representatives to the city's Retirement Board, thus tipping the balance. The legislation eventually passed around 1977.

Step two appears to have been to insert some innocuous-seeming language in the city's home-rule charter, and step three was to lob a court case into the system (to a judge with who knows what motivation) to change the nature of the board's authority:

The [spring 1989] case involved a Providence police officer, Walter Bruckshaw, who, along with 100 other city employees, wanted to buy credit in the city pension system for work they had done for other government agencies. The Retirement Board denied them. The court ruled the city's home rule charter, which went into effect in 1983, granted the Providence Retirement Board control over city pension decisions.

And voila. Day and his counterpart in the police union, Richard Patterson, ran for seats on the board promising to "boost the pensions of current and future retirees. The result? Compounded cost of living adjustments (COLAs) of 3-6%, tripled minimum pensions for police and firemen, and reduced minimum years of service. As city administrators strove to control the bleeding, the unions maneuvered these issues into contract negotiations. Then came all of the individual Pension Board decisions:

In 1991, every police officer who retired in Providence –– 21 in all –– received a job-related disability pension from the Retirement Board.

Of the 53 firefighters leaving their jobs, the Retirement Board approved disability pensions for 48 of them.

So, yes, Day's statement about authority isn't without justification, but the authority ultimately comes not from the narrow scope of Providence politics and governance, but from the reality of public-sector unions in the first place. The unions get a seat at the negotiating table as employee representatives, and they get a hand in the political process that determines those with whom they'll be negotiating. That's simply the incentive structure of the system, and as becomes more undeniable with every passing month, the incentives are far too strong even for fiscal reality and inevitability to overcome.

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another only in RI. Seriously? John Simmons speaks of pension abuse? Is there another light around to shine on his pension dynamic. Certainly not at Blojo.

Posted by: jay at June 8, 2011 8:23 AM

And a related point: most of Rhode Island's fiscal problems stem from what is legal; e.g., earn a defined benefit, lifetime pension and start collecting it after twenty years of service, even if you are a very healthy forty year old.

In this case, a special interest succeeded in grabbing control of a legal, financial, public framework (the pension system) and started writing itself checks.

Posted by: Monique at June 8, 2011 8:28 AM


Posted by: John at June 8, 2011 9:12 AM

One more reason public-employee unions should be ILLEGAL!!! Do we need more evidence? They are nothing but a cancer.
There is absolutely no intellectual argument to be made for public-employee unions!
Are people finally getting what I have been saying for years???

Posted by: Mike Cappelli at June 8, 2011 9:17 AM
"All we did" on Dec. 6, 1989, says Day, "was vote in broad daylight and do what we had the right to do. If we had the authority to do this, we were going to do it. You can't fault someone for being aware" of the laws. "I don't regret it at all."

Legality is not morality, you scumbag. You betrayed the public trust to enrich yourself and your labor buddies. The state is collapsing and innocent people are suffering because of your actions on that Board.

Posted by: Dan at June 8, 2011 9:50 AM

The union membership voted Steven Day out shortly after this debacle, and Buddy Cianci rewarded him with a chief's position.

Our "leader," who engineered our contract in the nineties then became part of the management team.

People suck, not unions. Unions can be the tool used by these criminals only if we let them, much like the General Assembly uses the populace.

And, while I'm at it, twenty years as a firefighter in Providence does not bode well toward becoming "a very healthy forty year old."

Posted by: michael at June 8, 2011 11:55 AM

"People suck, not unions. Unions can be the tool used by these criminals only if we let them, much like the General Assembly uses the populace."

True, but the mechanisms inherent in public unions do incentivize sucky people to suck even more. It's like giving an arsonist a matchbook and kerosene for his birthday.

Posted by: Dan at June 8, 2011 12:50 PM

Unions once served a great purpose. (heavy emphasis on "once".) I was a local chairman in another life (railroads). There is little incentive for the individual to excel in a union shop. Salaries are negotiated by insulated top brass for the group. Individualism is not encouraged. (no merit raises,etc). Rules are strictly drawn among crafts and animosity builds between union leaders,members and management. It is an obsolete framework in a global economy. It promised too much and delivered little.

Posted by: ANTHONY at June 8, 2011 2:05 PM

no michael, unions suck.
The only way we are going to fix the problems are by getting the unions out of the way. We don't need them. You may; we do not. And, it's not about you, it's about us, the taxpayers and what is good for us. You are easily replaced.

Posted by: Mike Cappelli at June 8, 2011 3:04 PM

We are all easily replaced, Mike. What I find upsetting is the willingness of the private sector employees without representation, or at least an organized block of people who can agree to fight for their own best interests to use their disintegrating as a badge of honor when comparing their lot in life to public sector unions.

Posted by: michael at June 8, 2011 5:10 PM

Michael - spare us the union rhetoric. The fact that I am not in a union does not mean that I don't have representation. It means that I am free to represent myself and to use the money I save on corrupt mandatory union dues to hire quality legal or professional representation any time I please. More often than not, your corrupt union leaders end up representing themselves with some incidental short-lived benefits to the the membership. Look at where your beloved union leadership has gotten you and your brothers - they continue to reap huge salaries and cut sweetheart deals for each other while your brothers are about to be laid off by the dozens or take massive cuts. Did you ever really think they cared about you?

You are the loyal and hard-working workhorse from Orwell's Animal Farm, repeating your "Napoleon is always right" mantra on and on as your leadership sells you out to the glue factory. It's time to wake up and realize that the pigs are living in the farmhouse. The pigs ALWAYS end up in the farmhouse.

Posted by: Dan at June 8, 2011 6:06 PM

Dan, if you could, just for a little while anyway, pretend we are in a room having a conversation. You might find that there is common ground and something to be learned from a civilized discussion.

Again, the leaders I am concerned with are the executive board of Local 799, people I've worked with on the trucks for twenty years. Their integrity is intact, and we, the membership vote on their pay, which is far from "huge."

My "brothers" are well represented. Tavares is using extortionist tactics to break our contract. He says he wants systematic change to a legal document or we will lose some of our members, in effect pawning the responsibility of difficult political decisions onto the union. It is a cowardly move, and another example of a politician casting the blame on somebody else.

People think we should accept Tavares's proposal and save jobs. We think Tavares should honor our contract, and find savings which are there if he does the work and looks for them and come up with a good plan.

He wants six million in cuts from an already depleted fire department. Have some balls and close a fire station, or reduce manning, and foot patrols, or cut from the top, but please, save us the "I inherited this problem" rhetoric.

You use the word corrupt quite easily, with nothing to back the accusation up, other than your misguided belief that all labor unions are corrupt. There are people behind those accusations, people who most definitely are the antithesis of corruption.

Posted by: michael at June 8, 2011 6:52 PM

Michael - I have explained numerous times that corruption does not exclusively mean criminality, but can also refer to any ingrained mechanism that thwarts open, responsive, and effective governance. Public unions are granted monopoly status over the labor force by closed shop legislation states like Rhode Island, which, coupled with the fundamental nature of government and its insulation from market forces, inherently corrupts the labor market and inevitably results in these kinds of systemic financial problems. So yes, public unions are inherently corrupt in an economic and democratic sense, even though the individual actors themselves may not be guilty of criminality (although there is certainly no shortage of those characters in RI Labor as well).

Contracts are legal instruments and are not ironclad, nor is breaking a promise dishonorable or illegal if there were inherent problems with the foundations of the contract itself or if the circumstances have changed significantly. Taveras has a workable and specific solution to the very serious financial problem facing the city. Your union just offers vague deflections of responsibility and points fingers into the past, offering no specifics as to how to reach the required level of cuts. You can cry martyr all day long, but if we look back to Big Labor's hijacking of the retirement board in 1989, we can clearly see that your union is not blameless in this crisis. It's time for the brotherhood to accept proportional responsibility and become part of the solution. If you can come up with a concrete alternate proposal with specific cuts, then there will be no need to layoff any firemen. That hasn't happened yet.

Posted by: Dan at June 8, 2011 7:57 PM

Hey, how did you get in on the negotiations, I can't even do that!

And there is no open labor market for firefighters, it's a paramilitary organization

Posted by: michael at June 8, 2011 8:09 PM

When your brothers are laid off, I want to hear your plaudits for the union. Hah!!
You, pal, are living the lie!
You just don't get it. When are you going to wake up? Look at what unions did to manufacturing in this country. Or they increased wages alright...they also increased the number of manufacturers fleeing this country. So, if you are lucky to have a job, you are doing OK. If you are one of the hundreds who now don't have a job, for every one that does, life sucks. Great job unions!
Now, the same thing is going on in police and fire departments all over the country. It just took a little longer for reality to set in because governments can live in denial while companies cannot. Even that can't go on forever, as we are now finding out.
The fact that you can't grasp this very simple concept is astonishing. Quit drinking the kool-aid - unions suck!

Posted by: Mike Cappelli at June 9, 2011 9:34 AM
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