Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

27 July 2009

Is a Government Take-Over of Pension Plans Coming?

Single-employer defined benefit company pension plans are covered in many cases by the Pension Protection Act (PPA). The Pension Benefit Guaranty Corporation (PBGC) is tasked with the responsibility to take-over the covered pension plans if they fall into default. This is a government corporation with some similarities to Fanny Mae and Freddy Mac. 80% of the pension plans covered by the PPA in 2008 were considered to be reasonably well-funded. But, financial investment losses in late 2008 and early 2009, have left only 20% of these single-employee pension plans well-funded.

Meanwhile, outside of the PPA are some multi-employer pension plans. Among these is the Teamsters Central States Fund. This fund has three retirees for every active worker! There are now calls for the government to have the PBGC take over failing multi-employer pension funds, including the very troubled Teamsters Central States Fund. This will require an infusion of taxpayer bailout money.

The Teamsters claim the problem with their Central States Fund is that deregulation of the trucking industry decades ago caused a significant loss in trucking jobs when companies went out of business. Gee, have you seen a great decrease in the number of trucks on the road? No? Well neither have I. Teamsters leadership is heavily committed to the Democrat Party, so they are not well-inclined toward the truth.

Let us check up on the facts a bit here. In 1970 there were 18,000,000 trucks on the road. The Motor Carrier Act of 1980 brought about a partial deregulation of the industry. There was a dramatic increase in the number of trucking companies as a result. There were other consequences:
  • Driver wages dropped.
  • Consumer costs went down as trucking costs went down.
  • There was a great increase in the number of truck drivers.
  • There was drastic de-unionization!
  • In 2006, there were 26,000,000 trucks on the road, none of which are driven by robots.
So, contrary to the implication that de-regulation brought about a loss of companies and truckers, it only brought about a loss of those companies who could not compete in a less regulated environment. A very disproportionate number of the companies unable to compete were unionized. Is this a surprise to anyone?

Democrats are always complaining about de-regulation. They are always unhappy with the idea of competition. They are always eager to be lazy. They are always eager to have the world owe them a living. How disgusting. How absolutely and utterly disgusting!!!!! Yet, we are all supposed to provide pensions to union workers whose unions kept their trucking companies from being able to compete. Does this sound familiar? Can anyone remember Government Motors and Chrysler? Is providing pensions for non-competing labor unions among our next bailouts?

2 comments:

Dienekes said...

Great post!

Too many people forget what the trucking industry once was like. However, when you start naming companies that were unionized like Consolidated Freight, P.I.E. etc., then they say 'oh yeah.'

There is a partial list of closed IBT companies located here: http://www.1-888-no-union.com/teamstersoutofbusiness.html

Best regards.

Charles R. Anderson, Ph.D. said...

Dienekes,

Thanks for the compliment. This is a very long list of extinct unionized trucking companies. I am impressed at how disastrous it is for a company in a competitive market such as trucking to become unionized.

I seem to remember frequently seeing Red Ball on the road, yet they are listed as having only 44 employees. Are the employee numbers those of the companies when they went out of business? If so, Red Ball must have had many more employees when it was at its zenith and then hung on as long as they could as they drastically downsized. The result may be that the total number of employees given in the list may greatly underestimate the number of jobs lost as a result of the Teamsters.