May 21,2010:NWLP
5/18/10
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MEETING NOTICES
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Volume 111
Number 10
May 21, 2010
Portland, Oregon
Union pension funds face slow-motion crisis
By DON McINTOSH
Associate Editor
Two years after a severe Wall Street
downturn, working people continue to
suffer not just joblessness, but reduced
chances for a secure retirement. About
10.4 million American workers are
counting on retirement benefits from
multiemployer union pension trusts, but
the value of those trusts’ investment as-
sets, on average, fell 22 percent in 2008.
The traditional “defined benefit”
pension, a hallmark of union employ-
ment, is an employer promise of a fixed
monthly sum for workers when they re-
tire. It’s paid for with hourly or monthly
contributions that are invested and held
long-term. Union or nonunion employ-
ers can sponsor single-employer pen-
sions, but multiemployer pensions are
uniquely union. And nearly half of mul-
tiemployer pensions are in trouble.
“It’s really clear that our government
officials aren’t aware of the magnitude
of the problem,” says Joe Kear, Ma-
chinists District Lodge 24 business rep-
resentative, and a trustee on the multi-
state Automotive Machinists Pension
Trust.
Of the 1,500 multiemployer pension
trusts in the United States, about 45 per-
cent have less than 80 percent of the as-
sets they need to pay future benefits,
and the hardest-hit, about 30 percent of
the total, face funding deficiency or in-
solvency within seven years. The 80
percent threshold triggers a legal re-
quirement: Trusts have to reduce em-
ployee benefits, and increase employer
contributions. The intent of that re-
quirement is to avoid insolvency and a
bailout from the federal government’s
Pension Benefit Guaranty Corporation
(PBGC). But the required catch-up con-
tributions may be costly enough to put
some employers out of business, in-
creasing the burden on those that re-
main.
The Automotive Machinists Pension
Trust is a good example. The value of
its investment assets fell from $1 billion
to $650 million in the downturn. In
terms of “actuarial value” the trust went
from 95 percent funded to 75.9 percent.
And like many other union trusts, it has
a particular vulnerability: It’s a “ma-
ture” plan, heavy with retirees. About
5,000 retirees are collecting benefits
and 3,000 vested former workers are
owed future benefits, while just 2,000
“active” workers have employers con-
tributing to the trust on their behalf. For
the trust to make up for that $350 mil-
lion investment loss tomorrow would
amount to about $175,000 per active
worker. Federal law requires the trust to
adopt a 10-year plan to improve fund-
ing. So its labor and management
trustees resolved to trim benefits and
ramp up employer contributions start-
ing July 1, 2009.
Two years ago, an assembly worker
at Daimler Trucks North America’s
Portland truck plant could retire at age
55 after 30 years on the job — and col-
lect 71.6 percent of the full retirement
benefit from the Automotive Machinists
Pension Trust. Today, a worker in the
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Oregon’s Worker Freedom
Act survives court challenge
Oregon’s Worker Freedom Act has
survived its first court challenge. In a
May 6 ruling, U.S. District Court Judge
Michael Mosman dismissed a lawsuit
by two business groups that wanted the
union-authored state law struck down.
The Worker Freedom Act, which
took effect, Jan. 1, forbids Oregon em-
ployers from firing or otherwise disci-
plining workers for refusing to attend
or participate in workplace anti-union
meetings, or meetings held to express
an employer’s religious or political
views if those aren’t work-related. If an
employer holds such a mandatory
meeting and disciplines a non-comply-
ing worker, the worker can sue and win
reinstatement, triple damages and at-
torneys fees. Basically, employers can
hold the meetings; they just can’t force
workers to attend.
But Associated Oregon Industries
(AOI) and the U.S. Chamber of Com-
merce argued in their lawsuit that the
Worker Freedom Act would violate
employers’ freedom of speech, and
would run afoul of the legal precedent
that the National Labor Relations Act, a
federal law, pre-empts states laws that
cover the same ground.
Mosman didn’t rule on those ques-
tions. Instead, he dismissed the suit be-
cause the business groups failed to
show that their members were harmed
by the defendants they named in the
suit — Oregon Labor Commissioner
Brad Avakian and Portland-headquar-
tered Laborers Local 296.
AOI and the Chamber argued that
their business members, including Sil-
verton-based cooked meat processor
BrucePac, suffered harm because they
had to forego mandatory anti-union
meetings — for fear that Avakian
would enforce the law against them
and that Local 296 would encourage
disciplined workers to sue.
But Avakian declared that he had no
authority or intention to enforce the
law, which spells out that it’s meant to
be enforced by private lawsuit. And,
Mosman wrote, “until an employer
holds a mandatory meeting, and then
… [disciplines] an employee who re-
fuses to attend, the Laborers Union
cannot ‘encourage’ an employee to
sue.”
The Worker Freedom Act, the first
state law of its kind, continues to be in
force.
same situation would get 35 percent of
the full benefit.
The trust is now levying a 10 percent
employer pension surcharge, an amount
that will increase to 75 percent in the
next three years. At UPS, that will mean
paying an extra $11,630 a year for each
union-represented truck mechanic. The
money would fill a hole created by the
financial market meltdown, not add to
worker benefits.
Oftentimes, that extra “employer”
contribution comes directly out of
workers’ wages. That’s particularly the
case in building and construction trades
unions, which account for about half of
all multiemployer pension trusts. The
multiemployer pension trust model
works well in the construction industry
because it has many small employers
and skilled workers who hire out to
multiple employers over the course of a
career. In many unions, the custom is to
Building trades
back bid for
private casino
Special pickup
Bobbi Harrison, a member of the National Association of Letter Carriers
Branch 82, picks up a bag of groceries from a postal customer in Ladd’s
Addition May 8, part of the Stamp Out Hunger national food drive sponsored
by Letter Carriers and the U.S. Postal Service. More than 4,200 urban and
rural letter carriers throughout Oregon and Clark County, Wash., joined in
collecting 1,866,683 pounds of food this year. “That’s a 16.25 increase over
last year,” said Oregon Food Bank Public Relations Manager Jean Kemp-
Ware. “It’s exciting coming around the corner and seeing all the yellow bags
by the mailbox,” said Harrison, who works out of the East Portland Post
Office. “We’ve got a great community. It’s really cool.” Nationwide, 19,724,393
pounds of food had been gathered at press time, pushing total donations
collected since the drive began 18 years ago to more than one billion pounds.
A proposed private casino in east
Multnomah County has won support of
the Columbia Pacific Building and
Construction Trades Council.
Lake Oswego financial consultant
Bruce Studer and lawyer Matt Rossman
on May 7 announced formation of a fi-
nancial partnership to fund construction
of a casino and entertainment center at
the defunct Multnomah Kennel Club in
Wood Village east of Portland.
Plans are in the works to build the
complex under an all-union project la-
bor agreement with CPBCTC.
In order to proceed, however, the de-
velopers must secure two ballot meas-
ures. The men have formed a political
action committee called the Good for
Oregon Committee.
One measure is a constitutional
amendment creating an exception to al-
low one private casino to operate in
Oregon. The second measure details
how much will be spent initially to
build the casino ($250 million) and
where some of the profits will go. The
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