Obama Administration Stays Quiet as Boeing Strikes Major Blow to Pensions

Mike Elk January 6, 2014

A Boeing employee works on the wing of a Boeing 777 jet in Everett, Wash. (Stephen Brashear/Getty Images)

On Fri­day, yet anoth­er nail was put in the cof­fin of the defined-ben­e­fit pen­sion in Amer­i­ca. Accord­ing to the Eco­nom­ic Pol­i­cy Insti­tute (EPI), the per­cent­age of U.S. pri­vate-sec­tor retire­ment plans with defined ben­e­fits fell by half between 1989 and 2010, from 42 to only 22 per­cent. Yet this type of plan is much pre­ferred by unions and work­er advo­cates over defined-con­tri­bu­tion plans such 401(k)s, because if a com­pa­ny makes bad invest­ment deci­sions, work­ers’ retire­ment ben­e­fits don’t suffer.

Boe­ing is one of the few remain­ing major cor­po­ra­tions in the Unit­ed States that still offers defined-ben­e­fit pen­sions. But on Fri­day, 30,000 union Boe­ing work­ers in Wash­ing­ton state vot­ed to give up the pen­sions for new hires and to let the com­pa­ny freeze the plans for all work­ers in 2016.

I don’t see a way for­ward on pen­sions. I don’t see what it is that we can do,” says Ross Eisen­brey, vice pres­i­dent of EPI, which advo­cates for low- and mid­dle-income work­ers. Retire­ment secu­ri­ty right now is wish­ful thinking.”

The vote by mem­bers of the Inter­na­tion­al Asso­ci­a­tion of Machin­ists (IAM) Lodge 751 came after Boe­ing threat­ened to move pro­duc­tion of the 777X jet line, along with poten­tial­ly thou­sands of jobs, out of Wash­ing­ton state unless work­ers agreed to the con­tract. The work­ers vot­ed down a sim­i­lar con­tract in Novem­ber, but Boe­ing refused to budge — even though the com­pa­ny is doing well, with over $400 bil­lion dol­lars in back orders and a pro­gram to buy back more than $10 bil­lion in its own stock.

In Decem­ber, the inter­na­tion­al stepped in and forced the local, which opposed the deal, to hold anoth­er vote. In a bid to keep their jobs, the work­ers vot­ed 51-to-49 per­cent on Fri­day to rat­i­fy the slight­ly revised con­tract, which ends defined-ben­e­fit pen­sions and bans work­ers from strik­ing for eight years.

Boe­ing is one more point in a long trend of employ­ers shed­ding their pen­sion lia­bil­i­ty,” says Eisen­brey. Look­ing ahead, they don’t want to be in a sit­u­a­tion where we go through anoth­er stock mar­ket plunge and they wind up hav­ing to put a lot of mon­ey in the pen­sions’ prob­lem. From an employ­er’s point of view, a defined-con­tri­bu­tion plan is the eas­i­est thing, you just put in 3 per­cent from an employ­ee’s pay­check and they invest. If the employ­ee invests bad­ly, then it’s their tough luck. Its just simpler.”

The loss of pen­sions at Boe­ing marks a major set­back for unions, as employ­ers typ­i­cal­ly fol­low the exam­ple of oth­er employ­ers at the bar­gain­ing table in terms of what con­sti­tutes a rea­son­able demand. Since the finan­cial crash, unions have giv­en up pen­sions for new hires at large, prof­itable, indus­try trend­set­ters such as Gen­er­al Elec­tric, Ver­i­zon, Hon­ey­well and now, Boeing.

Though this marks a sea change toward retire­ment inse­cu­ri­ty for tens of thou­sands of U.S. work­ers dur­ing Oba­ma’s tenure, thus far the pres­i­dent has said noth­ing about the trend.

Dean Bak­er, co-direc­tor of the Cen­ter for Eco­nom­ic and Pol­i­cy Research, says the pres­i­dent could use his bul­ly pul­pit on the issue. Cer­tain­ly he could say some­thing about pre­serv­ing DB pen­sions,” says Bak­er. That would­n’t cost him any­thing, but appar­ent­ly it is not even on his radar screen.”

Indeed, U.S. pres­i­dents have occa­sion­al­ly weighed in on or inter­vened in labor strug­gles, as when Pres­i­dent Richard Nixon stepped into medi­ate the 1971 Bitu­mi­nous Coal Strike. In 2008, then Pres­i­dent-elect Oba­ma spoke in sup­port of the laid-off work­ers who occu­pied the Repub­lic Win­dows and Doors plant in Chica­go. Oba­ma also pub­licly praised the Unit­ed Auto Work­ers for mak­ing con­ces­sions as part of the auto bailout.

So why hasn’t the Oba­ma admin­is­tra­tion said any­thing about an issue that affects so many Americans?

They don’t give a damn and don’t want to piss any­one off over it,” says Bak­er. It’s pret­ty obvi­ous that Oba­ma does­n’t feel the same oblig­a­tion towards sup­port­ing unions as he does towards push­ing the agen­da of major corporations.”

While Pres­i­dent Oba­ma did not speak out on behalf of Boe­ing work­ers, the Pres­i­dent is quite open about being a major pub­lic advo­cate for Boeing.

Speak­ing to the Export Coun­cil last Sep­tem­ber, Pres­i­dent Oba­ma said, I think Jim [McN­er­ney, Chair­man and CEO of Boe­ing], at least, will con­firm that I’m hap­py to go out and make sales. I’m expect­ing a gold watch — (laugh­ter) — from Boe­ing at the end of my pres­i­den­cy, because I know that I’m on the list of top sales­men at Boe­ing. And that applies to all of you.”

EPI’s Eisen­brey says that the Oba­ma admin­is­tra­tion has been much more focused on cut­ting Social Secu­ri­ty than shoring up American’s retire­ment secu­ri­ty. Last spring, the Oba­ma Admin­is­tra­tion announced its sup­port for a pro­pos­al to amend Social Secu­ri­ty known as chained CPI,” which the AFL-CIO oppos­es because it entails low­er ben­e­fits for retirees. We should be increas­ing ben­e­fits and their pro­pos­al was to have a tech­ni­cal adjust­ment which was a ben­e­fit cut,” says Eisenbrey.

Work­ing In These Times reached out to the White House for a reac­tion to the Boe­ing vote, but did not receive a response. As with many labor issues, the Pres­i­dent has once again remained silent while union work­ers have tak­en a hit.

Mean­while, Boe­ing work­ers are adjust­ing to less secure retire­ment futures. John Klei­boek­er, a Boe­ing work­er of 16 years and the pres­i­dent of the Machin­ists Local Lodge 63, told The Ore­gon­ian, I’ve got 15 years to retire­ment. … I’m look­ing at a loss of $250,000.”

Full dis­clo­sure: The IAM and UAW are web­site spon­sors of In These Times. Spon­sors have no role in edi­to­r­i­al content.

Mike Elk wrote for In These Times and its labor blog, Work­ing In These Times, from 2010 to 2014. He is cur­rent­ly a labor reporter at Politico.
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