Talks between the Newspaper Guild of New York and the New York Times have been heated. In late March, the union forced the paper to drop its proposal to extend the workweek at the Times to 40 hours​—​any work over 35 hours and the paper has to pay overtime. The Times’s management bitterly noted that the shorter workweek costs real money and that “eight-hour days are the norm .  .  . in much of the world outside The Times.”

Following on the heels of this victory, the guild set its sights on another management proposal: transitioning workers out of a traditional pension plan and into a defined contribution plan, such as a 401(k). Again, this is now the norm in much of the world outside the Times, but the union is having none of it. On April 18, New York Times guild members began circulating a YouTube video featuring some of the paper’s most senior staff excoriating Times publisher Arthur O. Sulzberger Jr. and “corporate management.” The pension move is an affront because “we’ve already been investing in helping save the paper,” said Times columnist Jim Dwyer.

If the guild has been helping the paper out of its dire financial straits, their pension plan doesn’t reflect that. According to the paper’s last annual report, the company pension plans are $522 million underfunded and have enough money to cover only 77 percent of the plans’ liabilities. The federal government considers pension funds endangered if they are less than 80 percent funded, and 65 percent funding is the threshold below which the government declares a pension plan to be in “critical status.” That’s the point at which a fund is likely to go into an accounting tailspin and never be able to cover its obligations.

If the veteran journalists at the Times weren’t so busy trying to protect their generous benefits, they might realize there’s a story here. Union pension funds​—​particularly multi-employer plans​—​are on the verge of collapse across the country.

This problem has been building for a while, largely as a result of an aging unionized workforce. A Government Accountability Office report found that since 1998 more people have been collecting benefits from multi-employer plans than paying into them.

As bad as this sounds, new rules from the Financial Accounting Standards Board (FASB) requiring companies to disclose their pension liabilities have revealed the problems to be much worse than previously estimated.

Analysts at Credit Suisse crunched the numbers on 1,354 of the country’s 1,459 multi-employer pension plans and concluded they are collectively $369 billion short of the money needed to cover their liabilities and are only 52 percent funded. That’s more than double the $160 billion deficit previously estimated by FASB. Credit Suisse arrived at its figure by measuring the actual assets and obligations, as opposed to the plans’ “actuarial value,” an estimate that allows companies to discount their pension liabilities based on expectations of future returns that have turned out to be unrealistically optimistic.

“With multi-employer plans in bad shape, companies could get hit from a number of angles including increased contributions, difficult labor negotiations, higher withdrawal liabilities, and [mergers and acquisitions] could be impacted as acquirers have to price in the underfunding. The new insights may even change investor and rating agency opinions of certain companies,” according to Credit Suisse’s report, “Crawling Out of the Shadows: Shining a Light on Multi-employer Pension Plans.”

In other words, because of the new transparency requirements, the stock of unionized companies could take a big hit. What’s more, transparency about union pension liabilities could end up depressing entire industries. That’s because union pension plans are interconnected. If pension plans start failing in heavily unionized sectors such as construction, transportation, and supermarkets, it could have an ugly domino effect.

One of the reasons 401(k)s and defined contribution retirement plans began supplanting traditional defined benefit pension plans in the 1970s is that they had a big advantage for workers-​—​portability. Workers could quit their jobs and take their retirement plans with them. Multi-employer plans were Congress’s attempt to offer union members portability without sacrificing the advantages of being in a defined benefit plan. Unions can use collective bargaining to force companies to pool their pension plans. Workers can then move between companies—say from Ford to GM—with their pensions intact. Hence the term “multi-employer pension plans.”

The big catch is that multi-employer pension plans operate under “last man standing” accounting rules. If five unionized companies are in a multi-employer plan and four of them go out of business, the fifth company is on the hook to pay the pensions of the employees from the four other companies. For this reason, UPS stunned observers when it paid $6 billion​—​40 percent more than analysts had pegged its liabilities​—​to buy its way out of its multi-employer plan, rather than run the risk of being on the hook for the entire Teamsters union pension.

David Zion, one of the authors of the Credit Suisse report, is somewhat sanguine about the eye-popping numbers, noting that analysts on Wall Street have been anticipating this. “It’s been out there. I would expect that people that followed [industries such as] transportation and supermarkets knew that it was a risk. But what they’re able to do now is to start putting some numbers around it,” he says.

Still, Zion notes that there’s significant potential for this new information to impact public perception and markets more broadly. “To the extent that it shines a light on a claim that wasn’t really well factored in previously, that could have a negative impact on some stock prices.”

Brett McMahon, a longtime union critic and vice president at Miller & Long Construction, is much more blunt about the effects of multi-employer pension transparency: “This puts a concrete price on unionization. .  .  . If it doesn’t affect the public perception, it should.”

The sizable price tag also won’t help reverse the decline in private sector unions. Employers will fight harder than ever to keep workers from forming a new union​—​which can then force management into joining a multi-employer plan that may already be well on its way to failing.

The political ramifications of this are not trivial. In 2010, when Democrats still had control of Congress, unions tried to push Democrats, who received $400 million in campaign cash from organized labor in 2008, to pass something called the “Create Jobs and Save Benefits Act.” The actual text of the legislation would have made the massive multi-employer pension liabilities “obligations of the United States.” A $369 billion pension bailout that would only benefit 7 percent of the workforce wasn’t popular enough to pass then, and it’s definitely off the table with a GOP majority in the House.

However, this doesn’t mean the problem is going away. Multi-employer transparency is likely to accelerate the demise of union pension plans. If nothing else, this will swamp the Pension Benefit Guaranty Corporation (PBGC), the taxpayer-funded backstop for failed pension plans. As of 2010, the PBGC had a total of $102.5 billion in obligations and $79.5 billion in assets, and it has been steadily accruing new liabilities. Further, the PBGC has a maximum annual multi-employer plan benefit of $12,870 per person. That’s not much to retire on, and given the outsize political influence of unions, there will be tremendous pressure on Congress to do something more for the victims of failed union pension plans.

Aside from alerting investors and employers, the perilous state of multi-employer pension plans should also be a wake-up call to Congress. The failure of many of these pensions is a matter of when and not if. It would be advantageous for Congress to have a plan in place to address the failure of union pensions before political pressures dictate they concoct one in a hurry. By the time they read about it in the New York Times, it will probably be too late.

Mark Hemingway is a senior writer at The Weekly Standard.

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