Current News



Auto workers aren't striking only for higher wages. They want their pensions back, too

Jo Constantz and Josh Eidelson, Bloomberg News on

Published in News & Features

On picket lines around the country, auto workers aren’t just demanding higher wages. They want to get back their once-sacred retirement pensions.

While United Auto Workers members who were hired prior to the 2008 financial crisis have pensions, those brought on since have received 401(k) plans instead. The union is demanding the auto companies provide pensions for new employees and those who currently lack them.

“We need to do something, because right now, if you came in after '07, you don't have a pension,” said Ryan Ashley, a Ford engine plant worker in Cleveland. “You could retire, and the economy tanks. Whereas at least a pension is guaranteed money.”

Ford Motor Co., General Motors Co. and Stellantis NV are determined to consign pensions to the past even as striking UAW members are just as keen to revive them. The fight has resonance well beyond the auto industry: With inflation persisting as the U.S. enters another fraught presidential election cycle, the plight of the middle class — and the financial condition of millions of retirees — is front and center.

Labor experts don’t see a return to a system of full-fledged pensions happening anytime soon, if ever, because of the massive cost associated with them. Even so, demanding pensions is a smart strategy, some say, because it reminds both sides how far behind auto workers have fallen since their heyday.

“The UAW jobs used to be seen as the best jobs and working for the auto company, you're making big money — buy boats, buy houses, do whatever you want to do,” said Arthur Wheaton, director of Labor Studies at Cornell University’s School of Industrial and Labor Relations who teaches contract negotiations. “If you're a new hire hired in the last four years, you're not buying anything, you may be renting and you may be working two jobs. It's a very different scenario.”Using pension demands as a bargaining chip could lead to other sweeteners, such as more generous matching contributions to 401(k) funds. “The UAW might end up settling for something less, but they might say, ‘We’re not giving up on these issues, we’re going to push harder,’” said John Logan, chair of the Labor and Employment Studies department at San Francisco State University.


Up until the 1980s, the most common retirement plans were defined-benefit pensions, under which employees typically get a guaranteed set monthly income in retirement and employers took on the cost and the risk. Nowadays traditional pensions are rare in the U.S. outside of the public sector.

A full-scale shift in almost every industry in the U.S. began in the 1980s, as companies undergoing a wave of restructuring moved from pensions to so-called “defined contribution” plans, like 401(k)s, where employees decide how much to contribute and companies often match funds up to a set amount. Under this model, the employee assumes most of the cost and all of the risk: There are no guarantees for what an individual’s monthly income will look like in retirement, since that depends on how much money they contribute and how their investments perform.

Now that the major Detroit auto companies are raking in record profits and CEO pay is soaring, striking workers say they deserve to get back the benefits they sacrificed to help the auto companies skirt financial collapse in the 2008 financial crisis.

“The pension part, members who don't have that, they want to be able to retire with dignity,” said Jay Makled, financial secretary of UAW Local 600. For new employees who want to build a career, he said, “it’s top priority”


swipe to next page

©2023 Bloomberg News. Visit at Distributed by Tribune Content Agency, LLC.


blog comments powered by Disqus