The California Public Employees' Retirement System is twisting itself in knots trying to show how much value it adds to the state's economy. CalPERS distributed $12.7 billion in pension payments last year so its size isn't in question, but from there it takes credit for "supporting" 1.5 million jobs through its investment portfolio including iconic California companies like Google, Apple, and Walt Disney.
This is downright goofy logic--through my own investments in mutual funds, I'm sure I personally own a tiny share of these companies too. But I'd never take credit for "supporting" jobs at those companies. Presumably, just like me, CalPERS holds those investments because they're trying to make money to pay for future retirement payments; any jobs we support are entirely peripheral.
What's more, note that CalPERS is taking credit for three popular companies, but it doesn't want you to press too far into all the companies and industries it supports. The same report notes that CalPERS is also a large investor in the "Securities, commodities, investments and related activities" and "Petroleum refineries." Would it be as proud of "supporting" jobs at Goldman Sachs or Sallie Mae? What about ExxonMobil or British Petroleum? Not to pick on CalPERS, but any large and broad investing effort is likely to end up making investments not all of its members support.
CalPERS also uses a rather magical accounting trick to estimate that every dollar in taxpayer contributions turns into $10.85 in economic activity. Back in the real world, statistical analyses of the American Recovery and Reinvestment Act pegged the mulitplier effect of the stimulus as low as .02 and as high as 2.31 for every dollar invested. CalPERS wants you to believe that its annual pension payments provide better stiumuls than a one-time federal investment during one of the worst recessions in modern history.
As I've written before, these types of analyses from pension plans are nonsense because they ignore opportunity costs. As the Wall Street Journal noted, "California taxpayers have sunk about $70 billion into Calpers over the last decade, which they otherwise could have spent on more productive enterprises or pursuits. For every one dollar workers contribute to their retirement, taxpayers are investing two. Local sales and property taxes have risen to pay for increasing pension payments. Public workers have also been laid off and infrastructure delayed—all of which has depressed economic growth." Sloppy economic analyses like the CalPERS report do a disservice to the public debate and shroud the conversations we should be having about trade-offs, value, and how best to provide secure retirement benefits to all workers.