Even if the Legislature deployed a mixture of both incentives and mandates, it seems unlikely that these policies would be perfectly effective in the long term. It is more likely that the Legislature would have to continually re-evaluate these incentives and mandates, making the balance of benefits between Michigan’s public and private sectors a constant issue. To alleviate some of this concern, the Legislature should consider policies that would work to actually prevent this imbalance from developing in the first place.

Perhaps the best way to achieve a more permanent balancing of public and private sector benefits would be through initiating a constitutional amendment.[*] The following are ideas for such amendments:

  • Prohibit the total cost of benefits provided to employees at subsidiary government units from exceeding a certain private sector index.

  • Prohibit the future use of defined-benefit pension systems at all levels of state and local government.[†]

[*]  Michigan legislators can place something on the ballot, to be voted on in a statewide general election, with a two-thirds vote in the both the House and the Senate. Mich Const 1963, Article XII, Sec. 1-2.

[†]  There may be some apparent conflict between this idea and Article IX, Sec. 24 of the Michigan Constitution, which protects the pension benefits earned by employees. An amendment could continue to pay down the state unfunded liabilities, but transition new employees to defined-contribution retirement systems benchmarked to private sector averages. This would have the added benefit of preventing retirement benefits from being underfunded.