Thirty-three thousand Boeing machinists, members of the International Association of Machinists (IAM), on Wednesday, October 25, voted down the company’s proposed contract offer by nearly a two-thirds margin. The company’s offer included a 35% increase over 4 years. Previously 96% of the membership rejected an offer, recommended by the union leaders, of a 25% wage increase, setting off the strike on September 12. While a bigger wage increase to compensate for Seattle’s high inflation remains an issue, workers say that restoring their pensions is the major sticking point.
Beginning in the 1940s, the Boeing contract with the IAM included guaranteed levels of monthly pension payments. Pension plans that guarantee a negotiated benefit level are called “defined benefit plans”. The company is legally obligated to make the negotiated payments each month regardless of how well the company is doing and regardless of whether the stock market is up or down.
In 2014, Boeing demanded that the defined pension plan be frozen and that its union employees be switched to 401k plans. Under a 401k, the company makes a contractually defined contribution to each worker’s 401k, but the actual monthly payout on retirement is dependent on the level of the stock market when the worker retires. This puts all the risk on the worker. The union accepted this switch and scheduled a vote on a day when many workers could not participate. The company threatened to move production out of the Seattle area to non-union plants if the workers refused to go along with the switch, and by a small margin the workers agreed.
Until the 1980s, most unionized workers had defined benefit pensions rather than 401k plans. Even if the benefit levels were less than adequate, eliminating them was a major goal of corporate America’s drive to increase profits by cutting labor costs. Unions not only gave away the members pensions, they also gave up Cost of Living Clauses and accepted wage freezes. Union officials, claiming that workers and bosses were “partners in production” gave up any pretense of fighting increased workloads and compulsory overtime. Productivity and profits soared and so did the wealth of the 1%. The era of concessions has lasted for more than 40 years.
The strike is a serious blow to Boeing’s weak finances which gives the workers an uncommon amount of leverage. Boeing workers have rejected two contract offers negotiated by the union officials, and they appear determined to hold out on their demands. However, their strike will never be fully effective as long company-minded union officials remain in overall control of the struggle. How Boeing workers address this challenge will determine how much they can win from this stubborn but vulnerable company. But win or lose on the demand to restore their pensions, the Boeing strike makes it clear that a growing number of US workers want an end the era of concessions. Fighting to restore pensions is only a first step.
