Value on Display, run by the “good ole boys” club of senior leadership, will be responsible for the demise of the Taft-Hartley multi-employer pension plans in the trades. They have already run market share and organizing into the ground, so why stop there with this abysmal leadership!
The “hot potato” of insolvent pensions will be played off. And in saying “hot potato” we mean real workers losing or getting substantially reduced benefits in retirement! The trades presidents must get rid of the defined benefit pension because they are so vastly underfunded and because management has told them that they will not deal with the withdrawal liability issues any longer!
So, enter the Federal Butch Lewis Act: Senator Sherwood Brown, D-OH introduced the Act; and now the rebranded version introduced by Rep. Richard Neal, D-MA, Chair of the House Ways and Means.
The purpose of the BLA is to underwrite with loans/bailouts the current Building Trades’ insolvent pensions and the many more following. Currently, most Multi-employer/Taft Hartley pensions plans, and there are approximately 1,100 plans, are funded at 60% or less as a composite!
First off, the “good ole boys” sunk nearly all of the current and future insolvent plans! Not the government, not the markets! The Labor side of senior leadership of those funds are substantially at fault.
The current and former good ole boy’s senior leadership have zero discipline and integrity. Every one of the current senior leaders – all political animals – were around when union after union agreed to put newly negotiated money “ON THE CHECK” for nearly 3 decades – from the late 70’s to approximately early 2000’s. That money put on the check was a vote by and a responsibility of grown workers. The average member would have suffered the consequences of poor to little pension contributions with lower benefits at retirement time. However, the funds would be solvent to pay benefits. What changed the dynamics of solvent funds to insolvent funds was the senior leaders good ole boys’ self-greed & their politics!
The good ole boys now in a position of power on those funds jacked up accruals of pension payments to levels impossible to sustain even in great times. They knew that there was zero money to support these benefits over time and they did it anyway because of their greed and desire to score short-lived political points.
I was around during this time. I know how the members would applaud on the union floor and tell them, the good ole boys, what great investors and managers they were. Members couldn’t have known they were digging themselves a hole at the worst possible time in their lives – retirement! But the “good ole boys” not only knew about this hole, they didn’t care. Turns out the good ole boys have a separate and distinct pension, which just happens to be fully funded – so any local pension benefits are gravy. And they do want the gravy, every cent they can get, even if the substantial number of Rank & File members lose some or all of their pension benefits.
Per our International Presidents and most of their talking heads, the GOVERNMENT was/is responsible for the pension insolvencies. It MADE us Trustees do imprudent acts and FORCED us to spend ourselves into insolvency. All BS! First off, all Taft Hartley Pensions have the same set of pension rules – logic would dictate that all funds would be in the same boat – but, they are not!
To listen to our senior leaders and political hacks like Brown, et al – the funds were forced to make benefit improvements once they hit 120% or more of funding is just one example! Most funds did take the excess funding, mostly from interest earned when markets were good, and made benefit improvements. However, most made improvements far past what was prudent, when they didn’t have the money to pay for it then and especially down the road. They worked the professionals on those funds to give them scenarios with very narrow parameters that could JUSTIFY HUGE benefits increases relative to money available, knowing that mid- and long-term numbers would NEVER work out!
They took out a credit card and hoped that somewhere, someday it would rain cash in numbers needed to keep pensions afloat.
Many trustees, like myself, payed down debt in our respective funds with the excess funding from market interest, and that in time opened up more real cash for real and sustainable benefits down the road in retirement. THE MEMBERS DID NOT LIKE THOSE DECISIONS AT THE TIME, they saw other participants getting huge increases and many fights broke out on the floor to hold the line. For example, they didn’t like creating new tiers of prospective benefits – they do now. Trustees have had other prudent actions that also can be taken in part or in whole to keep out of a debt situation; the “good ole boys” CHOSE not too!
So, trustees of insolvent plans gave benefits that: 1) they had no cash to sustain long-term, and 2) put them in further debt. An illustrative example would be maxing out your credit card out. You’ll enjoy the benefits for a short while. Then the bill comes due, including the payment for interest. Bottom line is you have LESS overall purchasing power. So, the BIG BAD GOVERNMENT laid out options that otherwise prudent trustees can take. The ones that are insolvent had good ole boys that used greed and politics to play the R&F. Now those incredibly bad decisions are coming due. What is ironic is the members probably named some union hall or school after the very trustees that screwed them!
BTW – this all can be reverse engineered Brothers and Sisters. You need some base guidance, but these numbers are easy to understand in the light of day. And yet many of the R&F will turn to the very good ole boys that sunk pensions and even market share for answers – that needs to stop if we are going to have any chance or strategy for change.
The markets did us in! Hey, we got hit hard in 2000 -9.1; 2001 -11.9; 2002 -22.1; and then the rebound with 2003 +28.7; 2004 +10.9; 2005 +4.9; 2006 +15.8.
Hit again in 2008 with -37 and rebound with 2009 +26.5; 2010 +15.1; 2011 + 2.1; 2012 +16.0; 2013 +32.4 and the market continues since then in an overall positive direct. Bottom line is the markets have stayed within historical numbers needed to support benefits if they are paid for. The market has little ability to erase the massive debt compiled by insolvent plans! Check for yourselves – Google S&P historical returns by year to get all returns not listed above. Also understand our pensions do not recognize all loses/gains in any given year. They are smoothed out in a rolling 5-year average that the professionals use and have used for a long time.
HOURS – The forgotten element in pension viability. As expressed in the opening statement, “VALUE ON DISPLAY” will be responsible for the demise of pensions. Hours and organizing (or lack thereof) can be interchangeable here. Pension calculations/benefits have a substantial component related to total hours contributed to a fund, be it local or international. We could have organized our way out of the pension disaster, and we still can! Understand that to the Founders and Labor Rising, organizing is taking the company and workers and imposing a Collective Bargaining Agreement on them. Anything less than that HAS NOT worked – such as recruitment, salting, old school organizing, VOD, training etc… Topping the list of failed “strategies” is VOD! Since inception of VOD, the trades collectively are getting pummeled in work hours lost/market share/density. This is expediting the pension insolvencies!
Wow – what a coincidence that the exact same good ole boys club who have decimated pensions are exactly the same men who have abandoned true organizing and replaced it with the massive failure that is Value on Display. Coincidence? Not a chance!
History will be crystal clear that from the beginning of good ole boy Georgine, to the present good ole boys, that the Building Trades went from Labor MOVEMENT to lap dogs of management! A temp agency.
A legacy of failure across the board! Clueless to self-examination and measure numbers and implement change! Call me skeptical, but I’m certain they know exactly what they want. And a vibrant, free and independent democratic labor MOVEMENT is foreign to them. They belong to management.
The trades are primarily losing hours because of increases of the non-union market share and to technology advancements in construction delivery (e.g., needing far less workers and time to do a given job).
The IP’s know that the trades have lost market share even in the super-heated record years of construction spending. They also know that on par the markets have been solid. Should either one or both cool down for any length of time, pensions will fail exponentially. Here is the current list of plans in trouble from the DOL: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/public-disclosure/2018-funding-status-notices
The R&F is also out of money to shore up unfunded liability. They have diverted money from CBA, wages and annuities for years and are out of options. The senior leaders, good ole boys know this, so…
Back to the BLA legislation, which is a LOAN/BAILOUT! If a pension fund can’t afford its bills that are coming due for the next several decades, how in the hell is it going to afford repayment of loans to make funds whole? Exactly the point – the pension plans cannot! Part of the BLA legislation allows for loan FORGIVENESS which is why it is a bailout!
The average Joe and Jane BT member could care less who foots the bill so they can have the money they feel is due them. Thus, begins the political hot potato of the Butch Lewis Act, if it can even pass which is in itself problematic. The IP’s can spin that they did all they could to SAVE the participants from the government and markets, their hands are clean! And the irony here is now asking the government for the fix.
Meanwhile the hole will get deeper and different political administrations will fund or NOT the BLA even if passed! The loans/bailouts are open ended. The GOA does the scoring of costs for government spending; but in this case, the timeline for funds needing loans/bailouts is measured in decades. The consensus of the Pension Analytics Group is approximately $160 billion covering approximately 230 plans expected to fail, and that number can easily and unfortunately rise along with billions more of loans/bailouts. The unscored number of $34 billion for a one-time loan/bailout is smoke and mirrors BS of the highest order. One fund – the Teamsters Central States Plan – needs this much and probably more all by itself.
Understand this – the Zones have been reclassified. Green is good; however, in the new classifications, many so-called Green Zone funds actually may be Green now but projected to fail in 5 years. You should know that huge difference! The new classifications are explained in the link below:
https://cheiron.us/cheironHome/viewArtAction.do?artID=139
For years, we at Labor Rising have said that our brand of true organizing can solve multiple issues: Market share, pensions, political muscle rebuild, unions working as an agent of the middle class.
And yet every attempt to build a real organizing capacity is thwarted by our Internationals – they will NOT take on the clients, credit and social footprint of those most responsible for the non/anti-union. The owner, developer, construction manager & GC. We play small ball dancing with subs – how incredibly stupid!
So, the next couple of Blogs will again educate on what organizing looks like in 2019!
“if you see a good fight – get in it”
Danny L Caliendo
Organizer
Labor Rising/Labor Combat
