Last year, in an article for THE WEEKLY STANDARD I discussed the growing number of existential threats to unions. One of the major challenges facing unions is that their multi-employer pension plans are deep in the hole, and the problems were being masked by accounting standards that allowed them to hide their debt:
Getting a handle on multi-employer pension liabilities has always been notoriously difficult, and concern about their viability has grown as American union membership has dwindled in the face of globalization and technologically driven gains in productivity. A recent Government Accountability Office report found that as of 1998 the number of union members paying into the plans was equal to the number of retirees receiving benefits. The Financial Accounting Standards Board recently noted in a press release that a “study of over 100 multi-employer plans, including the largest plans in the country (as measured by assets), indicated that in 2008 those plans were collectively underfunded by over $160 billion (approximately 44 percent of their collective plan liabilities).” …
Until now, companies have been required to disclose only their contributions to multi-employer plans. But ratings agencies and financial markets have started insisting on transparency—and the Financial Accounting Standards Board, which has de facto statutory authority from the SEC, is set to enact a rule in the second quarter of this year that requires disclosure of multi-employer liabilities.
Until now, companies have been required to disclose only their contributions to multi-employer plans. But ratings agencies and financial markets have started insisting on transparency—and the Financial Accounting Standards Board, which has de facto statutory authority from the SEC, is set to enact a rule in the second quarter of this year that requires disclosure of multi-employer liabilities.
Adding these liabilities to the balance sheets of union employers could make it nearly impossible for them to get loans, lines of credit, bonding, and the kind of financial assistance that is the lifeblood of many unionized sectors such as construction.
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