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California State University, Dominguez Hills
University of Wisconsin, Parkside
Created: July 2, 2004
Latest Update: July 2, 2004
This morning in the New York Times, I was drawn to an article about the cutting of pensisons at United Airlines. The airline failed to get a federally-guaranteed loan, those making it difficult for it to get the loans it needs to come out of bankruptcy. The article: United's Pensions on Increasingly Shaky Ground By Mary Williams Walsh. Published: July 2, 2004. At p.C 1. Backup"Which workers' pensions at United are most at risk? Those with the biggest pensions - the pilots - might not, in fact, be first in the cross hairs.
"Because the pilots' fund had good returns during the stock market boom, it built a big reserve of credits for funding purposes. That cushion has allowed United, a unit of the UAL Corporation, to contribute less cash to that plan than to the others since entering bankruptcy, even though the pilots have been promised by far the most benefits."
From NYTimes article.
So, if your pension plan invests well and makes a lot of money on the market, your pension is safer. How are workers supposed to be able to oversee their pension plan administrators? How many of us have the financial training to play the market successfully? And the larger the capital, the easier it is to ride out market fluctuations. Small investors lose out first because they can't afford to ride out the losing periods. So who are the groups tha will be attacked first? Those with the smallest plans.
"The most recent data suggest that the pension plan for United's mechanics has been consuming the most cash in the last two years. United's plan for administrative workers and managers appears to have required the second-largest amount of cash, followed by the plan for flight attendants.
"As long as this pattern continues, United could conserve more cash in the short term - and make itself more attractive to lenders - by chopping one or more of its skimpier pension plans. It could either freeze the benefits at their current level, or terminate one or more plans outright - a far more drastic step that would require approval by the bankruptcy court.
"A termination would save the airline more money but also cause an uproar in the workplace. To minimize the backlash, United might start with the plan that has promised the smallest benefits - the flight attendants' plan - because government insurance would cover more of those promises. The flight attendants have already agreed to pension reductions, and they are bitter about a new plan to cut retiree health insurance. United might ease the pain by giving them other retirement benefits, like an enriched 401(k) plan.
From NYTimes article.
What about equality here? Wealth, in this instance is not the product of labor or cometence or perseverance, or intelligence; it's the product of making the lucky choices, probably with a large measure of intuitivenss, and making money work for you. Most american workers get to do that through their pensions. If they win, that is good. If they lose, well, life is a crapshoot. Are these the values by which we wish to live?
Is Ba'al the God of Luck? What are we saying here? That solid, honest striving is irrelevant? Luck is what counts?
The ethics discussion will follow soon. July 2, 2004. jeanne