These pension plans are underfunded after a bull market in stocks has doubled since it’s last peak in June 2007, and has nearly quadrupled since it’s last low in March 2009. When stocks and real estate have been running up in value for eight years, pension plans should not be underfunded. But they are. CalPERS should be overfunded at a time like this, not underfunded. That bodes ill for the financial status of CalPERS if and when stocks and real estate undergo a downward correction.
Faced with rising labor costs, thanks in part to a big boost in California’s minimum wage, and shortages of workers, employers throughout the state are trying to replace human labor with machines.
Amazon’s highly automated warehouses that have seemingly sprung up overnight throughout the state are testaments to that desire, as are intensified efforts in large-scale, labor-intensive agriculture to develop machinery that can handle even the most delicate crops such as strawberries.
In the coming months and years, California voters can expect to see a variety of tax increases pop up on their local election ballots. They will be called “public safety” taxes to hire more police or firefighters or “parks” or “library” taxes to pay for those popular public services. But don’t be fooled. Any new tax proposal is in reality a “pension tax” designed to help the California Public Employees’ Retirement System make up for shortfalls in its investment strategy.
The local picture is not much better, according to data released through Stanford University in October. Funded in part by a nonprofit that advocates pension reform and conducted by Joe Nation, a former Democratic assemblyman who is now with the Stanford Institute for Economic Policy Research, the study found that the city of Sacramento has more than doubled its contribution to CalPERS in the past nine years, going from $42.4 million in 2008 to $88.2 million in 2017. Sacramento’s pension costs are expected to reach about $150 million by 2022.
Construction workers in California are among the highest paid in the nation, according to figures from the Bureau of Labor Statistics. Fixr.com, an online website that provides cost guides, comparisons and other information for people looking to do remodeling or repair projects, crunched the Bureau of Labor Statistics numbers to create a state-by-state ranking of average hourly wages for workers in the industry.