The problem with multiemployer pensions

1Jun/100

The problem with multiemployer pensions

A good explanation of the core issue with multiemployer plans:

Here’s a not uncommon scenario: A union takes over a hypothetical trucking company — let’s call it XYZ Trucking. The first thing they’re going to do is use their newly acquired powers of mandatory binding arbitration to force them into a multi-employer pension plan, usually with companies represented by the same and/or affiliated unions. So the workers at XYZ Trucking now find themselves in the same pension plan as ABC Trucking.

But let’s say that XYZ trucking gets hit hard by the economy or its business suffers for some other reason. Meanwhile, union strictures make the company less adaptable or otherwise able to respond to the changing business environment, even as the union continues to strong-arm better benefits and salaries year after year. Union pension plan liabilities grow to the point that it affects the company’s balance sheet so adversely the company can’t get a loan. Eventually, XYZ trucking declares bankruptcy.

The good news for XYZ trucking employees is that they are in a multi-employer pension plan. Under “last man standing” accounting rules, ABC Trucking now has to pick up the tab for all the workers at XYZ Trucking even though they never worked at the company.

So union management bleeds one company dry, then makes an unrelated company responsible for picking up their pension obligations. Then they start bleeding them dry. When there’s no one left to bleed dry, they have Democratic senators and House members in their pocket to push this bill on the taxpayer.

Bottom line is that unions are taken care of, while taxpayers are left to shell out billions. Nice racket, huh?

The only thing I've got to say is that if the MEPs want their bailout, they had best move fast. So many piggies at the bailout trough have really lowered the level for additional bailouts, and then there's the whole question if they'll have enough leverage with the next Congress.

There are a whole bunch of Democratic constituencies trying to be bought off right now in advance of the midterm elections, some with legislation that will only pass the House, so the Dems can say “Hey, we tried” and “See, we need even stronger support in the Senate... only 59 senators and we're hog-tied! Sorry we can't do anything about DADT/Amnesty for illegals/cardcheck/cap&trade/MEP bailout unless you give us oodles of campaign $$ and come out in force in Nov!” and to the independents they can say “Look, we're not dangerous! We can't pass the stuff you don't like, so it's safe to re-elect your local Dem!”

So yeah, I expect that like with the other issues listed above, there will be lots of Democratic jawboning, passage of something in the House, and it dies a lonely death in the Senate. I could be wrong, but the private unions don't have broad enough electoral power to influence many Senators, even Democratic ones. And they can't look to the public employee unions for support, as those guys need an even bigger bailout.

….well, those were my thoughts last week when I originally got this post together, and now I'm not so sure. I think the Dems realize they're screwed this election cycle, so they might as well go for broke. I just don't see why some Republicans are aiding and abetting this. Well, in my previous pension news roundup, I saw that Rep. McCotter was receiving a lot of pension PAC money, so that's one explanation.

Meep

Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.