Organized labor’s epiphany: elections have [negative] consequences

After being told over and over for the past four years that elections have consequences, it is nice to know that unions have discovered the same thing.  I call it organized labor’s epiphany.

bankruptcy-sign-4x3Union bosses have been hawking this administration’s policies to the their membership.  They expected to receive something for their efforts, and they have. Trade unions (think construction) whose unemployment has been bouncing between 14 percent and 16 percent, got the cold shoulder on the Keystone pipeline.  The Employee Free Choice Act (EFCA) was forgotten as President Obama used his clout to push through Obamacare, which, the unions supported enthusiastically when they thought it would not impact them — they could keep their plans.  Recently the unions discovered that Obamacare is not something that just happens to other people.  Unions have discovered that the conservatives weren’t lying when they said Obamacare would drive up the cost of health insurance.

John Wilhelm, chairman of Unite Here Health, the insurance plan for 260,000 union workers recalled “I heard him say, ‘If you like your health plan, you can keep it.  If I’m wrong, and the president does not intend to keep his word, I would have severe second thoughts about the law.”  A little late for that, Mr. Wilhelm.  You backed it, now you must own it.  Of course, AFL-CIO President, Richard Trumka and Jimmy Hoffa, Jr. of the Teamsters now have their hands out.  They want taxpayers to subsidize their membership.  They now have a problem with being able to afford those sweet cadillac health insurance plans.

What the unions never reveal to the public or their members is their own precarious balancing act on a fiscal cliff.  Health plans and pensions within the union are designed in a similar manner as social security.  Everything is great when the number contributing to the plan is greater than those taking out.  It doesn’t work so well when the equation is flipped.  Unions fund their plans through employer contributions agreed upon in their contractual bargaining agreements (CBAs).  It is usually set up in this manner: union Company B agrees to pay per man hour into a John Unionworker’s pension and health insurance; companies who pay less for their workers are subsidized by compnanies who pay more.   This works well when everyone is working and the CBA’s are flush, but not so well when the unemployment rate is once again edging upward and members are unemployed.  There is no financial leeway within these plans.

Union pension funds are what are described as a defined benefit.  It is used as a part of their sales pitch when trying to organize new members.  In 2009, Unions were calling for a bailout of their pension plans, with good reason.  As membership plummeted, the retirees being paid from the pension plans outnumbered those who were paying in.  The union officials who had concerns for the future of  their pension plans developed hybrids.  A combination of defined benefit with either an annuity or a 401K (the seriousness of the potential failure of numerous union pension plans can be found thru this link).

Rebecca Smith is a contributor to The Brenner Brief and an expert on union issues. Twitter: @unionhypocrisy

Rebecca Smith is a contributor to The Brenner Brief and an expert on union issues. Twitter: @unionhypocrisy

Union pensions are protected under ERISA Trust Law which was created by the Taft-Hartley Act.  When a union pension plan reaches a level of unfunded liability, the government gives them three months to come up with a plan to keep it solvent.  If they fail to do that, the government takes over.  Now their health insurance plans are facing a financial threat, all from the President who is on “their side” supposedly.

What have they received for their efforts?  They have received an unconstitutionally appointed NLRB that may have a years worth of decisions set aside.

The Sheet Metal Workers International Association helped push for passage of the health law. Mr. Beall said he still believes everyone should have health insurance, but worries the law is undermining the union’s ability to offer coverage.

“If we’re not offering our members insurance and pension, why would you want to be union?” he asked.

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  1. chuckrussell3 says:

    Brilliant. People never grasp that the unions are looking out for the best interest of the unions, not the workers that they are comprised of or the corporations that employ them

  2. Isn’t it great to have an in-house union expert. I love it. People need to understand the bomb that is coming from unfunded pension liabilities. The estimates are all over the place but, every one of them is over a trillion dollars. What exactly do these bosses and the politicians that are in their pocket think is going to happen to them when the taxpayer hears the bomb exploded?

  3. You’re abosulutely right Chuck. Hostess was a perfect example of that. The union felt their was more to be gained by taking a stand than by protecting 18,000 loyal union members. Anyone who believes they are protected because tehy are part of a union is fooling themselves.

  4. abaworlock says:

    Not a big fan of unions, they have gotten to powerful. However they do serve a important service to every one. None-union shops still compete some what on pay scale and benefits. Unions fight for employees rights and that is passed on to every one. It would seem that a government take over would be a very very bad thing for entire US workforce.


  1. […] Organized labor’s epiphany: elections have [negative] consequences ( […]

  2. […] Organized labor’s epiphany: elections have [negative] consequences ( […]

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