California Socialism: An Enigma

State’s mini-Social-Security program is gearing up, but it’s real goal is to battle “pension envy” rather than to help Californians secure a retirement.
State’s mini-Social-Security program is gearing up, but it’s real goal is to battle “pension envy” rather than to help Californians secure a retirement.

California officials have an incredible knack for proposing dubious, government solutions to problems that don’t actually exist, while ignoring the real problems that are under their purview. The best example, perhaps, is the $100-billion high-speed rail project that will be far slower and costlier for consumers than our existing means of statewide high-speed travel (i.e., Southwest Airlines). The state is moving forward with that boondoggle — undaunted by continuous delays, engineering conundrums, cost overruns, and an obvious lack of demand for a new rail line.

But a close runner up is an unnecessary retirement program for private-sector workers that state officials are now unveiling on pilot-project basis. “Any employer with at least five employees that doesn’t already offer a workplace retirement savings vehicle will be required to either begin offering one via the private market or provide their employees access to CalSavers,” according to the description from the state treasurer’s office.

Note the word “required,” despite its supporters’ claims that the program is totally voluntary. Employees can opt out, but employers cannot. That five-employee requirement captures the bulk of California’s small businesses, which means yet another regulatory and bookkeeping requirement, even if the state promises that the program is cost free. The $170 million in a taxpayer-provided startup loan might not be much by California budget standards, but this may be just the beginning. And for what?

California workers already are eligible for Social Security. That system’s a mess, of course, but it won’t become any less messy by having the California government create its own facsimile of it. Furthermore, any Californian who works for a company that does not offer a 401(k) saving plan is free to open their own retirement account and enjoy the many tax advantages the federal government offers. A lack of retirement savings is a legitimate policy concern, but there are plenty of options available for anyone who has the desire to begin saving for the future.

Meanwhile, the state’s own public-sector retirement system is reaching crisis levels. What can go wrong by inserting the state into the management of retirement plans for California’s private workforce even as its own government-managed plans amass hundreds of billions of dollars in public debt? State lawmakers haven’t addressed falling funding levels and growing unfunded liabilities for years, even as they vote in favor of creating a single-payer healthcare system that would cost, by the Legislature’s own conservative estimates, more than the entire state budget. More of the same.


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