Forcing companies to bail out failing union pensions
Examiner Editorial
June 18, 2009
Private firms could be required to save underfunded union pension plans even if doing so reduces profits and jeopardizes the retirement savings of non-union workers. That's the consequence of a binding arbitration provision in a proposal now before Congress. The provision is included in the horribly misnamed Employee Free Choice Act (aka Card Check) and may actually be the primary driving force behind the measure, which is described by labor bosses as their top legislative priority for 2009. Card Check abolishes secret balloting voting for employees in workplace representation elections, and mandates that federal arbitrators impose settlements when a company fails to reach an agreement with a newly recognized union within 120 days.
Card Check would not bar federal arbitrators from forcing companies into union-negotiated multi-employer pension plans, many of which are severely underfunded and staggering under steadily increasing rising liabilities. Pensions for nearly half of the nation's 20 largest unions are classified as either "endangered" or in "critical" condition due to underfunding, according to federal actuarial reports. Pensions with less than 80 percent of the assets needed to cover present and projected liabilities are considered "endangered," while those below 65 percent are classified as "critical" under the Pension Protection Act of 2006. The average union pension has resources to cover only 62 percent of what is owed to participants, according to the government-backed Pension Benefit Guarantee Corp. (PBGC). Less than one in 160 workers is presently covered by a properly funded union pension plan. Failed pension plans are bailed out by the PBGC.
But opposition to abolishing the secret ballot in the workplace is growing steadily, forcing Card Check backers to seek a legislative compromise with opponents. But if the compromise includes the mandatory arbitration provision, unions, particularly those with sickly pension plans, will be tempted to resist settling with a company, knowing that federal arbitrators will likely impose a settlement that is more to their liking, according to Ted Phlegar, senior counsel to the Workforce Freedom Initiative. "Unions are pushing this bill because they need members and they need the contributions as many of these funds are underwater. This is one way to save them," Phlegar said. "In fact, this may have been the goal all along." In other words, a Card Check compromise that includes mandatory arbitration would give unions that inadequately funded their pension plans a backdoor way to get a bailout, paid for either by the company or the tax payers.
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