EFCA – More To Think About

Unless you’ve been living under a rock, by now you have read or heard about “Card Check” or the Employee Free Choice Act (EFCA).  This proposed legislation is not friendly to business, regardless of what form it will take in the House or the Senate.

An issue which is driving the unions to support EFCA, and is not spoken about very much, is under-funded union pension plans.  One of the major problems for the industry’s union employers is that prior to Wall Street’s meltdown, the pension plans did not have enough funds to cover future retirement benefits — by significant dollars.  Since the amount of dollars necessary to replenish the coffers – especially now that the market has destroyed the value of these funds – is limited, more the reason unions need to find ways to recruit.  With fewer workers joining unions over the years, and printing companies disappearing at a fast-clip, less and less employees are supporting a growing number of retirees.  More members translates into more contributions, which can help narrow the unfunded liability – over the short term. 

One has to be concerned that with Senator Arlen Specter (D., PA) jumping ship that key players may be more willing to broker a deal, that would do away with the proposed “card-check” portion of the legislation,  but still leave binding arbitration as part of the bill – and that my friends, is just as nasty as non-private ballot. 

If a company was forced into binding arbitration, there is a good probability it will have to offer employees a pension plan – in one of the union’s extremely under-funded plans.  Because the employer is joining a multi-employer trust, under federal law he will have to fund his employees’ portions, as well as the un-funded portion of the existing retirees in the plan.  Not a pretty picture.

I’m not going to get into the arcane actuarial and funding issues, but here are some thoughts from Bob Lindgren, president of PIA Southern California and someone who REALLY understands pension plan funding issues.  “There’s a better reason why it would be a suicidal act for an employer to agree to contribute to one of the union plans–employer withdrawal liability (EWL).  Since EWL is measured based upon (as a general rule) the ratio between the withdrawing employer’s contributions and the contributions of all of the participating employers during the three year measurement period, the employer might find that if he negotiated his way out of the plan, de-certified the union, or went out of business, he would likely owe an enormous sum of money.  For instance, at the present time, plants that are closing with 100+ employees in the GCC/IBT National Pension Plan (one of the industry’s union pension plans] have seven figure liabilities.”

Thus, another reason why it’s important for our industry to stand up and say to Congress — EFCA in ANY form is not acceptable.  Visit http://www.piamidam.org and write to Congress. Make your voice heard.

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