Politics, Unions and Wisconsin Pensions

Bruce Murphy:

This is a story that tells how state benefits - and state power - works.

In 1994, former governor Tommy Thompson was running for reelection to his third term. He wanted to win by a wide margin to boast his chances of being considered as a possible candidate for president or vice-president of the United States. So Thompson let union leaders know he was open to improving the pension for state employees.

The overture worked. The state employees union backed Thompson in 1994 and again in 1998. And Thompson made good on his promise, helping to pass, in 1999, a state law that gave all employees a 10 percent increase in the value of their pension for all years worked prior to 2000 (any years worked after this got the usual pension multiplier).

But Thompson went further than the unions wanted. His law allowed employees to collect up to 70 percent of their final average salary in pension payments, an increase from the old 65 percent. That had little value for the unions: Employees would see their annual pension multiplier rise from 1.6 per year to 1.765 percent; even with that increase, however, they would have to work 37 years to hit the legal ceiling of 65 percent of their final average salary.

Posted by Jim Zellmer at March 3, 2011 4:44 AM
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