Blue Ridge Paper offers a startlingly clear snapshot of what has happened to the labor movement. The union chief, in a recent issue of The Asheville Citizen-Times, said workers were promised profit sharing in exchange for wage freezes seven years ago when Champion sold the company to an investment firm and the workers. A few weeks ago the union agreed to a new contract that would nix the profit sharing — if a prospecitve new investor comes on board — but did include a pay raise.
The much-touted employee-owned company, one where the workers shared in the profits, suddenly was shown for what it truly was: a commodity for big investors to invest in, a place where employees must hang on for dear life to a good job that pays well. No promise of future benefits carries any guarantee. Period.
And so it goes for employees at thousands of manufacturers and corporations large and small across the country. Whether it’s General Motors or one of the major airlines, pension plans that guaranteed retirement income and health care are in jeopardy. Here are a few recent statistics about American workers:
• A 2005 report showed that half of the U.S. workforce have jobs that offer no retirement benefits whatsoever.
• 30 percent of the nation’s private sector workforce are no longer eligible for the kind of pension where responsibility for management rests with the company. Instead, these firms use tax-deferred 401(k) accounts. Make the wrong choices and you’re sunk.
• The Kaiser Family Foundation, a nonpartisan health research group in Menlo Park, Calif., reports that the number of big company employees (those with 200 or more workers) in line for retiree health benefits has plunged from 66 percent in 1988 to 36 in 2005.
A recent article in The New Yorker delved into some of corporate America’s woes by examining the “dependency ratio.” In a nutshell, the dependency ratio is the relationship between the number of people who aren’t of working age and the number who are. In 1962, G.M. had 464,000 U.S. workers and was paying benefits to 40,000 retirees and their spouses, a ratio of 1 to 11.6; last year, G.M. had 141,000 employees and paid benefits to 453,000 retires, a ratio of 3.2 to 1.
It’s relatively easy to see that there is simply no way G.M. can afford such an outlay. Its pensioners were forced to take cuts in what was promised. It’s hard to imagine it now, but companies like Microsoft and Google will one day find themselves in the same boat: a shrinking market share, a large number of retirees, and no way to fulfill its obligations to its employees.
Early labor leaders foresaw this problem. In the late 1940s labor organizers in the Detroit auto industry wanted pensions and health care benefits spread across the country, and they cheered when President Truman proposed national health insurance in 1947. That same year, Ford’s union voted down a pension plan because its leaders wanted retirement security for everyone in the country, not just those lucky enough to work at Ford. By spreading the cost of these benefits across the country — i.e., through the federal government — employees would still get benefits despite the rise and fall of private companies.
Alas, it was not to be. Corporate chieftans didn’t want workers to have so much power. And now, as many of our huge corporation stare at billions of dollars in pension and health-care obligations they can’t meet, U.S. workers are increasingly left to fend for themselves amid a heap of broken promises.
As these private companies restructure and re-organize to cope with these obligations, perhaps their leaders and our politicians will see the wisdom of government-supported pensions and health-care benefits. It’s not the answer to all of our economic challenges, but it could help corporations survive and workers retire knowing they weren’t lied to for all those years.