RICHMOND — Where Wisconsin Gov. Scott Walker (R) wants to take his state, Virginia has already been: It is one of a handful of states that prohibit collective bargaining for public employees in state and local government.
Given that, you’d think the state’s retirement program would look a lot like those offered by private employers, right?
You’d be wrong.
The state has steadfastly maintained a defined benefit plan for the vast majority of its employees, a stable perk increasingly rare in the private sector.
Despite having no unions, Virginia has been one of four states where employees have, for almost 30 years, paid nothing each year toward their retirement.
And its union-free status has hardly spared the state pension woes. Gov. Robert F. McDonnell (R) has warned that the plan will become insolvent over time if lawmakers do not address $17.6 billion in unfunded liabilities.
Virginia helps illustrate a reality that complicates the political rhetoric for both sides in the debate over public employee unionization: When it comes to retirement plans, there seems to be little correlation between union membership rates and either the generosity of states as employers or the financial stability of their systems.
The reality suggests that, if more states went the way of Virginia and eliminated collective bargaining, it could be that neither union members’ worst fears nor many Republicans’ best predictions for retirement benefits would come true.
“It was a surprise to me,” said Sylvester J. Schieber, former chairman of the Social Security Advisory Board and author of a recent study comparing the generosity of state pension plans.
Schieber’s work shows that states with few union members are typically no more stingy when it comes to employee retirement than those with many union members, he said.
Schieber’s study, which looked at the percentage of an employee’s working wages that pension systems are designed to replace in retirement, found that Virginia offers a middling plan — 32 states are more generous, 17 less so. But its plan offers workers nearly the same as that of Maryland, which has a strong union presence.
Another recent study, by an economist at North Carolina State University, showed the same thing: Although states with strong unions offered better benefits in the 1970s and early ’80s, that advantage had dissipated by 2005.
“It’s hard to explain why some states have done one thing or another,” study author Robert Clark said. “It’s certainly true that states that had relatively little unionization were also increasing benefits.”
In Virginia, the General Assembly agreed last year to make changes to its pension program but only for new hires. Those hired after July 1 will now have to contribute 5 percent of their salary to the plan each year, and they will have to work longer before becoming eligible for retirement.
But when McDonnell this year proposed extending some of those changes to Virginia’s 87,000 current state employees and offering localities the option to do the same for about 140,000 teachers, the legislature largely balked.
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