What happens when a city goes bankrupt? The people who were going to benefit from the unsustainable contracts their unions negotiated get screwed. This is another brick in the "why unions hurt workers" wall.
...young people were joyfully playing soccer in a park near the picturesque Blackstone River waterfall that gave this city its name. Older residents gathered on the spacious porches of their ancient Victorians or wooden triple-deckers, drinking beer and conversing in Spanish, Portuguese and sometimes English.If any U.S. city was destined to go bankrupt, it was this one -- though Vallejo, Calif., beat it by three years. Like Vallejo, ruinous public-employee contracts sent Central Falls over the edge. Unlike the San Francisco suburb, Central Falls has a smaller, less economically diverse tax base. (The median household income is under $33,520 a year.) Its local government at the time of the bankruptcy filing was far more corrupt than Vallejo's.
On this thin tax base, Central Falls faced an annual deficit of $5 million and unfunded pension obligations of $80 million. For a long time, its police and firefighters could retire on full pensions after only 20 years of service. So even though their monthly payouts were not princely, workers could start collecting them -- and free health coverage for life -- while in their 40s. Bankruptcy lets a city tear up union contracts and start over.
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