Detroit Free Press: Marick Masters on Southeast Michigan carpenters union pension crisis
A private-sector pension crisis is hitting roughly 19,000 current and retired unionized skilled trades workers in southeast Michigan, another sign of the precarious nature of some pension promises made to workers years ago. Leaders of the Michigan Regional Council of Carpenters and Millwrights are asking the federal government for permission to cut the size of their southeast Michigan members' pension checks, saying that if nothing is done, their pension fund will run dry by 2035. The fund, called the Carpenters Pension Trust Fund — Detroit and Vicinity, has entered a financial death spiral, due, in part, to more retirees drawing monthly checks than active workers paying in. The pension fund has $772 million and was considered 34.5% funded as of a year ago. There is a 2.4 ratio of inactive to active pension plan participants. Marick Masters, director of labor at Wayne State University, said private employers in the 1970s started to move away from pensions, also known as defined-benefit plans, and toward defined-contribution plans for their workers like 401(k)s. “A big reason for the shift was to reduce the liability that companies incurred that went on their balance sheets for the defined-benefit plans," he said. "We bailed out the financial industry, we bailed out the auto companies, it’s hard to say we shouldn’t bail out these folks, if we follow that same sort of logic," Masters said.
