Unions investing in America’s infrastructure
By Harold Meyerson,
Who will rebuild America? Despite the indisputable decay of our roads, bridges, ports, airports and schools, no one has come forward to patch them up, much less build their more efficient and attractive successors.
“Prior to 1975,” says Bernard Schwartz, the former CEO of defense and aerospace manufacturer Loral Corp., who has taken the rebuilding of our infrastructure as a personal crusade, “we spent 3 percent of our GDP on infrastructure. Since then, we’ve spent 2 percent. If you add up that difference over the years, it comes to about $2 trillion, which is the amount that the American Society of Civil Engineers says would be required to bring our infrastructure up to par.”
What happened in 1975? It’s roughly the midpoint between the federal government’s enactment of Medicare and the indexing of Social Security, which greatly diminished poverty among U.S. seniors, and the Howard Jarvis/Ronald Reagan tax revolt, which greatly diminished government revenues. That left fewer funds for public construction projects, but at the time, our infrastructure was still pretty spiffy — the interstate highway system had only recently been completed, and the jet-age airports in major U.S. cities were still relatively new.
Today they’re sagging, and dragging the country down with them. But government, hamstrung by austerity-obsessed centrists and the anti-government radical right, is not stepping up to rebuild them. A bill to establish a federal infrastructure bank has been introduced in the Senate by Massachusetts Democrat John Kerry and Texas Republican Kay Bailey Hutchison, but it’s hard to imagine the do-nothing House Republicans supporting such a measure.
Which leaves — whom? U.S. banks and corporations are sitting on trillions of dollars, but there’s scant indication they want to invest it in America. A recent column in the Wall Street Journal called on U.S. billionaires to put their money into public projects in return for tax benefits and naming rights. (The Rupert Murdoch Sewage Treatment Plant? Has a ring to it.) I’m not aware of any takers who’ve come forth, however, to answer this plea.
But there are other pots of money in the United States — most prominently, our pension funds. And one group of pension funds has already begun to pony up the bucks to rebuild the nation: those controlled (at least in part) by America’s unions.
The retirement set-asides for unionized public employees and construction workers go into funds that their unions and their employers jointly control. In June, AFL-CIO President Richard Trumka announced that his organization’s unions’ funds would invest $10 billion over the next five years in infrastructure projects. Since then, the federation’s construction-worker division has put $200 million of pension money into to retrofitting buildings, while the retirement funds of California teachers and other public employees have committed between $1.1 billion and $1.4 billion to infrastructure projects in the state. (Bound by their fiduciary responsibility to the retirees, the funds’ trustees must be confident that the projects will generate revenues, through tolls, fees, and the economic growth that such projects engender.)
“At a time when banks have frozen investment and municipalities have frozen borrowing, we’ve decided to step forward,” says Randi Weingarten, the president of the American Federation of Teachers. In January, Weingarten began meeting with the leaders of other major public employee unions, including some — the Service Employees International Union, the National Education Association — that aren’t AFL-CIO members. They decided to commit a share of their retirement funds to projects that shored up the nation’s infrastructure. The Clinton Global Initiative (CGI) assisted them, setting up meetings between the union leaders and supportive state treasurers.
The former president himself touted these efforts at a CGI meeting last month. “This is a huge deal,” he said. “This system will work, and you get guaranteed savings.”
Public-employee pension benefits have taken a lot of heat in recent years. Many have questioned their affordability, while Republicans such as Wisconsin Gov. Scott Walker and Ohio Gov. John Kasich have sought to effectively banish public-employee unions in the bargain. But such unions not only represent U.S. workers, they also are among America’s major investors — just about the only big investors these days who are putting their money where the nation needs it most. It’s a smart political move on their part, but it’s a smarter economic one: The economy can’t recover so long as construction fails to revive, and the number of teachers, firefighters and cops will decline as long as the economy doesn’t recover.
“We’re investing in a way that makes sense for our funds, for job creation, for the country,” says Weingarten. “It’s another way that teachers can help build America’s future.”