Union Leader Says: Tell Young Workers the Truth
by The Electrical Worker, Thu Oct 08, 2009 at 04:11:36 AM EDT
A recent report issued by the AFL-CIO revealed the scope of the economic crisis facing young people: rising unemployment and anxiety about their futures, inability to buy their own homes or even move out of their parents' houses and lack of basic health care and retirement security.
(T)he attitude of many employers. Today's young people are discouraged from working together to achieve a higher standard of living. They are told not to expect "outdated" concepts like decent health insurance or a pension plan much beyond an inadequate 401(k) account.
Responding to false comments made to the Pittsburgh Post-Gazette by the head of the Associated Builders and Contractors - an alliance of anti-union contractors - about the IBEW's pension plans, Hill defends the union's commitment to provide its members with guaranteed retirement security, a rare item in the American workplace these days.
Our union's pensions are ... defined-benefits plans where pooled funds provide a predictable level of payments, as opposed to 401(k) plans where employees assume all the risk and which have been the vehicles of so many dashed retirement hopes over the past two years.
Writing soon after the Enron debacle wiped out the 401(k) accounts of hundreds of employees, American Prospect Editor Robert Kuttner wrote:
As recently as 1980, one American worker in two had "defined benefit" plans. All during your working life, the company built up a pension account on your behalf. At retirement, your pension, based on your pre-retirement income and years of service, was guaranteed as long as you lived ... No longer. Only one employee in four now has such coverage, mostly in old line companies and unionized ones, and their share of the work force is dwindling.
The problem with the alternative, the 401(k), according to Kuttner:
Most 401(k) plans do not accumulate enough to live comfortably on. Compared to traditional plans, they are a bad deal (except for the company). (New York University economist Edward N.) Wolff found that in 1989, 29.9 percent of retired Americans had to live on less than half of their pre-retirement income. But by 1998 -- again, after a record stock market boom -- that percent of stressed retirees had risen to 42.5 percent. The typical (median) retirement wealth held by persons in the pre- retirement ages of 47 to 64 also declined, by 11 percent.
For workers under 35 who have been scarred by the experience of the "crash of 2008" and are now looking for jobs that can provide them with long-term economic security, labor's commitment to defined-benefit plans might make a lot of sense, particularly to many ABC employees who have to rely on shaky 401(k)s for their own retirement.
Tags: 401(k), ABC, AFL-CIO, anti-Union, Building Trades, defined-benefit plan, Edwin D. Hill, IBEW, International Brotherhood of Electrical Workers, labor movement, Pensions, Pittsburgh, Retirement Security, young workers (all tags)