Washington state, like many other states across the nation, is facing a continuing budget shortfall. But as state legislators address these budget challenges, pension critics have been vocal in their misguided calls to cut or eliminate public sector pensions.
Countering those claims, American Rights at Work Education Fund released a new report demonstrating how private and public pension funds help drive economic growth through investments that, in addition to producing solid returns for retirees, create good jobs.
Analyzing a sample of construction funds and real estate trusts over 15 years, the report found that from 1995 to 2010, private and public pension funds put more than $20 billion into funds and trusts invested in projects that created approximately 186,622,088 good jobs. These jobs were created as a collateral benefit of median aggregate returns that outperformed appropriate benchmark indexes.
“In projects from coast to coast, we are seeing workers’ pensions make needed investments in areas hard hit by the recession,” says Michael Wasser, author of the brief. “And the jobs they create allow workers in construction, an industry that bore the brunt of the Great Recession’s impact, to get back to work.”
At a time when federal, state, and local governments are unwilling to fund projects that would put people to work and stimulate the economy, defined benefit pension plans could provide the necessary capital to recharge our local economies.
Further, pensions are a model to emulate – serving as a dynamic vehicle for ensuring workers enjoy a meaningful retirement, while also powering economies through large scale investments in capital markets. Missing from the debate around state and local pension funds is the role pensions play in stimulating local economies through investments that can create much needed jobs for our communities across the country.