I spent a lot of time walking around Sears stores when I was a kid. It was my grandfather’s favorite place to shop for tools so at least once a week, while my mother was at work, we would make a trip to the store near his house in Washington, DC. I didn’t care much about the tools, to be honest, but they also had toys.

Sears has been closing stores for the past 10 years, trying to find some way to remain profitable. About three or four months ago I walked into a Sears store at a mall near my house. I was killing time waiting for a table at a restaurant, but I did buy a small set of tools, partly because I needed them and partly out of nostalgia. I went back to that same store about a month later and it was gone, an empty shell.

Yesterday, Sears announced its quarterly results and they were not good. From CNN Money:

Sears Holdings, which owns the Sears and Kmart brands, reported yet another huge loss in the second quarter — $508 million, about twice as much as it lost a year earlier…

Sears’ market value is only $134 million…

Sears and Kmart had 3,500 combined US stores in 2005, when they merger. Today they have fewer than 900, and the company announced in August that 46 more will close before the holiday shopping season.

There are certainly plenty of reasons for Sears decline, starting with WalMart but also Amazon and the internet in general. Sears was slow to move from traditional mall-based retail stores to online sales at a time when online was growing and malls were dying.

But there’s another factor dragging the company down which the CEO focused on in a letter that accompanied yesterday’s quarterly statement: The company’s ruinously expensive pension plan.

Lampert said Sears has paid almost $2 billion into pension plans in the past five years, and $4.5 billion since Sears and Kmart merged in 2005 to form Sears Holdings. The company pays retirees about $300 million a year, filings show.

If Sears could have put that money into operations, “we would have been in a better position to compete with other large retail companies, many of which don’t have large pension plans,” Lampert wrote in a blog post.

He also faulted the “very difficult” environment for retailers, but he said Sears has been “significantly impacted” by pension obligations.

Sears was once the largest employer in the U.S. and still has 100,000 pensioners. So it has spent $4.5 billion on pensions while going from 3,500 to 900 stores. And it’s currently spending double the market value of the entire company per year on pension obligations. Meanwhile, Amazon and Walmart have 401k plans that offer some matching of contributions (Amazon’s is pretty low) but don’t offer a guaranteed pension for life.

Something similar can, of course, be said about state pensions. Sears was founded and based in Chicago. The entire state of Illinois has been undergoing a pension crisis for years. This Crain’s piece from April summarizes the current situation:

Consider that the unfunded liability in the state’s combined retirement systems has risen in 11 of the state’s past 12 years—despite a roaring stock market, despite a steady increase in contributions that now amount to a stunning $8 billion or so a year, and despite passage several years ago of a plan that markedly reduces benefits for those hired after Jan. 1, 2011. Between 2004 and 2016 (the last year for which audited financials are available) unfunded liability quadrupled, to $123.8 billion, according to the Illinois Commission on Government Forecasting and Accountability, the Legislature’s financial watchdog unit.

The sad, slow demise of Sears is something to keep in mind as states around the country deal with their own pension obligations. This is something that is eating state budgets and taking money away from other priorities. There is not an unlimited supply of money to keep paying people to not work, no matter what unions convinced state governments to agree to decades ago.