The Coastal Post - September, 1997

Labor On The Move


The Teamster strike against UPS highlighted some important labor issues most Americans don't understand. In our on-going series on unions, low-wage earners and the rich getting richer, we decided to give a historical perspective to current labor unrest around the country, whether it's UPS, GM or Whistlestop.

Let's begin with a true anecdote.

A man worked in the same steel mill back East for 44 years when he suddenly died. Even though he was a union member, the company controlled his pension plan. Because he died a year or two before his pension was due to kick in, his wife, a homemaker, and children were left with nothing. That was even though he was covered for 44 years.

The majority of pensions today, union plans especially, pass certain standards to be qualified under the ERISA Act. These pensions have a provision whereby employees become vested. This is similar to tenure for teachers. In other words, after two to five years, the widow would have received all that his pension had earned and benefits. These benefits are a matter of law. They're not granted because of UPS' or any other company's generosity.

Corruption and mismanagement of company-controlled pension plans were so bad the feds stepped in and passed the Employee Retirement Income Security Act of 1974. One safeguard of the Act insures that if any employee vested in a qualified pension plan is unable to work to retirement, they can't lose that part of the plan that has become vested. Upon death, beneficiaries receive benefits. If employees are laid off, the pension is held for them until retirement.

ERISA also requires full funding of these pension plans. Prior to the act, many companies declared bankruptcy after draining company pension plans. Since ERISA passed, the business community has tried to dilute the Act to avoid paying full benefits and pensions to employees.

A case in point is a course given by the California Chamber of Commerce during the recent "Greed Is Good" era. It taught employers how to use loopholes in the law to avoid or reduce payments to pension and benefit packages and not get caught. One of the promoters was Phil Quigley, the Chairman of the Board of Pacific Telesis.

Two recommended loopholes were the now familiar utilization of temporary workers and independent contractors, neither of whom receive benefits. The revision of the tax code in 1984 under Reagan only added to the tilt favoring business over employees. Many consider this effort by much of the business community to skirt the safeguards of the law one reason UPS and others have hired so many part-time employees. If the employee works only 20 hours a week, the company contributes half the pension fees of a full-time worker and pays part-time wages, even if that employee ends up working 40 to 60 hours.

Another provision of ERISA is that pensions cannot be transferred by the company to another company or taken away. One trick was to transfer pensions to a cheaper plan for the employer which was less beneficial to the employee. That's now illegal.

Another problem with company-controlled plans is that if a company controls the pension fund and goes bankrupt, their retired employees are usually out of luck. Plans controlled by unions and other qualified organizations are "moving pensions." With a moving pension, if an employee contributes to a qualified plan for 30 years but at five different companies, s/he still receives a pension equivalent to the 30 years of contributions.

Another thing: any company or union that controls the pension fund has full say over where and how those funds are invested and how net profits are distributed, to the company, union or back into the pension plan. That's how they've been able to build such large funds. These pension plans have a big impact on Wall Street. Is it any wonder business is trying to wrest control away from such groups as the teachers' unions, state employees and the Teamsters?

The Teamsters aren't the only ones striking. A series of strikes in the last year were called against General Motors by the United Auto Workers as contracts expired in the industry. Steel workers just reached an agreement after a 10-month strike. Nurses are striking for better care for patients. Pilots and others are doing the same thing.

Equador, Australia and France have been shaken by strikes demanding better conditions and more pay. A union in Germany gave support to the Teamsters. French workers are demanding restoration of benefits. Mexican workers are on the move. Even Generation X is getting involved. Retail clerks are organizing at Starbucks, Borders Books & Music and Noah's Bagels across the country. While these companies began as worker-friendly, when they went public, they began considering the stockholder over the employee. Is this the fate for Whole Foods?

Multi-national corporations better take a look at their bottom line and employee relations one more time. Workers of the world are uniting.

Next month: a look at the Tax Code of 1984 that set in motion the loss of employee benefits and wages in favor of employers.

:nd other issues and when elected, my voice will be their voice.

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