The Check's in the Mail

How a once-mighty union sold out thousands of workers on the eve of retirement

When Bob young was 23, he quit his job as a gas station mechanic to go to work for a car dealership. The money was a little better, but the real draw was the sense of assurance that came with the move. Because he'd join a union, he'd have health care benefits and--unlike most guys who worked on cars for a living--a secure pension.

That pension was everything to Young. He knew it was impossible for anyone to perform a rough, physical job into old age. And without much education, his prospects would be slim once his body gave out. So a few years ago, when the dealership he was working for closed, he was careful to take another job with the same union, the International Brotherhood of Teamsters.

Over the years Young turned down better-paying jobs and set aside any fleeting thoughts of opening his own shop. Knowing they'd never be rich, he and his wife planned carefully. They bought an inexpensive house in rural Cokato, reasoning that Young could give up both the long commute into the city and his Teamster job when he became eligible for the pension. He'd be drawing $2,000 a month, but he'd be 53 at that point. If he took a part-time job and they continued to live frugally, they could make it.

Raoul Benavides

Young is a little sheepish when he talks about how it's all fallen apart. He's not the kind of guy who believes in handouts, and he's well aware that most people today anticipate working well into their 60s. But he's been making decisions for the whole of his working life based on the promise of that pension. The money his employers put into it over the years would otherwise have shown up in his paycheck. And in truth, $2,000 a month really isn't that much money.

Last year, the union renegotiated his contract. He got a raise of 80 cents an hour and, miraculously, his health care costs went down $20 a month. Given the economy, he and the other 1,500 guys in his bargaining unit figured it was a pretty good deal. But two months later, despite the new contract, his health care premiums quadrupled and the rule that made him eligible for retirement after 30 years was eliminated. Under the new system, he won't be eligible for health care for several years after retirement and, equally awful, unless he stays on the job for an extra decade or more, he'll be trying to get by on a much smaller pension.

The pension fund, Young and his co-workers were told, was in bad shape. Interest rates were down, the stock market was down, and health care expenses were up. Several of the larger employers who had been paying into the fund had gone belly-up, and there were now more Teamsters drawing pensions than there were working and making contributions.

The fund's administrators even had a clever name for the situation: the Perfect Storm. And that's how it was presented to union members. The hardship was no one's fault, just a bunch of freak occurrences crashing down at once.

But Young is one of a growing number of rank-and-file workers who just don't buy it. Union President Jimmy Hoffa was elected in 1998 on a platform of protecting Teamster benefits. And yet where pensions are concerned, his leaders have managed to negotiate one bad contract after another, seemingly without taking the pension shortfall into account.

For example, Young's own contract was signed two years after the stock market crash, so the trustees who are paid handsomely to look after the money had to have known a shortfall was coming. "It's like they just dropped the ball," he complains. "They didn't even give us the option of putting more money in. There's not a person out there who wouldn't have said, 'Take that 80-cent raise and put it into the pension.'"

Young and his brethren fear that union leaders are playing right into the hands of the Teamsters' largest employer, United Parcel Service. UPS has long wanted to control its own pension dollars, something that is rarely good for workers and retirees, but usually a windfall for corporate executives. And there's reason to think the shipping company will get away with it. Incredibly, despite Enron, US Airways, and other corporate scandals that have wiped out the lifetime savings of countless workers in the last four years, the current Congress has consistently acted to protect big business over voters.

The way Young and his co-workers see it, the people in charge of the pension have a bunch of reasons to exaggerate the size of the crisis and, incredible though it sounds, reasons not to fix it. The Perfect Storm, they say, also turns out to be the Perfect Excuse.


In theory, Bob Young has the Cadillac of pensions. Started in 1955, the Central States Pension Fund is the second-largest union pension plan in the country. It draws on contributions from 160,000 Teamsters in 22 states and supports 200,000 retirees. Some 4,500 companies pay into the massive account, so the security of each worker's assets isn't tied solely to his or her own employer's fortunes. When a participating company goes out of business, others pick up the slack. It's supposed to be the safest kind of pension.

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