Union/Government Complex, Pensions the Chicago Way

Chicago Sun-Times:

City Hall's biggest pension doesn't go to a police superintendent, fire commissioner or even an alderman.

It's paid to a former steamroller operator named Dennis J. Gannon.

But Gannon's City Hall pension — $153,649 a year — isn't based on what he was paid as a steamroller operator and foreman for the city's Department of Streets and Sanitation.

Instead, Gannon took advantage of a little-known state law that allowed him to base his taxpayer-supported pension on his much-larger salary as president of the Chicago Federation of Labor, a private organization that represents more than 300 unions affiliated with the AFL-CIO.

And he didn't even have to retire as the federation president. He's still in that job, which paid him $215,484 in 2007, the most recent figures available.

Thanks to that law, Gannon now collects a city pension that's nearly three times what he made at City Hall. He began collecting that pension five years ago, when he was 50. By the time he turns 70, that city pension will have paid him a total of more than $3 million.

Gannon is perhaps the city's most prominent labor leader. When Mayor Daley was seeking cost-cutting concessions from city workers this summer, he turned to Gannon — and largely got them.

Dates back to 1957

Gannon defends his city pension deal.

"I'm probably not the only labor guy taking advantage of that state law,'' Gannon said.

He's right. A Chicago Sun-Times examination of the state's 17 largest government retirement plans found more than five dozen retired government workers whose pensions are based not on their public salaries but, instead, on what they were paid by labor unions, lobbying groups and other non-governmental organizations. (Emphasis mine)

And now the Democratic Congress wants to promote unionization of medical professionals via pending Health Reform Legislation. Because they believe in fairness. To their big supporters. Because everyone wants to see union bosses and big attorneys make more than surgeons, cardiologists and oncologists, who after all, are just technicians.

Incidentally, one reason the unions need help from Congress and the Administration is that they need big boosts in membership to cover their unfunded pensions. These unfunded pensions will be a huge problem for unions in the near future, unless they can turn around their flagging membership through such measures as elimination of the secret ballot in union elections.

TRUE STORY: As noted in the link above, Boeing employees in one plant have just voted to disband their union. One of my brothers-in-law once got a job with Boeing in Washington State. His supervisors were very happy with him, because he did high-quality work and got more done than the other workers. However, his unionized co-workers harassed him and he quit. He left behind a lot of security and an easy future. Because he did not feel good about pretending to work. Must run in David's family.

My brother quit working for the State in his first job out of college for similar reasons. He gave up security for integrity and independence.

General Principles: As Lawrence M. Miller noted, the establishment of unions in an industry is often a sign that management has become alienated from workers. If management pays attention to its employees, unions are generally not too attractive to those employees. And unions are just as susceptible to arrogance and corruption as are business leaders. Sometimes more so, as in the old-fashioned involvement of organized crime in Big Labor.

Management and unions can become so bound in rigid rules that they become involved in a death-spiral as they become unable to respond to changing circumstances. Witness GM and Chrysler.