Con Edison: Who is To Blame?
If this post takes it will seem like a miracle, and I'll finish off that FY2010 Census Bureau public education finance data for publication next week. Reading between the lines, it is clear to see what the source of conflict is that led to the Con Edison lockout/strike: not enough money in the pension fund. Like our local government agencies, Con Edison is a monopoly, and more for Con Edison workers means less for other workers due to higher rates (or vice versa). Con Edison managers and shareholders represent a limited buffer that could also become better or worse off as well, but as for the government the issue is mostly a question of fairness among workers.
So why is there not enough money in the pension fund? Did shareholders/managers skimp on contributions when asset prices were inflated during the various bubbles, to get higher executive pay or profits? Were some of the savings passed on to ratepayers in the form of lower rates than would have otherwise been the case, under Con Ed’s regulated “cost plus” pricing? As for the unionized workers, the question of fairness comes down to a simple question: are they only getting the pensions they were promised when they were hired? Or were those pensions retroactively enhanced at some point (or perhaps more than once point) in the past 20 years, without the cost of the increases being honestly disclosed to those who would ultimately be forced to pay for them?
In the case of New York City public employee unions the answer is obvious – there was a great social injustice committed by the unions and some of their members (particularly their older members) at the expense of everyone else. The unions are trying to frame the issue as workers just getting what they are promised. For New York City, if the workers were ONLY getting what they were promised when hired, most of the pension problem would not exist.
But no one wants to bring up the past, it seems. The unions don’t want to talk about the retroactive enhancements. Those seeking to do away with pensions want to pretend the problems were inherent, and not a result of retroactive deals in which management/politicians also had a hand. And everyone wants to screw future generations to make up for what older generations have taken. Including old media with their aging readership.
But just for the interest of those with a different view, could someone report how big the Con Edison pension hole is? And whether or not Con Edison workers have received retroactive pension enhancements during the asset price bubble era of the past 20 years, or are only getting the pensions as the were promised when hired?
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