The story starts by looking at workers at Delphi Corporation, the auto parts manufacturer. The company's leaders took it into bankruptcy earlier this year and the employee pension plan was one of the first things targeted to be wiped out. They also demanded that employees take a 2/3 pay cut, but have since withdrawn that demand. The thought that this might be good news for Delphi employees just seems like wishful thinking at this point.
Here is a key section in the story:
Although Delphi has since backed off a bit it says it's willing to negotiate with its unions and its former parent and largest customer, General Motors Corp. the parts firm has left little doubt that its ultimate aim remains steep reductions in wages, benefits and retiree costs.Delphi is, as the article points out, tearing a page out of the playbook of the airlines and others who used the bankruptcy process to shed their pension obligations to employees. The burden ultimately falls on other (temporarily?) healthy pension plans, as the agency that steps in to make good on at least some of the promises (the Pension Benefit Guarantee Corporation) is funded by what amounts to a tax on other pension plans.
Delphi is at the cutting edge of a crisis that's engulfing the U.S. auto industry, much as it did steel and airlines. Its actions are adding to a gathering trend, a shift of economic risks once largely borne by business and government to the backs of working families.
Before the trouble is over, some believe, a corporate icon such as Ford Motor Co. or GM could be swept from the American landscape. So too could much of what remains of the already frayed relationship between millions of working people and their employers.
"When the history of this period is written, Delphi will be viewed as the tipping point where the auto industry either got its act together or failed," said David E. Cole, the son of a former GM president and head of the Center for Automotive Research, based in Ann Arbor, Mich. "The spillover to the rest of the economy is going to be tremendous."
So, the pension plans will likely go the way of job security, company loyalty and other myths that defined post-World War II America. But, these pensions were based on promises companies made to their workers during those years and many of those promises were codified in contracts between workers and companies. The phrase "not worth the paper they were written on" comes to mind, but let's not get brutally honest about it during the holiday season.
Instead, allow me to explain my belief that this tipping point we've just encountered has ushered in the "Uncle Earl K. Long Era" of American economic life.
As source material, I'm using A.J. Leibling's book on Earl Long, called The Earl of Louisiana. In my copy (the 1981 paperback edition from LSU Press), on pages 40-41, Leibling reports one of the great stories about Uncle Earl that appears to have taken place during his third term as governor:
"Earl likes to cut them down to size before they get too big and fresh," Tom Sancton said. "You heard what he did to the fellow from Alexandria who got a big retainer from the theater owners to try to remove a two per cent tax on movie admissions? The fellow went to see Earl before the last campaign and came back and told his clients that it was in the bag. Then he went out and worked like a dog for Earl speaking on television and radio, and stumping and conspiring and kissing babies and hustling votes until Earl was elected Governor. One of the first things Earl did in new Legislature was to oppose removal of the tax. The fellow from Alexandria went to see him he was afraid he would have to refund his fee, or the theater owners would shoot him and he said, 'I told my clients that you said you wanted their support and that you wouldn't block removal of the tax. What do I tell them now?' You know what old Earl said? He said, 'I'll tell you what to tell them. Tell them I lied.'"That is, apparently, what a number of corporations have decided to say about their pension plans. If we have, in fact, crossed a tipping point, others will follow. That is to say, corporate America is telling those who (in the words of Bruce Springsteen) made those companies "rich enough to forget my name" that the promise of a secure retirement in return for years of service was a lie. Contracts are, apparently, for suckers.
This is more of the "one way street America" that big money and their Republican allies are creating here. Reciprocity is out; cashing in is 'in.' The idea of shared responsibility is out. So, too, is the concept of the general good. Nope, it's 'all for one and all for one' in this age. And, Uncle Earl's statement to the man from Alexandria nicely captures the essence of the new era.
By the way, another great book on Earl K. Long is Uncle Earl Deserved Better, by my good friend Jack McGuire of Mandeville. I did the production and printing on the book back in 1995, so I'm a bit biased, but it's a well-documented, highly enlightening read.