What does the United Food and Commercial Workers International Union, which organized Black Fridays "strikes" outside some Walmart stores, not want Walmart employees to know?
The unions dirty little secret is its failing pension plans. Many are in critical status, i.e. less than 65 percent funded, or in endangered status, less than 80 percent funded, according to the unions own reports to the U.S. Department of Labor. Without restructuring, they will not be able to pay all their obligations to future retirees.
Thats why the UFCW seeks to scoop up the 1.4 million Wal-Mart employees-to inject fresh money into its failing plans. This union, which says it has 1.3 million members in the United States and Canada, has been battling to organize Walmart stores, the worlds biggest retailer, for years, without success.
Despite the "strikes," Walmarts sales were at record highs on Black Friday. Stores were well-staffed, with employees motivated by their extra 10 percent discount on purchases.
The group organizing the protests, Organization United for Respect at Walmart, or OUR Walmart, seems to be acting as a labor union, because it claims thousands of Walmart employees as members. However, it has not filed financial disclosure information or elected officers, as unions are required to do under the Labor-Management Reporting and Disclosure Act. It is on shaky legal footing.
Most important, pension underfunding and required union dues make joining the UFCW unappealing.
Here is one example of pension underfunding: this unions Northern California Employers Joint Pension Trust Fund, covering 121,000 workers, is funded at 65 percent. And another: the Tri-State Pension Plan, covering Pennsylvania, New Jersey, and Delaware, with 35,000 workers, is funded at 55 percent. These fractions come from reports filed for 2011.
When I called the UFCW to ask about the funding status of pension plans, I was told that the union had no comment.
Of course, the UFCW doesnt tell Walmart employees about the underfunded condition of its plans. It doesnt tell them that if they join the union they will be forced to pay into a plan so that existing and future retirees can get full benefits. And that the plan has failed to meet Congresss test of solvency and presumably has only a small chance of being solvent when Walmart employees retire.
Rather, it tells them only that it wants to improve their working conditions. That they are working for unfair wages. That they are poorly treated by the company.
The UFCW also doesnt tell prospective members how much of members required dues are spent on gifts, lobbying, and political contributions. For the latest year available, 2011, this totaled $10 million, according to the unions reports to the Labor Department.
Such spending may be one reason that union membership is in a long-term decline, from 24 percent of the American workforce in 1973 to 12 percent in 2011. In 2012 the fraction of Americans belonging to unions will likely slip to 11 percent according to preliminary calculations from Census Bureau data made by Heritage Foundation economist James Sherk. He also projects that the ratio of private sector workers belonging to unions will decline to 6.3 percent from 6.6 percent in 2012.
The latest casualty of union collective bargaining is Hostess Brands, which is closing and laying off 18,500 workers. Officials from the Bakery Union and the Teamsters would not agree that cakes and bread could be carried on the same truck, nor that the drivers of the trucks could unload the baked goods and put them on store shelves.
With union membership down, unions are eager to sign up new members in order to swell their ranks, replenish their treasuries, fund staff salaries, and infuse new money into union-sponsored pension plans, many of which are underfunded.
In the process of recruiting new members, some labor organizations, such as the UFCW, dont mind twisting and omitting facts.
The UFCWs Web site reads, "The UFCW protects the rights of workers and strengthens Americas middle class by fighting for health care reform, living wages, retirement security, safe working conditions and the right to unionize so that working men and women and their families can realize the American Dream."
What the UFCW dont tell prospective members is that collectively-bargained pension plans generally have lower levels of funding than do plans offered by employers unilaterally for nonunion employees.
Unions also dont disclose that their own internal retirement plans for officers and staff are usually better funded than the plans for the rank-and-file, for which union officers are responsible. The UFCW International Union Savings and Retirement Plan for U.S. Officers and Employees is not a defined benefit plan, but a 401(k) and profit-sharing plan run by Fidelity Investments, so it will never suffer from underfunding.
Union officers and employees also benefit from the UFCW International Union Employees Annuity Plan, which had a market value of $4.2 million for the 2009-2010 plan year.
One advantage of a defined contribution plan is that participants can move to another job and take their 401(k) assets with them. Workers, on the other hand, generally lose pension benefits if they change jobs before full vesting.
While a pension plan need not be 100 percent funded at any given time to qualify as stable, the Pension Protection Act of 2006 draws a line at 80 percent. It considers funds with less than 80 percent of needed assets, as determined actuarially, to be in "endangered" status.
With fewer workers joining unions, the collectively-bargained multiemployer pension funds are characterized by an increasing number of retirees supported by fewer younger workers. Such plans can survive only through new contributions. This is why unions will do anything to recruit new members.
Union leaders have been a cause of underfunding. The labor leaders have negotiated for generous salaries, but neglected to demand pension contributions to fully fund the pensions. While union officials have many incentives to bargain for increased wages today, they have fewer incentives to ensure that there will be adequate long-term funding for the promised pensions.
Its no wonder that the UFCW and OUR Walmart arent telling Walmart employees about its pension plan. Joining a union to prop up its failing pension system might not be such a good deal.
Original Source: http://www.realclearmarkets.com/articles/2012/11/27/what_do_unions_not_want_walmart_employees_to_know_100011.html