Boeing Saga Ends with 51% Favoring New Contract
As I argued last month, the Puget Sound area of Washington state was easily the best place, from a strictly economic point of view, for Boeing to build its new 777x jetliner. This was confirmed when, despite the rejection of its union contract offer by a 2:1 margin and opening an auction for a new facility, Boeing came back to the union with a second contract offer (h/t New York Times). Yesterday, by a 51-49 margin, workers voted to accept the contract.
The new contract ends the company’s pension plan in favor of a 401(k), although it does not “affect the pensions already accrued.” This was unchanged from the previous offer. However, the company did make concessions on the time to raise to the top of a pay grade (6 years instead of the originally proposed 16) and by adding a second bonus payment, of $5,000, in 2020.
The closeness of the vote shows how difficult a decision this was. In addition, there was a rift between the international office of the Machinists’ union, which all but openly supported the contract, and the local union, which quite openly opposed it. Though the workers had a good bargaining position, it’s hard to negotiate with a gun to your head, and the company had also shown its willingness to do something stupid (from an economic point of view) when it put a production line for 787 in South Carolina rather than Washington.
So, yet another company ends a true pension plan, contributing to the coming retirement crisis. Washington state gets to set another record for the largest incentive package in U.S. history, although it is surely a violation of World Trade Organization subsidy rules, as was Boeing’s 2003 package. And we see yet again the need to ban job piracy, which strengthens the kind of job blackmail we have seen in this case, like so many others.
Cross-posted at Middle Class Political Economist.
What sort of draconian legislation would be required to stop “job piracy?”
The problem is that a true pension plan to pay very much assumes a whole career with one employeer. Since most plans base the pension on the highest 3 out of the last 5 years of employement, times some percentage per year worked times the number of years. So if you job hop which is said to be the way the world is today, a traditional pension does not pay off. Secondly you have to spend at least 5 years to get any return on the pension (vesting). A traditional pension was also a form of golden handcuff to keep the more experienced from changing jobs after 15 years or so with the company.
So for todays careers a traditional pension assumes a traditional career which no longer exists.
Now one could add an option to the 401k that is essentially a deferred annunity, where one could buy so much a month of income at say 60, for a given contribution. Since the deferral would shorten as you age you would get less income the older you get per dollar.
@save, the usual suggestion has been for Congress to make a finding that job piracy affects interstate commerce (which is true: if you affect the location of production, you affect trade), then use that as the basis for regulation.
Nothing draconian about it.
In all the union elections with which I’ve been involved, the votes were tallied behind closed doors by the upper echelons of the organization.
If that happened with this election, then we’ve no idea about the actual outcome.
Don’t get me wrong – I’m pro-union. It simply must be kept in mind that a Union sometimes considers other issues besides the intent and interests of the rank-and-file members.
And then there is the $8.5 billion reward to Boeing from he state for being so benevolent. At least I have to assume that is why the state promised such a payout.
Talk about robbing the help. You get the help to pay for their own pay via the state taxes they pay.
And where are the conservatives on that? I mean, why should a state citizen not working at Boeing, pay for the Boeing employees?
First Caterpillar, now Boeing. What’s next? Walmart hiring Pinkerton detectives?
We are in this mess because dang few people even my age were taught about the labor wars. The wars that won the freedoms required for a true middle class.
Try hard to remember that by definition half of the population has below average IQ. That means that nearly 50% of that population scores below 100 IQ, i.e. they are idiots (in the scientific nomenclature). Teaching them about labor laws will not solve the problems. Labor laws went into effect because laborers fought hard for those rights. Those hard won fights and rights have been continuously eroded because the average worker has lost sight of his and her own best economic interest. Social morality issues rule the day.
What will change that? Only when those same workers are far worse off than they are now will they finally fight to gain back what they have given up in the past several decades. I’m not an optimist in this regard. The process takes too long and results from suffering. Any other suggestions?