Much of the first 14 months of the Obama administration has been a public "love story" between the White House and the Labor Unions. It seems as if President Obama has been basing many of his decisions on how they help the Union Bosses as opposed to how they help the entire country:
- A large contributor to the bankruptcy of Chrysler and General Motors was the liability the Auto Giants owed to the UAW pension plans. In the buyout deal, the President gave the unions more than their fair share of the two companies at the expense of the primary investors who legally should have received more.
- In September the POTUS announced that it would impose a tariff of 35 percent on $1.8 billion of automobile tires imports from China, angering the country holding a large chunk of our bonds, acting on a petition from one of his major constituencies, the United Steelworkers union.
- Unions have been the fiercest proponents of the Obamacare have been the Unions. Andy Stern, head of the SEIU has been to the White House more than any other visitor. Some commentators have reported that's Stern's constant trips to the White House is due to his participation in reviewing the basic components of the health care bills as they are developed by the houses of congress. Why is this particular legislation so important to the unions? Because the unions pensions plans are woefully underfunded. The hope is once Obamacare is passed union workers will eventually be shoved over to the co-ops (or an eventual government option), freeing up union cash to help with the pension program.
- As of this very moment the administration is working on a plan to give preference to Union Shops for ALL federal contracts. The proposal, dubbed the “High Road Contracting Policy,” was first reportedby The Daily Caller in early February. According to multiple sources familiar with the discussions, the proposal would give preference to government contractors that pay their hourly workers a “living wage” and provide additional benefits such as health insurance, employer-funded retirement plans and paid sick leave. In other words, they will be "cutting out" the non-union shops and raising the price of jobs, and increasing the federal deficit.
These are just a few ways the President is favoring his friends, the Union leaders over the needs of the Union Rank and file and the American People. The reason for the favorable treatment, the Pension Plans are about to collapse, most of the rank and file may not even know that when they are ready to retire their pensions may not be there.
Should these pension plans collapse its curtains for the Union Leaders and it would not be the best recruiting tool for the labor movement in general.
How bad off are the union pension plans? The best single indicator of a plan’s financial health is its Funding Percentage. A fully funded plan will have a funding percentage of 100%. A plan is underfunded when the percentage is below 100%. The lower the percentage, the greater the risk that benefits will not be available when they come due.
According to the Pension Protection Act of 2006 multi-employer (plans set through unions and company sponsors) plans are evaluated via their funding levels. To ensure retiree benefits are protected, when a multiemployer plan falls below certain funding levels, stronger funding requirements become effective under provisions of the Pension Protection Act of 2006. Plans whose funding levels are below 80% are referred to as “endangered,” while those below 65% are referred to as “critical.”
The list of 108 union pension plans below is from the Moody's September 2009 report. The ones in green print are at the endangered level, the ones in red are critical.
This is the first of a series of posts about Union pensions, and how White House policy is being adapted to save the "arses" of union leaders. Look for more soon.