Retirement benefits: Not a gift

By Edward J. McElroy
AFT President

While USA Today zeroed in on health benefits for retired teachers that particular day, we have all read opinion pieces critical of workers’ benefits in general. Increasingly, retiree healthcare is portrayed as a budget buster for both the public and private sectors.

Clearly, the price of healthcare is a serious problem that we need to address.

When more than $1,000 of the cost of a new General Motors car goes to pay for the healthcare of current and former GM employees. But it’s not just companies like GM that are trying every trick in the book to shed collectively bargained obligations that guarantee retiree health benefits.

Last year, Alaska Gov. Frank Murkowski went after future retiree benefits, hijacking the Legislature by threatening to withhold money for new schools, roads and other capital projects if lawmakers didn’t discontinue the defined-benefit pension and health benefits it offers employees working for state, municipal and borough governments; school districts; and the university system. The governor won, and effective July 1, 2006, all new hires will be “covered” by defined-contribution retirement and health reimbursement plans.

Also last year, AFT members in Minnesota’s Crosby-Ironton School District went on strike for 39 days, one of the longest teacher strikes in the state’s history. The only issue on the table: retiree health benefits.

Governments at all levels are saying they must rein in the cost of retiree healthcare. We can’t expect citizens who have little or no retirement benefits to stand up for others who do. In some instances, the news media has tried to scapegoat public employees and their unions by suggesting that we should give back what we negotiated to help the bottom line of cash-strapped governments. They suggest these benefits were “given” rather than negotiated.

Retirement health benefits weren’t a gift. More often than not, employers recognized that a retiree health plan can serve as an incentive for higher-paid, more experienced employees to retire and be replaced by lower-paid, entry-level workers. It was advantageous for management negotiators to swap a pay increase for a benefit that could be funded over time. No one gives away these benefits. They are traded.

Hard-working AFT members and others earned these benefits by deferring compensation. Our members trusted that these benefits would be there when they needed them most. As painful as it may be, employers need to honor their contractual obligations. Violating these long-held promises is nothing short of theft.

We need to work toward a national healthcare solution, but that will take time. Meanwhile, obligations don’t disappear. We’re not talking about a commodity. We’re talking about people.

As a nation, we’re in the middle of a retirement security crisis. The federal budget calling for billions in cuts to Medicare makes it worse. We dodged a bullet in the Social Security fight last year, but it created a feeling of “social insecurity” in millions of Americans. And no one can feel good about the fact that more than 2,000 companies have unloaded their pension obligations on the federal Pension Benefit Guarantee Corporation.

The elimination of pensions and other retiree benefits at companies like United Airlines, while top executives lock in lucrative retirement awards, is scandalous.

Our retirement security problem, as bad as it is, moves to a completely new level when the government fails to live up to its obligations.

Everyone who has a pension or retirement benefits should be alarmed. If employers are allowed to walk away from their obligations, contracts of all kinds become meaningless. And when the government doesn’t live up to its obligations, it doesn’t matter where you work. We’re all in trouble.