Securing Pensions

See this guy? He’s feeling pretty good because back in his day, non-union shops weren’t undercutting union rates.

Today, MCA-KC 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.

Smart changes means we get more competitive. When we compete, we generate more hours, and more hours means more long-term stability for our industry and our pensions.

The Union Difference

In 1960 this foreman didn’t have to worry about competition. Nearly every mechanical contracting job was a union job.

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.

Our Retirement Plan

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.

Unfunded Liability Risk

We didn’t have to worry about “unfunded liability” in 1960. Our biggest concern was what was for lunch.

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?

Government Protection

Believe it or not, these folks lived in a time when the phrase “government bailout” didn’t mean anything.

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.

MCA-KC will work with our federal representatives to ensure the strength of PBGC, but it is clear we can’t leave our future in the hands of the federal government.

We need to work together to get more competitive and generate more hours in order to safeguard our retirement plans.