RE: [Futurework] FW: United default a threat to all workers

[Cordell, Arthur: ECOM]

A colleague of mine used to avoid airlines that outsourced maintenance. -----Original Message----- From: Ed Weick [mailto:[EMAIL PROTECTED] Sent: Friday, June 10, 2005 1:54 PM To: Cordell, Arthur: ECOM; FUTUREWORK (E-mail) Subject: Re: [Futurework] FW: United default a threat to all workers Personally, I hate the thought of flying on an airline whose workers are disgruntled because of the concessions they've had to make on wages and benefits.  I'll avoid United, Northwest, Delta, Air Canada, etc., etc., etc.   Maybe I'll just hitch-hike.   Ed ----- Original Message ----- From: Cordell, Arthur: ECOM To: FUTUREWORK (E-mail) Sent: Friday, June 10, 2005 12:52 PM Subject: [Futurework] FW: United default a threat to all workers   Subject: United default a threat to all workers http://www.miami.com/mld/miamiherald/news/opinion/11701911.htm   Miami Herald     May 21, 2005   United default a threat to all workers   By Robert V. Callahan [EMAIL PROTECTED]   Last week's United Airlines pension default reveals serious trouble for all middle-class Americans with pensions. Most of us believe that pension plans are sacrosanct. Untouchable. Safe and secure. Protected by a beneficent government and tight laws. The United case shows otherwise. United used the law to dump more than $9 billion in pension liabilities on the taxpayers. No one in government stopped them. Here's how it happened.   The Railway Labor Act controls airline negotiations. It mandates that all negotiations be done in good faith. Then contracts are agreed on, companies must abide by them and unions must maintain peace. But United Airlines, despite three massive concessionary contracts with significant give-backs, simply did not make their required pension contributions. Just didn't do it.   Retirees with nothing   One would think there would be a safeguard. There's supposed to be. It's called ERISA, for the Employee Retirement Income Security Act. In the 1970s, companies put worthless stock, undervalued real estate and IOU's into pension funds. No one knew until retirees, counting on pensions, wound up with nothing. ERISA was supposed to prevent this kind of abuse.   Turns out, however, that there was an ''out'' that allowed companies to continue evasive practices. The loophole this time is with the IRS. A company can legally avoid making mandated pension contributions -- with no penalty. In fact, any company can do this up to three times, again with no penalty. When contributions are not made the pension formulas simply freeze. Nothing happens to the company. If the employees in the pension plan are unionized, there is nothing the union can do.   Bad faith bargaining   This is how United ran up a $9.3 billion pension deficit and triggered the largest pension default in U.S. history.   • First, it bargained in bad faith and used the Railway Labor Act to protect itself. • Then, it used the IRS to avoid pension contributions. • Finally, it turned to the bankruptcy courts to basically wipe out any liability.   In bankruptcy court, fiscal protective procedures supersede all other obligations. So nothing was in place to protect the 120,000 United employee pensions. The same employees who, despite sweeping wage reductions, kept United at the top of the airline industry were simply robbed. And there was nothing they could do.   This was all done strategically, with forethought. United's actions exhibit a thorough yet malicious understanding of all the controlling laws and regulations. United's team knew that they could simply avoid pension contributions and then use the system, the law, the courts to transfer their mess and their obligation to American taxpayers. The Railway Labor Act kept the work force in place, working. The IRS code allowed United to default on pension payments with no penalties. ERISA was insufficiently protective to stop the strategy. Then the bankruptcy courts allowed United to just walk away from all its promises.   It's time to wake up.   Lax laws and loopholes   The retirement threat is not just from arcane actuarial computations on Social Security 40 years in the future. The threat is now, from lax laws and elected officials who refuse to close loopholes. This week's disaster was not just limited to United Airlines and its unfortunate employees. It was a shot across the bow to every person in the United States who plans on ever retiring.   It is a challenge to lawmakers on both sides of the political spectrum. Whether one's issue is social agenda or business practice, this United Airlines debacle is the largest, scariest, most immoral and threatening public act to rumble through our society in years.   Robert V. Callahan is director of development of Nova Southeastern University's Farquhar College of Arts and Sciences. This e-mail may be privileged and/or confidential, and the sender does not waive any related rights and obligations. Any distribution, use or copying of this e-mail or the information it contains by other than an intended recipient is unauthorized. If you received this e-mail in error, please advise me (by return e-mail or otherwise) immediately. Ce courriel est confidentiel et protégé. L'expéditeur ne renonce pas aux droits et obligations qui s'y rapportent. Toute diffusion, utilisation ou copie de ce message ou des renseignements qu'il contient par une personne autre que le (les) destinataire(s) désigné(s) est interdite. Si vous recevez ce courriel par erreur, veuillez m'en aviser immédiatement, par retour de courriel ou par un autre moyen. ) _______________________________________________ Futurework mailing list Futurework@fes.uwaterloo.ca http://fes.uwaterloo.ca/mailman/listinfo/futurework

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