The Mechanical Contractors Association of Kansas City is dedicated to competing for every single mechanical contracting job in the Kansas City market.
One of our biggest challenges faced when competing with a non-union shop is the cost that’s associated with the unfunded liability in our pensions.
We have great pension and benefit programs, but they add to our costs and create uncertainty when contractors are thinking about investment.
Imagine if you had a mortgage on your house, but the mortgage increased every time a neighbor went bankrupt. That’s what happens with our pensions. If one union mechanical contractor goes out of business, the amount owed to employees from that contractor is spread to every remaining union contactor.
That makes investment in new technologies and areas of growth a challenge.
MCAKC contractors are committed to working with our union teammates to solve this challenge. It’s going to take growing, getting more jobs, and more people working to solve it. It’s going to take working together to invest our current assets wisely to keep our promises. And, it’s going to take ongoing conversations about the future and what quality retirement planning looks like as our workforce evolves.
The sections below outline what you need to know about our pensions as we get ready to compete for every project.
Today, MCAKC contractors offer the best wage and benefits packages in the industry, but the expense makes it hard to compete with non-union contractors.
In fact, Local 8 recently had to use a portion of its planned wage package increase to strengthen its pension and health and welfare benefits.
We can’t just cut our way out of this problem. We have a shared responsibility to make smart changes. That requires us to get competitive. When we compete, we generate more hours, and more hours means leads to long-term stability for our industry and our pensions.
That was then. Now, despite the fact that a journeyman in a union plumbing or pipefitting shop makes roughly the same hourly wage as a journeyman in a non-union shop, non-union contractors are still beating us for jobs. That’s because wages don’t tell the full story.
The union health and retirement benefits package adds more than $19 per hour for each journeyman on top of his wages. So while we enjoy first-rate benefits, they also create a competitive disadvantage.
Fifty years ago, this guy could have gone his entire career without knowing much about his pension plan, but today we need to be smarter. We have a defined benefit, multi-employer plan.
It’s a retirement program that’s supported by contributions from more than one employer and is managed by a joint board of trustees from labor and management. It provides a set amount of income upon retirement.
This kind of plan assumes that more people are paying into it than taking money out. Unfortunately, that’s not the case today.
The amount of money that’s owed into the system to ensure current workers receive their benefits is the “unfunded liability,” and it’s one of the biggest challenges facing union mechanical contractors right now.
Today, we all have to be concerned about the risks. If a contractor goes out of business, for example, its unfunded liability is passed along to the remaining contractors.
That would be disastrous. If fewer contractors have to absorb more costs, union pricing goes higher and we become less competitive. That will mean fewer projects, fewer jobs, and fewer hours.
The only way to ensure that the defined pension is there for future retirees is for everyone – contractors, union leaders, and union workers – to share the responsibility for making sensible changes that ensure the long-term health of union mechanical contracting. How do we know if the pension is healthy?
Now it seems people are getting bailouts left and right. Unfortunately, the Pension Benefit Guaranty Corporation (PBGC), the government-run insurance program that underwrites our pensions, doesn’t have deep enough pockets to bail us out.
The PBGC has been under incredible strain for the past decade. The global economic meltdown and major payouts to airlines and automakers have left it strapped.
MCAKC continues to work with federal representatives to ensure the strength of PBGC.