Pensions & Healthcare

Non-union retirees in some bailed-out companies are complaining loudly that their pensions are being unexpectedly cut in order to subsidize union retirees. Some of these cuts are quite drastic--as high as seventy-five per cent--and the non-union people are understandably upset.

Union workers took it on the chin while most of these non-union people did relatively well over the past 20 years or so. Most of the union workers whose retirement benefits are up for discussion took early and forced retirements and not all of their retirement benefits are completely secure. In many cases younger and less senior workers gave up something so that remaining high-seniority workers could keep working. Corporations were successful in pitting younger and less senior workers against older and more senior workers in many cases and too many unions sacrificed too much in the process. Pattern bargaining, which was the foundation for workers in entire industries to move forward with healthcare, pensions and higher wages, has been sacrificed.

Republicans and conservative Democrats will no doubt make an issue of the disparity in benefits between union and non-union retirees in bailed out industries. They will use the issue as a bully pulpit to attack unions and further divide workers.

If the point were that we should have guaranteed social pensions and retiree benefits owned and managed in the interests of the working class the folks complaining would have more of a case. I'm thinking here of something bigger and better than Social Security, and not something to replace it either. A portable and guaranteed pension with healthcare for every worker that provides for a dignified retirement in addition to Social Security is not too much to ask or to expect.

But the people who are complaining the loudest today don't seem to be about a guaranteed social pension for all. Their primary objection seems to be that a union worker is getting a subsidy at their expense.

No one is actually taking money from non-union retirees and giving it to union retirees, mind you. The union retirees in most cases draw their benefits from different pension funds than non-union retirees and the union retirees had representatives, however weak and incompetent they have been, to negotiate on their behalf. Most subsidies come through cost-shifting, employer contributions, government contributions, retirement plan investments and union contract concessions and not all plans define benefit levels in any case.

The workers whose pensions are being cut still have a valid complaint, I think. It is no fault of theirs if labor laws in this country have stopped them from gaining union representation or if unions have not shown enough interest in them over the years. Labor's social agenda should always be broader and more inclusive than it is. In the winner-take-all exclusive-representation union contract bargaining system we have in the US a union must use every advantage that it can in order to win a first (often basic and generic) union contract. Healthcare and pensions have therefore become the jealousy guarded "union advantage" and this explains why most unions have taken a backseat in the healthcare and pension struggles; if everyone can get these through legislation, and if the law makes union organizing so difficult and gives the bosses so much power, what is the union advantage? How do unions organize and maintain themselves if they can't offer something better than what employers do or what can be obtained on the market?

This logic works against itself, of course. The benefits of a relatively small group of workers will always be at risk if other workers can't get them, the market will constantly attempt to drive the workers' living standard down and those with superior benefits will develop a circle-the-wagons mentality over time that cannot be sustained. In the US, moreover, unions can no longer negotiate on behalf of retirees.

In order to better understand this question and understand how union benefits are won and maintained you should read "Why The Health Insurance Excise Tax Is A Bad Idea" by Steve Early and Rand Wilson in The Nation. Check it out here.