The Next Great Bailout - Union Pension Plans
Get ready, folks. The newest government bailout may come sooner than you think! Organized labor is pushing for legislation to bailout underfunded union pension plans. Currently, the average union pension plan has enough money to cover only 62% of its financial obligations. That puts most of them on the government's "critical" list.
Of course, taxpayers will again bear the burden for years of mismanagement and, in some cases, outright misappropriation of pension funds. Unlike prior bailouts of the auto industry and the financial sector, a bailout of union pension plans is unlikely to result in taxpayer recoupment given the continued decline in union affiliation. If organized labor prevails in ramming through the Employee Free Choice Act ("EFCA"), which could result in compulsory unionism for most employers, then it's possible that additional revenue would be available to repay the taxpayers due to forced participation in multi-employer pension plans. However, even that result may be impossible to achieve since EFCA could force many employers to close their doors due to the exceedingly high cost of union wages and benefits. In that case, the "bailout" could turn quickly into a permanent form of government subsidy. That's just what the doctor ordered for this troubled economy ... NOT!
3 comments:
That is simply not true. Multiemployee Pension funds were performing at assumed rates of 8% or less (7.9% actual) before the bankers performed their disappearing money trick.
"Of course, taxpayers will again bear the burden for years of mismanagement and, in some cases, outright misappropriation of pension funds."
That statement is a misrepresentation of the facts. Why should the bankers who put us into this mess get away with it, while the working class AGAIN are called upon to support the callous greed that is this countries banking industry.
Shame on you Randy, a child of fortune. "exceedingly high cost of union wages and benefits." It's no the wage that's high, it's the health and welfare fringe expense thanks to run-away insurance companies and lawyers like you.
State's pension is guaranteed by the state, it cannot go bankrupt. This means that no matter how much its costs increase, the state is required to pick up the tab.
new pension
Chris:
With all due respect, I am not a "child of fortune" as you suggest. I'm a blue collar guy who was fortunate enough to have parents who worked their butts off to allow me to have a white collar job.
You are free to disagree with me, but get your facts straight. Union wages are high ... it costs generally at least 30% more, from a wage perspective, to do a job union. Add in the costs of fringes, and the cost is driven even higher.
Just take a look at any public works construction project where prevailing wages are required. The prevailing wage is typically the union wage in the locality in which the work is being performed; however, in many cases the union wage is not "prevailing" in a locality. Regardless, the taxpayer is required to pay the higher rate. You can thank union lobbyists for that.
You're correct that the high costs of fringes are due, in part, to insurance companies. But, don't blame me and other management-side attorneys for the problem. We're among those trying to get those costs lowered since our clients are the ones who get stuck with the bill.
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