WASHINGTON—Heeding the pleas of workers and unions who could see their pensions go down the drain in the next six years, the Democratic-run House Education and Labor Committee approved HR397, to fix multi-employer pension plans’ problems. The 26-18 vote on June 11 was on party lines.
If eventually approved, the measure would help those financially ailing plans with 30-year repayable federal loans to shore up their assets and value, at affordable interest rates. The loans would come from a trust fund in the Treasury Department and plans seeking aid would have to prove the money would keep them solvent and able to provide current benefits.
The AFL-CIO and various unions, including the Mine Workers and the Bakery Workers, support HR397. AFL-CIO Legislative Director Bill Samuel said it would help at least a million people.
“Absent federal action, the retirement income security of over one million American workers, retirees, and pension beneficiaries across the country is in jeopardy because of the impending failure of their multiemployer pension plans,” Samuel wrote.
“By establishing a federal loan program for troubled plans meeting certain criteria, HR397 reflects the accurate recognition that allowing these plans to fail will have a devastating impact not only on individuals, but also on numerous companies, and the communities in which plan participants, retirees and beneficiaries reside.”
He also said it’s a matter of equity. Workers left high and dry by the financier-caused Great Recession a decade ago – as their pensions collapsed too – have not forgotten that Congress bailed out the bankers, but didn’t really help them or their pensions.
“Passage of the Rehabilitation for Multiemployer Pensions Act (HR 397) is a top priority for the House leadership and for the labor movement,” added Bakery, Confectionery and Workers and Grain Millers President David Durkee in a posting on the union’s website. If it fails, all workers with collectively bargained pensions could be hurt, he warmed.
“It is vital that BCTGM members continue to pressure Congress to support a legislative solution to the nation’s growing pension crisis. E-mail your U.S. Representative and urge them to support” HR 397.
Whether the measure and the pressure will succeed is uncertain. Education and Labor Committee Republicans screamed the bill is full of false promises for the workers, including the Mine Workers, Teamsters and others sitting in the audience.
Led by Rep. Virginia Foxx, R-N.C. — who, as panel chair, questioned the need for unions — the GOPers unanimously opposed HR397. Foxx predicted the GOP-run Senate wouldn’t even vote on it.
The measure represents yet another attempt to help an estimated one million workers, whose 100 or so pension plans are financially ailing. The plans took a red ink bath during the Great Recession, while watching too many contributing employers go broke, dumping pension payment obligations on the federal Pension Benefits Guaranty Corporation, remaining employers, or both.
While Mine Workers and Teamsters represent the largest groups of affected workers, retirees and surviving spouses, the multi-employer plans problems range across many industries. That sent Teamsters, Machinists, BCTGM members and more to Congress on the issue.
If the multi-employer plans can’t pick up the tab, the workers and their survivors are transferred to the PBGC, whose monthly payouts are minimal. And its multi-employer pension fund, garnered from fees levied on employers, is going broke, too.
“We should fulfill our promises” to workers for decent retirement security, committee chair Rep. Bobby Scott, D-Va., said before the final vote in late afternoon. “Jobs are in jeopardy if we fail to act.”
“If one major (multi-employer) plan fails in 2025, that could cost 55,000 jobs,” he warned, as employers fire workers in order to pay pension bills. Though Scott did not say so, that plan is the Teamsters’ giant Central States Pension Fund. And PBGC’s reserves are so low that its own multiemployer fund would be insolvent the same year, witnesses had warned.
“Doing nothing would be the most expensive option we have,” Scott warned. Inaction would drive the ailing plans into insolvency and cost the government billions of dollars over a decade in benefits ranging from food stamps to Medicaid to housing and more.
But while the Teamsters multiemployer plan faces a financial cliff in six years, two Mine Workers pension funds, set up and guaranteed by the government just after World War II, are on the verge of going under right now. Those plans cover 83,000 unionized miners and surviving spouses. Each gets $600-$2,200 monthly, depending on how long the miner involved toiled.
That prospect sent UMWA members to Capitol Hill for months to lobby for pensions for widows, retirees and other survivors. House Democrats and a few Republicans from coal states, such as Rep. David McKinley of West Virginia and Sen. Rob Portman of Ohio, have been working with their Democratic colleagues and UMWA on the problem.
There are several measures pending in the Senate, too, but none have gone so far as to get a committee OK, unlike HR397.
“What Washington doesn’t understand is that workers sat at the negotiating table and gave up raises because they were counting on these pensions when they retired,” Sen. Sherrod Brown, D-Ohio, another prime mover on the problem, said.
“We are grateful to the Ohio workers, retirees and businesses whose tireless efforts have brought us this far, and are committed to continuing our work until Congress passes the solution Ohioans deserve.”
Right-wingers oppose HR397. So does one key player: So many coal companies have gone belly-up or been gobbled up by mergers that one firm, Murray Energy, now contributes 97 percent of the money for one UMWA pension fund – and it doesn’t want to keep doing so.
“That’s a collectively bargained responsibility they have. If a company can live up to its obligations it should, especially if taxpayer money is being transferred into the fund, too,” UMWA Legislative Director Phil Smith told journalists in reply.
Samuel called rescuing workers’ pensions a matter of equity. Congress rescued Wall Streeters whose flimsy paper and financial finagling caused the Great Recession, which cost the workers their homes, pay and pensions – and cost the multi-employer plans billions. It should rescue workers, too.
“The hard-working and tax-paying American workers whose retirement income security is at risk have not forgotten the 2008 record-setting federal rescue that provided hundreds of billions of dollars to troubled financial firms,” Samuel said.
“These workers are no less worthy than J.P. Morgan Chase or Fannie Mae and Freddie Mac who were the beneficiaries of that federal support. Indeed, unlike those entities, they played no part in creating the crisis at hand; throughout the years, they further have sacrificed wage increases in favor of contributions to their pension plan.
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