So Boeing is dropping their pension plans and cutting salaries.
This would be a “just another day in corporate America” story, except that they’re not even pretending they’re doing it to “save the company”. They didn’t bother to shift all the pensions to a subsidiary company that they could then load up with the first company’s debt to “put it in the brink of bankruptcy” in order to dump the pensions.
As a society, we’ve gotten used to that practice. Remember when the appallingly named Patriot Coal did it last year? It really wasn’t even news because robbing workers by playing accounting tricks is just how we do business in America now.
Boeing is taking a new approach to robbing their employees. They’re just doing it without the pretense and the hassles that come with the shell game we’ve gotten used to. From the LA Times article;
For just as the company was wringing concessions from its workers, its board of directors approved a 50% increase in the company’s stock dividend and a $10-billion stock buyback that will richly reward investors and executives who get paid in Boeing shares.
Boeing’s excuse? They’re not the first company to dump pensions, so they’re just “following the market”. Well that’s true. Again from the LA Times story;
In 1980, 84% of American workers at companies with 100 or more employees received lifetime pensions from their companies, and 70% got health insurance fully paid for by their employers. Today, fewer than 30% have lifetime pensions and only 18% have fully employer-paid health insurance.
Now remember, a pension is not a benefit on top of an employees salary. It’s deferred compensation. In other words, an employee agrees to a lower take home wage, in order to defer some of their total compensation into a retirement plan. I don’t have any experience in negotiating union contracts, but I do have a few colleagues that come from that world. When I negotiate salary with a candidate, I’m negotiating their annual salary and their annual bonus. When negotiations happen in a union environment, the whole package is negotiated. In other words, a negotiated salary of 80k for an employee encompasses everything; take home pay, pension contributions and health insurance costs. The union determines how that 80k is allocated. So that employee (for example) will take home a salary of 50k per year. 20k will go into health insurance (present and future), and 10k is diverted into their pension. So when a company (or the government) takes away someone’s negotiated pension, they’re retroactively cutting their salary for every year that employee has already worked.
Think about that next time you hear about a state, county, or corporation dumping their employee pensions. Would that work for you? Would it be okay for you, if your employer could retroactively take money out of your bank account to cut your pay for work you’ve already done? In my opinion, it’s never acceptable to go after pensions as long as there’s a single nickle left anywhere else. Assets should be liquidated, executives should retroactively pay back their salaries (since the fate of the company lies squarely in their hands), and a dozen other steps should be taken before fucking with an employees pension. But that’s just me, blindly protecting those fat cat airplane mechanics (and their kids) again!
Boeing has been fucking with its union workers for years despite the fact that in the past 10 years, they’ve reaped $35 billion dollars in profits and not paid a single dime in taxes. In 2011, 38% of Boeing’s revenue came from government contracts. In 2011, Boeing opened a plant in South Carolina, a “right to work” state. In case you’re not aware, “right to work” means “no rights to organize and negotiate”. Boeing pays its South Carolina plant workers 50% of what those same plant workers get paid in Washington state.
Before you go all “free market” libertarian lunatic on me, let’s unpack what this means for you. Does earning 50% less make it more likely, or less likely that that line worker can send his kids to college? Does earning 50% less make it more likely, or less likely that that line worker can absorb a sharp decline in the housing market? Does earning 50% less make it more likely, or less likely that that line worker can survive a layoff and avoid having to turn to public assistance?
Let’s unpack how well this has turned out for Boeing. The South Carolina plant is where the 787s are being built. That plant is running far behind its production goals, and is less productive than the Washington plant. The stunning part is that Boeing knew this would happen, but they calculated that long term gain of busting the unions in Washington was worth the short term (wrong again, Bob) losses of moving to a less skilled state. Part of what unions do, is constantly train people. The costs of that training are baked into those union contracts. Employees without training are less productive cause they don’t know what the fuck they’re doing. On top of the dramatically lower productivity rates, the South Carolina 787 has a tendency to go up in fucking flames.
So well played Boeing, well played.
I’m sure this bold new move of simply telling us they’re greedy by not even trying to make a case for fucking over their employees will turn out equally well for them. Cause it’s not like there’s anger brewing in America over increasingly obvious income inequality. Keep doing what you’re doing, corporate America. I’m sure there won’t even be any consequences for turning this country into a giant pyramid scheme, where only a few people at the top walk away with all of the wealth. Cause we’ve never seen civilizations and countries fall under these circumstances.
