Monday, May 16, 2005

Let them eat cake

Corporate America Pulling Back Pension Safety Net - Yahoo! News

Last week's court decision permitting United Airlines' parent to dump its pensions on the federal government is part of a sweeping trend that could make the nation's employers more competitive, but at the cost of leaving workers and their families bearing big new risks.

In a nutshell, a broadening swath of corporate America is retreating from the safety-net business and is shifting responsibility to employees.

Newsflash -- while a big portion of the net effect of UAL's pension punt is to shaft its employees by changing the employment contract post facto, the portion of their pensions that has not disappeared is being picked up by the Pension Benefit Guaranty Corp., a government agency. Granted, it is not directly taxpayer funded, but the money has to come from somewhere, and where it comes from premiums paid by every other company with a pension plan. You know, kinda like .... um... er... Social Security!

The decision by a Chicago bankruptcy court focused on the problems of a company strapped with $6.6 billion in pension costs. But the court's solution is one that even healthy firms are seeking to copy in one fashion or another, shifting benefit costs away from themselves and making fewer promises to their employees.

"People like to think of employers as social welfare organizations, but they're not," said Sylvester Scheiber, a partner with the financial consulting firm of Watson-Wyatt and a member of President Bush's 2001 Social Security Commission. "In an increasingly competitive world, they don't have room to do much else but focus on the competition."

Isn't it fascinating the way the same kinds of folks who push "right to work" labor laws because they believe in the sanctity of the employment contract and the freedom to enter into one no matter what the terms are so quick to applaud the breaking of contracts when the net effect is to screw the powerless?



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