Fight back against the assault on pensions

By Richard Mellor

Afscme Local 444, retired

I always find it a bit perplexing when some of my workers, public workers especially, raise this issue of “big government” and how they are opposed to it etc. I certainly find it odd when my co-workers say that or any public sector worker as we work for a section of government and we have one of the best jobs in the damn country and one of the best retirement packages; but this often doesn’t seem to register with them.  A few are just plain selfish but most just don’t think about it until I ask them why they’re working in a “socialist” job when the market is so damn good.  The usual response is that they work hard and deserve what they get, a sort of self defense mechanism.

I have a defined benefit pension.  A defined benefit plan is much more favorable to the worker as opposed to a market based defined contribution plan and bosses have waged a successful war against the former. I consider myself a lucky man and thank those workers that sacrificed to win such benefits. Congress enacted the Employee Retirement Income Security Act (ERISA) of 1974 to protect workers in defined benefit pension plans; here’s what the Employee Benefit Research Institute has to say:

"Participants in such plans have greater financial security than they did prior to ERISA's existence. But the number of such plans has declined dramatically, and today they are outnumbered by more popular defined contribution plans, particularly 401(k) plans. This change raises a question of whether defined benefit plans could disappear entirely and has fueled a debate about what could be done to preserve such plans as a key element of America's retirement savings infrastructure." 

Serious publications of the 1% like the Wall Street Journal claim that public sector workers are "overpaid.“ and our pensions exorbitant. The paper wrote back in September 2012 that, “Economic forces are reshaping traditional rivalries...." adding that this ideological assault is  "...convincing lawmakers and Labor leaders that past public pension plans are unsustainable.".

I have a decent pension, an amount I can live on and it is enough to enjoy life barring serious long-term illness.  Not only that, I retired before 60.  The bosses have to put a stop to this as the private sector cannot, or will not equal it. The future for US workers in the market economy is lower wages, declining benefits and working in to one’s 70’s or more. Like the autoworkers whose pay, benefits and retirement packages were too attractive to other workers, the public sector has to be put on rations.

Because they accept that there is no alternative to the market, that public workers have to compete with the private sector (and each other and workers abroad) and that profits are sacrosanct, the heads of organized labor go along with these drastic reductions in our standard of living that took a couple centuries and heroic struggle to win.  Given this, the bosses are moving ahead with their assault on pensions.

Multi-employer pension plans are next to go. These have been considered somewhat safer than single employer ones as this investment pool is spread among many employers rather than relying on one company.  Multi-employer plans cover about ten and a half million workers according to Bloomberg BusinessWeek. These plans are underfunded to the tune of $400 billion as workers age and in the aftermath of the Great Recessions the market inflicted its savagery on the fund.

So when a major employer goes out of business or declares bankruptcy as Hostess Brands did in 2012, it causes problems. In the Hostess example, if this company was unable to keep its pension obligations, and these firms declare bankruptcy in order to renege on them, it increases the chances that others can’t.  As BW explained in an article in its March 17^th issue, this is the situation with workers at the Ottenberg Bakery near Baltimore who were concerned they would, as one employee put it, “…have to work forever.”,   because Ottenberg is in the same multi-employer plan that Hostess was. If Hostess can’t pay; then what? It seems Hostess couldn’t:  “You have to repay your secured creditors first,” the CFO of the Hostess estate told BusinessWeek; investors must get their dough. So big government came to the rescue.

That nasty entity, “big government” stepped in and picked up the Hostess workers’ benefit payments so it looks like the folks at Ottenberg will be OK----maybe.  The lifeline came in the form of the Pension Benefit Guaranty Corp., the government agency that oversees the country’s 26,000 single and multi-employer private retirement plans.  Readers might recall similar action being taken by the Treasury’s TARP program that bailed out the banks and the government’s FDIC program that covers deposits.

The problem now is that the PBGC is also underfunded, after all, funding workers’ retirement is not

as lucrative as funding the Pentagon’s war machine or bailing out bankers.  The government help couldn’t give to the Hostess workers the retirement they were promised.  They took a “significant cut” as Business Week puts it.  In fact, the maximum of $1,072 a month the government (PBGC) guarantees to the most senior and highest paid workers in these plans is only a “fraction of what many were entitled to” BW writes and adds that the PBGC, “…is in need of a bailout of its own.”

The problem is that the government and the unelected billionaires that run it through their political representatives, have no intention of funding, or allotting more capital to a public expenditure like workers’ pensions.  Their general intent is to drive us further backward and deny future generations the gains that many of us have enjoyed after a century or more of struggle.

The PBGC has a $35.6 billion deficit and the Obama administration claims the agency could be insolvent in 10 years. Josh Gotbaum the head of the agency says that more could be done with more money but fat chance of that. Retired workers cost money, they are not a source of surplus value that can be exploited: they are money out. They are like the recruit who receives all the flag waving and patriotic nonsense about being heroes and courageous and all that when they are being sent to fight the corporations’ wars. When they return physically and mentally damaged, they are a liability.  The 1% is not in the egalitarian business.

Most workers simply bury their heads and hope things will get better. Unfortunately they will not. Those like myself and other public workers who still have a relatively secure existence compared to most try to hang in there, afraid that if they open their mouths others will see what they have and direct their anger toward us. This is what the bosses’ want.

To his credit, Gotbaum, perhaps taking his job as a government bureaucrat seriously, is asking Congress for more money for the PBGC.  But a more realistic plan being hatched out by the major corporations involved is to get Congress to allow companies to cut retirees benefits before the plan hits snags which according to BW would be a huge issue as, “By law, employers can’t reduce accrued benefits, which have long been considered untouchable.”  The authors of this plan, misnamed solutions not bailouts want “more flexibility” in order to fix the plan before it runs short of money.  The fix of course is to cut workers’ pensions regardless of the financial health of the actual plan.

The situation is dire say the bosses and their politicians. Former Democratic Congressman Earl Pomeroy who is advising the pension-slashing group uses a term all worker activists are familiar with, “A haircut now,” he says, “beats a beheading later.”  This is another version of the, It’s either a wage reduction or being laid off. There is only death next week or death today for the bosses and the top union officials echo them.

In league with the bosses in trying to get legislation passed that will allow pensions to be cut before the finances demand it is the leaders of the United Food and Commercial Workers’ Union.  This shouldn’t surprise us.  As I pointed out some time ago, the leadership of the UFCW’s Western State’s Council chose as their person of the year in 2009 the CEO of the corporation SavMart. Some of these union officials are millionaires.

Big players in the Solutions not bailout plan along with the UFCW heads are UPS and Bechtel, the company that gets contracts to rebuild countries after the US has bombed them in to antiquity.  Noted warmongers, George Schultz and Casper Weinberger (since deceased) came out of Bechtel.

BusinessWeek reports that the “Unions are split on whether to go along” referring us to the Teamster president, the lawyer James P Hoffa.  It’s quite evident though that Hoffa is on board with this; it’s just a matter of timing.  Hoffa has called the plan a  “mad rush” to destroy retirement security.  Like the entire leadership of organized Labor, Hoffa accepts that cuts have to be made, that profits have to be secured at the cost of the standard of living of US workers.  As a top labor official like a cowboy on a horses back, he doesn’t want the source of his security to die of thirst, not before he gets to his destination anyway.  If the bosses are too aggressive, are too rash, they could incite a riot among the ranks of organized labor, could ignite a movement from below that him and others like him might not be able to control.  It might undermine the relationship the heads of organized labor have built with the bosses based on labor peace.

What James Hoffa would prefer is to go easy for now and skin the hides off the future generations, the youth, the next generation of union members.  After all, they have little say in the matter and they cannot vote.  Hoffa is not against reducing benefits, it’s simply to what degree, on whom and when.

There is no end to this without a fight. The alternatives above are a fast death or a slow death. There is another alternative and that is to fight back. To build in our unions fighting caucuses and opposition groups that reject the Team Concept, reject competition between workers, and that refuse to bow before the altar of profit and the so-called free market---that demand and fight for what we need not what the bosses say is realistic.  Without this the 1% will continue to be successful in their drive to reduce our living standards to those of workers in the third world.  For those of us that have benefitted from the struggles of those that came before us and think we are safe we are not.  As the Unions continue to decline in influence and decades of gains are wiped out, our pensions will be undermined as well. If there are laws that protect them, they will change them. Workers are the majority in society that’s why they always try to divide us along racial, religious, gender or nationalist lines. We are not powerless.

Fighting back always pays.