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How unions can save their pensions, grow membership by creating good jobs, and revive American middle class prosperity

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Message Farid Khavari

How unions can save their pensions, grow membership by creating good jobs, and revive American middle class prosperity

Unions played a leading role in creating the middle class, and an era of unprecedented growth and general prosperity in America followed. A U.S. autoworker in the 1960's earned the equivalent of $120,000 today. Clearly that great era is over.

Existential threats

Nowadays unions are under attack from all sides, membership is down, and union members are stuck with stagnant wages, less job security and rising costs of all kinds.

Meanwhile, unions and union members face a huge pension crisis, as investment income cannot keep pace with growing liabilities. Even modest returns are slashed by fees and commissions.

Somehow pension funds always seek solutions from the same rigged markets and corrupt financial institutions that destroyed the economy in the first place. Somehow unions look for a few dollars in wages from the same employers who offshore jobs and who benefit from government subsidies for low-wage workers, or from governments drowning in deficits. These are not solutions.

Unions themselves have the power and resources to solve these problems.

The existential threats facing unions are in fact golden opportunities to create well-paying jobs, secure pension funds with safe, productive investments, and assure prosperity for their members.

Unions themselves are in a unique position to take advantage of these tremendous opportunities--immediately. Unions have all the resources they need. All they need is a plan and the will to act on it.

Unions need more members and members need better pay and benefits. Union pension funds need strong, safe returns to meet future liabilities. Here are some examples of how unions can achieve these goals.

Pension funds can earn 25% or more, safely, by investing in productive projects that create Super Jobs.

Before we look at specific programs that can accomplish these goals, we need to look at a few facts of life.

Costs always rise faster than incomes. You cannot get ahead simply by raising incomes. You can gain much more personal wealth by reducing costs than by raising incomes. The average person works about 15 years of his or her life to pay the costs of interest, energy and insurance. If you reduce those costs by half, you could save 8 years' pay. There is no possible pay raise that can increase your wealth by that much; yet reducing these costs is very possible.

There are wealth-producing jobs, and wealth-reducing jobs. Manufacturing and construction jobs and all the jobs that support them produce wealth by creating things that did not exist before. Essential services add wealth to the economy in quality of life. Financial jobs (collecting interest, trading stocks and derivatives, and gambling, for example) transfer wealth from masses of people to a few, without creating any new wealth.

Super Jobs

But there is a category of wealth-producing jobs that produce much more wealth than any other, and these are called Super Jobs. A Super Job produces a product or service which reduces long term costs for the customer. A solar energy system might cost $10,000 but over time it can make $50,000 worth of electricity. By investing $10,000 the customer adds $50,000 in tax-free savings to his personal wealth.

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Farid A. Khavari, Ph.D., is a noted economist and independent candidate for Florida governor in 2014. He is the author of 10 books including Environomics: the Economics of Environmentally Safe Prosperity (1993) and Toward a Zero Cost Economy (more...)

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