Malik Miah, San Francisco
Throughout the second half of the 20th century, the trade unions in the United States were regarded by working people as the preeminent vehicles for the defence of labour's interests because they won the best wages, health care and pension benefits for US workers. That's now all crumbling as the employers, backed by the federal government, chop away at these holy grails of labour.
The latest crisis for labour is in the airline industry. United Airlines, the world's second largest carrier, is on the verge of dumping its pension obligations onto the Pension Benefit Guaranty Corporation, a federal government agency that insures company pension plans for 44 million people. The PBGC is already hobbled by debt, having picked up the pieces of around 3200 failed pension plans in its 30-year life.
United seems intent on shedding some or all of its US$13 billion in pension obligations as a means of emerging from bankruptcy. With 63,000 employees and some 58,000 retirees and affected family members at United, such a move would be the PBGC's largest "distressed termination".
If UAL, United Airlines' parent company, does this, it is anticipated that all the other major "legacy" air carriers will do the same. This could hit the PBGC with a $31 billion bail-out bill.
All the unionists at United are fighting mad about these developments. The machinists' union (IAM) has filed a legal suit against United's top executives for failing to carry out their legal responsibilities. The mechanics union leaders in the Aircraft Mechanics Fraternal Association (AMFA) are planning informational pickets at the airports.
AMFA national director O.V. Delle-Femine stated in a July 29 letter to all members working at United Airlines: "The company's shameful, vicious act on our pensions shows us that mismanagement prevails and they have no innovative ideas. They can only attack the employees' wages and benefits. This is one reason why we must be proactive and delve into this and have meetings with investment experts that will give us new ideas and a nationwide movement to save our pensions."
The biggest problem the unions face is the changed environment from even five years ago. The "low-cost carriers" now dominate the ticket price structure in the domestic market. They have 25% of the market, and their share is expected to rise to nearly 50% in six years.
The major carriers (those with domestic and international markets) have obligations of pensions and other expenses the new airlines don't yet face, giving the newcomers a significant cost advantage.
The airline bosses see cutting wages, health-care costs and getting rid of defined-benefit plans as a quick solution to the profit squeeze. The move in general is toward define-contribution pensions and away from the lifetime annuities guaranteed under defined-benefit plans.
Defined-benefit plans typically provide each employee with a specific annual retirement benefit that is tied to the employee's "final average compensation" and number of years of service. Under defined-contribution plans, the employer simply contributes a specified percentage of the employee's salary to an individual investment account for the employee.
According to an article in the June 19 BusinessWeek magazine, no new defined-benefit plans such as those common at the "legacy" airlines (American, United, Delta, Northwest, Continental and US Airways) and at the major automakers (Ford, GM and Chrysler), have been started in a decade. The most profitable companies, including Microsoft and Southwest Airlines, don't offer defined-benefit plans.
The shift by corporations from promised pensions to more shaky "individual" pensions is being backed by the most conservative wings of the Republican and Democratic parties. Congress has acted to extend more financial manoeuvre room to the airline bosses without shoring up the weakened pensions. The winners are the top executives and big shareholders, not the rank-and-file employees. The only pressure on the politicians is the tens of thousands of voters receiving cheques from these "distressed terminated" pension plans.
That's why the taxpayers will end up having to bail out the PBGC and its obligations. They did so in the 1980s when the Savings and Loan industry collapsed.
The employees of the airlines will be hit twice — losing a chunk of their hard-earned pensions since the PBGC only guarantees a portion of their plans and paying a higher government debt to cover the shortfalls of the PBGC.
What should labour's strategy be? In the long run, the unions must build a national movement that guarantees all workers a pension that can't be terminated by bankrupt companies. The social security system was supposed to do that but it hasn't.
Such a movement would need to take up the three issues most dear to workers — living wages, health benefits and pensions.
No company or union is able to be an "island" in the current hostile anti-labour environment. At best, workers can hold the line for a bit, but the decline of pension protections can't be stopped short of a national campaign organised by democratic unions and backed by community groups.
This strategy means fighting the local battles as best we can while explaining the broader goals to defend pensions and other social benefits workers once took for granted at unionised work places.
At United Airlines, the AMFA seeks such a course with the other unions and employee groups. It is essential that representational disputes be subordinated to forging such united-front efforts. Otherwise, the employers and anti-labour forces will win.
[Malik Miah works for United Airlines and is an area representative for AMFA Local 9 in San Francisco and editor of the local's bi-monthly newsletter Way Points.]
From Â鶹´«Ã½ Weekly, August 25, 2004.
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