7 months ago
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One of the most painful issues dividing labor and management in the strike at Boeing is the loss of the traditional pension plan for union members in 2014.
The dispute has echoes of past labor disputes at Boeing, and at other companies, where workers have lost what used to be a key part of their retirement security. Employers have made, and won, demands to shift the risks associated with their workers’ retirements from their own bottom lines, to the retirees themselves.
Now unions are pushing back, demanding the return of traditional pension plans their members lost in past concession deals. That’s one of the reasons 33,000 members of the International Association of Machinists went on strike Friday after 95% voted against the tentative labor deal that would have increased the money Boeing paid into their 401(k) but would not have restored the traditional pension plan they lost 10 years ago. Restoring pension plans was an initially stated goal of the IAM, but they were not in the deal reached and rejected last week.
Jon Holden, the president of the largest union local at Boeing, said right after the vote to go on strike Thursday night that it wasn’t any one issue, but that “I know that many members haven’t healed from that wound” of losing the pension plans.
But the fact is that the traditional pension plans, once a staple of the retirement of many workers, have become exceedingly rare in the modern American workplace. And once a company drops traditional pensions plans to shift employees to a 401(k) type of retirement account, they are almost always gone for good.
While other unions have also sought to have lost pension plans restored, as the United Auto Workers union did during its successful strike at General Motors, Ford and Stellantis last fall, no American union has ever succeeded in bringing them back. Even though the auto strike produced a deal with record pay raises and other gains for the UAW, it did not restore pension plans to workers hired since 2007.
Employers frequently argue that employees and retirees can be better off with a 401(k) type of retirement plan, especially if their investments do well. During the UAW strike at the three unionized American automakers last fall, Ford CFO John Lawler called the traditional pension plans being sought by the union “a plan of the past.”
Pension plans vs 401(k)’s
The types of retirement plan available for American workers basically fall into two categories. First, a traditional pension plan that pays retirees, or their survivors, a fixed amount of money every month until they die, known as a defined benefit plan. The other is an individual retirement account, such as a 401(k) plan, in which the employer makes contributions, typically matching a portion of a worker’s own pre-tax contributions to the accounts. Those are known as defined contribution plans. In that case, retirees can decide about the amount withdrawn from the account, as frequently as they want — at least until they run out of assets.
