This is the second great setback for workers and unions in Michigan, coming on the heels of last year’s ramming through of so-called ‘right to work’ laws by Republicans and right-wing Governor Snyder. That same Republican-dominated legislative session overrode a fresh, legally binding referendum passed by Michigan voters that rejected Governor Snyder’s use of Emergency Financial Managers (EFM). The Republicans simply tinkered with the old law and passed a new EFM as part of an appropriations bill – which cannot be put to a referendum.

For union workers in Detroit, a city which is 84% African American, the bankruptcy is a disaster. Despite union givebacks and changes to retirement and pension plans, workers are hearing bankruptcy experts say they can expect between 10 and 20 cents on the dollar for their years of hard work and dedication. So despite years of union contracts, negotiated with local elected officials and approved under state laws, a judge will ultimately decide how much of a pension workers will get.

The American Federation of State, County, and Municipal Employees union, or AFSCME, represents about 70% of Detroit city workers, excluding categories like police and firefighters. AFSCME says their pension benefits were reduced by nearly 40% since 2012. In addition, on the job workers took a 10% pay cut in the past fiscal year to help avoid bankruptcy. Right now the average yearly pension is $19,000, but could go down to $9000 after the judge’s ruling.

There is no doubt that Detroit is a suffering city, whose manufacturing base along with hundreds of thousands of jobs largely disappeared since the 1970s. In previous decades Detroit was seen as a successful and exciting city, popularly known throughout the world for cars, sports, Motown music and good jobs. African Americans and their labor were a large part of this success. People in Detroit were proud of their city, their struggles and their accomplishments and they exercised more control over their lives than ever before.

However the big capitalists began to abandon Detroit starting in the 1970s, taking their investments and production elsewhere – to the suburbs, the South and overseas. Population began to fall, reaching less than half of what it once was, down to 701,000 today. With population falling steeply after 2000, Detroit now has a smaller tax base and the same and sometimes greater responsibilities. Corporations that did stay paid less in taxes. The good jobs dwindled. The great economic crisis that hit in 2008 left even more workers unemployed – today around 18% – hurting city income even more.

During the great economic crisis, the U.S. government spent billions to bail out banks and insurance companies, but there is no lifeline for Detroit and its workers. Instead they are being punished with bankruptcy, as if it is the only option. In the process, the politicians and judges are breaking contracts and abandoning long-held promises to workers and unions. Republican Governor Rick Snyder, instead of working with Detroit to avoid crisis, cut state funding in recent years ($66 million was cut between 2011-2012) and then took over local government by appointing an Emergency Financial Manager, sidelining the Mayor and other elected officials. The Governor has used the EFM to take over in small blue-collar towns, local school districts, and now the city of Detroit. The result of the EFM is always the same: cuts in social programs, privatization of schools and services and a refusal to negotiate with union workers, followed by their eventual replacement. In most cases thus far, the targets of EFM are government bodies run by African Americans.

Detroit faces real problems, but the rich and their politicians take advantage of the situation, and turn it into a crisis so they can seize power. Next they privatize valuable assets, like the Detroit Water and Sewage Department, at bargain basement prices. Wall Street wants to get their hands on the water works, so they can charge higher prices to homeowners and make a profit off of what should be a public utility. The EFM for Detroit, Kevyn Orr, has outside experts providing ‘valuations’ of the full range of city assets, including the parking meters and parking garages, publicly owned land like Belle Isle and other parks, the Detroit-WindsorTunnel (to Canada) and the Coleman A. Young International Airport. It may soon all be up for sale.

Even the public works of art in the Detroit Institute of Art are not safe. Emergency Manager Kevyn Orr had all the art appraised this week by Christie’s auction house. Orr’s representative, the New York investment banker Ken Buckfire, had secretly sent Christie’s appraisers to the art museum in June on an ‘informal’ basis. This past week, Buckfire was forced to cancel an ‘informal’ tour of Detroit. ‘Advisers’ were going to be shown the assets of the city that are going up for sale.

Judge Rhodes’ ruling is an attack on pensions, workers and unions across the country. It opens the door for other cities to run out on their contracts and displace unions. With Illinois pensions being called into question and some California cities facing similar funding problems, Detroit is now a test case. Republicans are leading the charge to force bankruptcy, suspend and override election results, to sell off assets and to cut and privatize social services. The Democrats are shrugging their shoulders and promising things will be different at the next election. The unions are in a life and death fight in Detroit. Workers have a lot at stake.

#DetroitMI #PoorPeoplesMovements #pensions #privatization #RepublicanAgenda #GovernorRickSnyder #antiunionBusting #workersRights

At the beginning of the legislative session, the Florida District of the Freedom Road Socialist Organization (FRSO) outlined several bills that workers, students and oppressed people in the state should unite against to defeat. Nearly two months later, labor unions, student groups and progressive organizations have a lot to celebrate as Governor Rick Scott and the Republican legislature continue to lose major battles at the Capitol.

By a close vote of 20-20, the Parent-Trigger bill (SB 682) went down in flames on the Florida Senate floor, April 30. Teachers and other union members sitting in the gallery cheered as a visibly frustrated Senate President Don Gaetz announced the tie vote, which effectively defeated the legislation. Parent-Trigger was a major priority for former Republican Governor Jeb Bush and his Foundation for Florida’s Future because it would have allowed corporations to take over public schools and convert them into for-profit charter schools.

Last year, popular pressure from teachers and workers forced the Senate to defeat Parent-Trigger, also by vote of 20-20. Six Republican state senators broke from their party and voted against Parent-Trigger, which defeated it for a second year in a row. The continued dissent in the Republican ranks represents a major body blow to the right-wing’s assault on public schools and it demonstrates the growing resistance to corporate takeovers of education.

Reports from Sunshine State News indicate that Governor Scott feared backlash from teachers and parents and pushed several Republican lawmakers to vote against Parent-Trigger, many of whom were open advocates of the bill last year. This defeat is significant because it shows the growing people’s power outside of the legislature in Florida and it signals disunity in the ranks of the right wing. This is good news for all Florida workers.

Later that day, the Florida Senate also defeated a radical attack on state workers’ and teachers’ pensions (HB 7011) by a vote of 18-22. Florida House Speaker Will Weatherford, a Republican from Central Florida, announced at the beginning of session that his major priority was closing the Florida Retirement System (FRS) defined benefit plan and putting all new state workers’ retirement into risky 401k plans. HB 7011 would transfer the hard-earned retirement benefits of teachers, firefighters and other public workers to Wall Street banks and corporations.

For months, unions held protests and press conferences outside of legislators’ offices to resist these attacks on their pensions. Thousands of phone calls from public workers across the state tied up office phone lines with messages against HB 7011. Despite the distance to Tallahassee, the Florida AFL-CIO and its affiliated unions brought hundreds of workers to the capitol every week of session to directly pressure legislators to vote against this bill.

Although workers should celebrate these people’s victories, the final two days of session promise even more battles. The Florida House remains vehemently opposed to expanding Medicaid coverage for poor and working Floridians and the few remaining days of the normal session makes a special session in the summer likely. Even worse, the Florida Senate will hear SB 1216 in the coming days, which would repeal the wage theft ordinances passed in several Florida counties to protect workers’ rights. These fights will continue well beyond the end of the legislative session and Florida workers ought to build on these victories in order to achieve more.

#TallahasseeFL #pensions #FreedomRoadSocialistOrganization #workersRights #RepublicanAgenda #teachersUnions #ParentTrigger

401(k) plans are risky for workers. Unlike pensions and Social Security, which are types of insurance against running out of money after retirement, 401(k) plans are investments which may or may not offer workers a lump sum of money upon retirement. It depends on how the investments do. One big risk for workers is that many 401(k) plans are largely made up of their employer’s stock. If the company goes bankrupt, as in the case of Enron, the workers can end up with nothing. Another big risk is a general decline in the stock market, like what happened in 2000 to 2002, a decline from which older workers with 401(k) plans never recovered.

While non-union businesses like HP have a relatively free hand in cutting pensions, unionized businesses like steel and the airlines have used bankruptcy to slash pensions. Pro-big business laws and courts have decided again and again that companies’ promises of payments to owners of their bonds (and almost all corporate bonds are owned by the rich) come before promises of pensions made to their workers. In many cases the workers’ pensions are taken over by the government-backed Pension Benefits Guaranty Corporation (PBGC), with much smaller retirement payments.

Many corporations, rather than cutting their workers’ pensions, have just cut the dollars that they pay into the pension plans. One study show that 85% of large corporations that offer pensions have underfunded plans. This has left 500 large corporations with a shortfall of $164 billion in their pension plans, when the monies in the plans now are compared to the promised future benefits. This shortfall, along with a smaller ($23 billion), but growing shortfall in the PBGC, has led to talk of a ‘crisis’ in pensions.

But, like the talk of Social Security going broke, this ‘pension crisis’ is phony. These same 500 large corporations are sitting on $634 billion in cash. Rather than use this money to fund their workers’ pensions, corporations want to hoard these profits to buy other companies or pay the owners of their stock.

One case is Exxon Mobil, whose pension plan has the second largest funding gap of any company, about $10 billion. But high gasoline prices meant Exxon Mobil made $25 billion in profits last year alone, and it is sitting on more than $20 billion in cash. This is more than enough to fully fund their pensions, but Exxon Mobil plans use this cash to pay out $15 billion to their shareholders and buy up oil companies in other countries.

There are now bills in Congress that would shore up the Pension Benefits Guaranty Corporation. Despite having some positive points, these bills do not address the real problem: Corporate America’s pursuit of ever higher profits at the cost of their workers’ jobs, wages, benefits and retirement. Workers and retirees will have to fight to protect their pensions just as we have fought for Social Security.

#SanJoseCA #Analysis #capitalistCrisis #pensions #pensionBenefitsGuarantyCorporation

“Here’s the fix, tax the rich!” chanted 350 University of Illinois at Chicago (UIC) workers, as they marched on May 26. Employees were mad as hell because of Governor Blagojevich’s threats against state pensions.

Govenor. Blagojevich wanted to add two more years to reach full retirement, but workers called out, “Hey, hey! Listen here! We won’t work for two more years!”

After many protests, the governor withdrew that proposal, along with a proposal for a two-tier system, where new hires would get fewer benefits.

The state still isn’t paying the required funds into the pension, so the crisis is not resolved. Willie English, a union steward, said, “They can’t balance the budget on our backs.”

Joe Iosbaker is a chief steward in SEIU (Service Employees International Union) Local 73 at the University of Illinois at Chicago.

#ChicagoIL #CapitalismAndEconomy #News #UIC #capitalistCrisis #pensions

Today, only 20% of all workers have company pension plans which pay a guaranteed retirement benefit based on salary and years of service. Twenty years ago, it was 40%. Almost half of these companies are considering cutting their benefits. Many are introducing so-called ‘cash balance’ plans to replace their traditional pension plans, which can lead to up to a 50% cut in benefits for older workers. Most workers who have a company retirement plan – and many, especially lower income workers, don’t – are in a 401(k) plan that offer no guaranteed benefits to retirees. 401(k) plans lost an average of 13% in 2002. On top of these losses, many large corporations, such as stock brokerage Charles Schwab, automaker Ford, Goodyear Tire and Rubber, and power producer El Paso Corporation, are reducing their contributions to their workers 401(k) retirement accounts.

While companies are required by law to set aside money to cover future pension benefits, there is no such requirement for company health insurance for retirees. Bankrupt Bethlehem Steel has been trying to end its health insurance for retirees in order to sell itself to another steel corporation. Retirees at other companies, such as Lucent Technologies (formerly a division of AT&T), are worried that their health insurance will be reduced or even cut entirely as the companies struggle to increase their profits. Across the country, states are planning to cut more than a million low-income Americans, including many retired, disabled, unemployed and low-income workers from the Medicaid program.

Because of the growing numbers of corporate bankruptcies, the Pension Benefit Guaranty Corporation (the government agency that insures workers’ pensions), suffered an $11 billion loss last year, leaving the PBGC with a $3 billion deficit. New regulations being proposed by the Bush administration would make it easier for businesses to adopt cash-balance plans and cut their older workers’ retirement benefits. Last, but certainly not least, Bush wants to replace social security with private investment accounts similar to 401(k)’s. This would be a big prize for Wall Street banks and brokerages, which would make billions of dollars in fees, but it would throw the average worker to the mercy of stock market.

One of the big fights around pensions will be waged by teachers and other state and local government workers, who face cuts in their pension plans by states with big pension and budget deficits. One of the worst situations is in Illinois, where the state pension fund has only 54% of the assets needed to pay its future benefits, a shortfall of almost $35 billion. In Massachusetts, teachers and their unions are fighting the governor’s proposal to force teachers out of their present traditional pension plan and into a 401(k)-style plan.

#SanJoseCA #Analysis #crisisOfCapitalism #pensions #401k #pensionBenefitGuarantyCorporation