For decades, being a coal miner has come with a deal: Work in dangerous, unpleasant conditions for years, and in exchange, get lifelong health-care benefits and a decent pension. Now, though, part of that deal is jeopardy, as the funds that provide those benefits have dwindled.
When Congress returns next week, legislators will be under intense pressure to fund health-care benefits and pension plans for coal miners that are otherwise set to expire at the end of April. The United Mine Workers Association is urging Congress to pass the Miners Protection Act, which would use money from a fund dedicated to cleaning up abandoned mines to instead shore up former mine workers’ health care and pension plans, which have been decimated as coal companies have filed for bankruptcy and stopped contributing to health-care and pension funds. America has a “moral commitment” to the nation’s retired miners, UMWA president Cecil E. Roberts wrote in a statement last month.
But does it really? The miners argue that Congress has an obligation to step in because of a deal signed between the federal government and the United Mine Workers in 1946 to end a nationwide strike. The federal government had taken control of the mines, and in order to get the miners to return to work, United Mine Workers president John King and Interior Secretary Julius Krug signed a deal that required coal companies to pay into a pension fund and a health insurance fund for miners. Today, the United Mine Workers of America refers to that deal as “The Promise,” and says that it means that the government (since Secretary Krug was one of the signees) committed to providing miners with health care and pensions for life.
But Congress is in a tight spot. If it bails out the miners, why stop there? Why not bail out all of the other pension funds, private and public, that are on the brink of insolvency? Miners are not the only group that is in danger of losing health care and pensions as their employers go bankrupt. One of the biggest private pension funds in the country, the Central States Pension Fund, which provides benefits for truck drivers, is also almost out of money and is proposing cutting benefits for current and future retirees. The miners and truckers funds are examples of defined-benefit multi-employer pension plans, meaning they provide a certain amount of money every month to covered workers from a number of companies. According to the Congressional Budget Office, such plans have $850 billion worth of benefit obligations, but have assets of only $400 billion. According to the Pension Research Council at the University of Pennsylvania, there are 1,300 such multi-employer pension plans, covering millions of workers.
“If you open the door here to the United Mine Workers, then you have 1,300 other plans waiting there to say, ‘Where's my bailout? Why is it fair that you preserved 100 percent of coal miners’ benefits?’” argues Rachel Greszler, a research fellow at the Heritage Foundation, a conservative think tank.
There is, however, a federal backstop for failing private pension plans (though not for failing health-care plans). When the automaker Studebaker went out of business in 1963, it terminated its pension plan and more than 4,000 workers lost most or all of their promised pension benefits. That eventually motivated Congress to pass the Employment Retirement Income Security Act of 1974, which set up the Pension Benefit Guarantee Corporation, which pays out reduced pensions in the event that a private pension fund becomes insolvent. (The Pension Benefit Guarantee Corporation itself is running out of money, which is another problem.)
When Congress returns next week, legislators will be under intense pressure to fund health-care benefits and pension plans for coal miners that are otherwise set to expire at the end of April. The United Mine Workers Association is urging Congress to pass the Miners Protection Act, which would use money from a fund dedicated to cleaning up abandoned mines to instead shore up former mine workers’ health care and pension plans, which have been decimated as coal companies have filed for bankruptcy and stopped contributing to health-care and pension funds. America has a “moral commitment” to the nation’s retired miners, UMWA president Cecil E. Roberts wrote in a statement last month.But does it really? The miners argue that Congress has an obligation to step in because of a deal signed between the federal government and the United Mine Workers in 1946 to end a nationwide strike. The federal government had taken control of the mines, and in order to get the miners to return to work, United Mine Workers president John King and Interior Secretary Julius Krug signed a deal that required coal companies to pay into a pension fund and a health insurance fund for miners. Today, the United Mine Workers of America refers to that deal as “The Promise,” and says that it means that the government (since Secretary Krug was one of the signees) committed to providing miners with health care and pensions for life.
But Congress is in a tight spot. If it bails out the miners, why stop there? Why not bail out all of the other pension funds, private and public, that are on the brink of insolvency? Miners are not the only group that is in danger of losing health care and pensions as their employers go bankrupt. One of the biggest private pension funds in the country, the Central States Pension Fund, which provides benefits for truck drivers, is also almost out of money and is proposing cutting benefits for current and future retirees. The miners and truckers funds are examples of defined-benefit multi-employer pension plans, meaning they provide a certain amount of money every month to covered workers from a number of companies. According to the Congressional Budget Office, such plans have $850 billion worth of benefit obligations, but have assets of only $400 billion. According to the Pension Research Council at the University of Pennsylvania, there are 1,300 such multi-employer pension plans, covering millions of workers.
“If you open the door here to the United Mine Workers, then you have 1,300 other plans waiting there to say, ‘Where's my bailout? Why is it fair that you preserved 100 percent of coal miners’ benefits?’” argues Rachel Greszler, a research fellow at the Heritage Foundation, a conservative think tank.
There is, however, a federal backstop for failing private pension plans (though not for failing health-care plans). When the automaker Studebaker went out of business in 1963, it terminated its pension plan and more than 4,000 workers lost most or all of their promised pension benefits. That eventually motivated Congress to pass the Employment Retirement Income Security Act of 1974, which set up the Pension Benefit Guarantee Corporation, which pays out reduced pensions in the event that a private pension fund becomes insolvent. (The Pension Benefit Guarantee Corporation itself is running out of money, which is another problem.)
by Alana Semuels, The Atlantic | Read more:
Image: Gene J. Puskar / AP
