NEXT BAILOUT GOES TO LABOR UNIONS
June 23, 2009
On the heels of a series of taxpayer-funded bailouts that resulted in over 600,000 people participating in nation-wide "tea parties", there is a great fear that the next bailout will be to save failing union pensions. As reported in a press release from the Alliance for Worker Freedom, hundreds-of-thousands of multi-employer defined benefit union pensions are underfunded. Meaning there are simply not enough assets to cover current liabilities.
The unions only hope is to force more and more companies to fund these massive failing pension plans by forcing binding interest arbitration on employers in the misnamed Employee Free Choice Act. The problem: most companies will choose to shut down rather than loose most of the capital in these plans. The companies will no longer be economically viable if they are forced by the government to fund these failing pension plans. This is what the Pension Benefit Guarantee Corporation (PBGC) is for. However, they don't have enough money to cover all the liabilities either.
The rank-and-file union members are on the loosing end of this stick by not having a traditional, portable defined contribution plan such as a 401(k). This would allow them to control where their money goes, and it's portable. This is extremely threatening to the unions as a worker would then be able to leave the union, with their pension, for another job. The union depends on the workers' dues and therefore uses this failing pension model as a way to trap more and more workers.
AWF claims the most deceptive part about this situation is the unions have known about this for close to ten years and have done nothing. Here are some facts:
Average union pension has resources to cover only 62% of what is owned to participants
Less than one in every 160 workers is covered by a union pension with the required assets
In a Pension Benefit Guarantee Corporation Rescue, pensioners only get $12k/year – max
Nothing prevents EFCA from forcing more workers and employers into these funds
The Service Employees International Union (SEIU), the United Food and Commercial Workers (UFCW), the International Brotherhood of Electrical Workers (IBEW), the Laborers International Union of Northern America LIUNA), the International Association of Machinists, the United Brotherhood of Carpenters, the International Union of Operating Engineers, and the National Plumbers Association all reportedly have underfunded plans.
On June 30th, the Financial Services Accounting Board (FASB) will issue notices to potentially hundreds-of-thousands of union employees indicating their pensions are only 65% funded or less. FASB has been told this issue is a “national epidemic”.
We believe that the Constitution of the United States speaks for itself. There is no need to rewrite, change or reinterpret it to suit the fancies of special interest groups or protected classes.