The Battle for Retirement Security: Why the Boeing Strike Matters
The Struggle for Pension Plans
- Loss of traditional pension plans for union members in 2014 sparked the ongoing strike at Boeing.
- Unions demand the return of pension plans lost in past concession deals.
- 33,000 members of the International Association of Machinists went on strike after rejecting a labor deal that did not restore the traditional pension plan.
The Decline of Pension Plans
- Traditional pension plans have become rare in the modern American workplace.
- Employers shift risks associated with retirement from their bottom lines to employees.
- Unions like the UAW have sought to restore lost pension plans, with limited success.
Pension Plans vs. 401(k)’s
- Defined benefit plans offer fixed monthly payments until death.
- Individual retirement accounts like 401(k) plans involve contributions from employers and employees.
- Defined benefit plans cover only 8% of workers in the US today, down from 39% in 1980.
Why Traditional Pensions are Rare
- Employers prefer 401(k) plans to shift risks to workers.
- 401(k) plans place investment risks on individuals.
- Traditional pension plans offer benefits even if the company goes bankrupt.
The IBM Example
- IBM reopened a closed pension plan due to market growth, not labor negotiations.
- The move to reopen the plan was unilateral by IBM, not part of a labor deal.
- The reopening of pension plans is rare and unlikely in the current labor climate.
Analysis:
The ongoing Boeing strike highlights the shift in retirement security from traditional pension plans to 401(k) accounts, impacting the financial futures of workers across America. The battle between labor and management reflects broader trends in the workforce, where employees face increased investment risks and uncertainty in retirement planning.
The decline of defined benefit plans and the rise of individual retirement accounts signify a shift in employer practices, aiming to transfer retirement risks to workers. While some companies, like IBM, have reopened closed pension plans due to market growth, the likelihood of restoring traditional pension plans, as demanded by unions, remains low.
The outcome of the Boeing strike will not only affect the 33,000 union members involved but also set a precedent for future labor negotiations and retirement security in the American workforce. As the fight for pension plans continues, the impact of these decisions reverberates beyond individual workers, shaping the landscape of retirement benefits for generations to come.