Column: Pension crisis reaches beyond workers, businesses
Source: The Columbus Dispatch`
Hardworking Ohioans who were promised pension benefits at the end of their careers are in trouble. Unforeseen, dramatic reductions to retirement dollars are eroding financial futures across the state. We are in the midst of a crisis, a multibillion-dollar problem with no easy way out. Multiemployer pension plans are underfunded and collapsing, jeopardizing the retirement security of more than 60,000 workers and retirees in Ohio and the stability of the American economy. This crisis is real, and it is past time we pay attention to it.
Ohio is home to some of the largest groups in the United States that rely on evaporating pension plans: the Toledo Roofers Local 134, the Ironworkers Local 17 of northeast Ohio and the Ohio Southwest Carpenters. All of these plans are on the brink of insolvency, putting real people on the brink, too. Roberta Dell, an employee at Spangler Candy Co. in Bryan said, “I always thought the pensions would be there for me when it came time to retire … I thought of it as my savings plan.”
Roberta’s employer belongs to the Central States Pension Fund, which has 400,000 members nationwide. It is expected to collapse by 2025. The backstop to it all, the Pension Benefit Guarantee Corp., is also likely to dry up by 2025. Needless to say, it is likely Roberta’s savings will not be there when she retires unless things change soon.
It is no secret that I battled with union leaders while in Congress. It might amuse some of them to find out we are now fighting the same fight. The reality is, failure to address this problem would not only decimate the future of millions of American workers but have a domino effect that will impact the entire economy.
Looking at the numbers paints a grim picture for workers and businesses alike.
Should the Central States Pension Fund indeed collapse within the next five years, the United States’ GDP will drop by more than $5 billion. Federal tax revenue will decline to the tune of $1.2 billion. Here at home, Ohio faces more anticipated job loss than anywhere else in the country. Nearly 6,000 jobs are set to disappear, along with millions in state and local tax revenues. I can’t help but think of the 120,000 Ohioans who lost their jobs during the 2008 recession, one of the main drivers behind the pension crisis. They cannot afford to go through something like that again. Neither can employers. Neither can any of us.
The failure of multiemployer plans hits businesses just as hard. It is getting a lot more difficult for employers to use benefits packages as a recruitment and retention tool. Even the potential of leaving these plans is negatively affecting employers. According to the U.S. Chamber of Commerce, withdrawal liability is affecting employers’ ability to get and maintain credit. But if employers stay in a plan and it becomes insolvent, they are faced with multiple roads that lead to bankruptcy. Put bluntly, American businesses are in a damned-if-you-do, damned-if-you-don’t situation.
The end of the road is closer than most Americans think.
If we continue down this trajectory more than 10 million people could be at risk of losing their hard-earned retirement benefits. Local communities will be struck with unabsorbable debt and job loss, and businesses will suffer. We haven one chance to solve the multiemployer pension crisis. The time to work together on a solution is now.
John Boehner, an Ohio Republican, served as a U.S. representative (1991-2015) and House speaker (2011-15).