Allen Roberts Quoted in “Boeing Workers’ Deal Rejection Banks on Longshot Pension Return”

Allen B. Roberts, Member of the Firm in the Employment, Labor & Workforce Management practice, was quoted in the Bloomberg Law Daily Labor Report, in “Boeing Workers’ Deal Rejection Banks on Longshot Pension Return,” by Austin R. Ramsey, Diego Areas Munhoz, and Parker Purifoy.

Following is an excerpt:

Boeing Co. workers are doubling down on reviving their legacy pensions, rejecting a labor deal with generous pay packages even as similar union efforts to restore those retirement benefits have failed.

Two rounds of negotiations with the International Association of Machinists and Aerospace Workers to end a five-week strike have resulted only in offers to boost worker 401(k)s, signaling restoration of pensions axed a decade ago may be more of a bargaining chip than a viable request.

But members of the International Association of Machinists and Aerospace Workers appear to be holding out, rejecting on Wednesday a proposed four-year agreement that would have guaranteed 35% wage increases and enhanced 401(k) plan benefit matches by setting them well above the national average at 8%.

Unions are finding success making pensions a fixture of high-stakes labor negotiations, even though the economics of guaranteeing income for retirees is a nonstarter for most 21st century businesses. They are using a post-Covid financial revival to cash in on the debts they think they’re owed for giving up pensions when times were tough, but they run the risk of overselling that promise to workers, observers say. …

The United Auto Workers union held out for six weeks against Detroit’s Big Three last year in part due to a long-shot bid to bring back pensions for younger members, ultimately relenting to accept instead historic gains in pay and the elimination of wage tiers.

Mondelez International Inc.-owned Nabisco workers in five states settled in 2021 for compounding wage hikes, 401(k) plan increases, and signing bonuses after the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union promised to reinstate pensions the company froze in 2018. …

Union-brokered multiemployer pensions endured as long as they could, but even they began freezing plans to new participants about 10 years ago, as labor unions faced the impossible choice of preserving their pensions or members’ jobs.

In their 2014 collective bargaining agreement, Boeing ended workers’ pensions and guaranteed them marginal wage increases over the next 10 years. …

‘Ship Has Sailed’

A schism may now be opening between workers and their union leaders left trying to strike a careful balance between how they communicate with their members and how they negotiate with management. …

The UAW and BCTGM agreements suggest that union leadership understands the economic reality—that pensions are too costly and uncertain for publicly traded companies to absorb again, said Allen B. Roberts, an employment litigation member at Epstein Becker & Green PC.

After 64% of his members voted down the Boeing proposal this week, IAM District 751 president Jon Holden said he wanted to hear what Boeing would offer instead.

“The loss of the pension is still right at the heart of this” for many union members, Holden said. “We’re going to put all cards on the table” to see what Boeing can offer in lieu of the pension plan, he added, according to a Bloomberg News report.

The union had recommended against the 2014 agreement that froze the machinists’ pension, but supported an earlier proposal this year that would have ended the strike without restoring a defined-benefit retirement plan.

Pensions have greater liability and risk to employers given that turbulence in the economy—such as the Covid-19 pandemic or a recession—or changes to the mortality and age expectancy rates can make it more difficult to pay workers the benefits they were promised. …

But fiery rhetoric at the outset on the restoration of pensions can sway how members vote, Roberts said.

“Something that is at least improbable in terms of a negotiated outcome will get such attention with such emotionality ascribed to it that it could run away from leaders, and it could quite possibly impair the successful conclusion of negotiations,” he said.