This week a very interesting story broke in the New York Times (this editorial gives a good summation – subscription required). Unions representing New York City’s municipal workers sponsored legislation that would allow their members to take early retirement (this particular bill gave these union members a “second bite at the apple” since these same workers had a chance to take early retirement before and declined to do so).
Unions asking for special treatment for their members isn’t really a news story. Here is the good part: the unions were able to convince the state legislature that their proposal to grant full retirement benefits to people who hadn’t actually earned them would cost New York taxpayers no money. How did they pull that off? By buying their own actuary.
The numbers that legislators were given to accompany this bill were provided by an actuary bought and paid for by the municipal unions. When interviewed by the Times he readily admitted that his numbers were “a step above voodoo.” Turns out that this actuary had provided similar opinions on other bills sponsored by unions in New York.
What is astonishing about this story isn’t that it happened – unions are used to using their dues money and influence to make things go their way. What is most disappointing is that the legislature in New York just sat by and let these voodoo numbers go by without even a question. If the Times hadn’t run this story this bill would have flown through, costing New York taxpayers and estimated $200 million per year. And that’s just one bill – there are many, many others that are now stopped because this same actuary gave the thumbs up on them as well.
But buying off an actuary wasn’t the real trick here. The real trick was buying off a legislature – because the reason why nobody but the Times was asking questions about these numbers is because many of these legislators were complicit: they took the union money to get elected, so who are they to question the numbers from someone else who took the money.
Cases like this highlight the importance of clear and robust financial disclosures for unions. The Department of Labor is pushing for improvements in the current regime (although some of these municipal unions aren’t even subject to federal reporting requirements which is why I argue that states should have similar rules).
