Thursday, May 12, 2005

UAL and Social Security

The Wall Street Journal made an interesting point about United today.
The unions are blaming United management for the pension fiasco, and not without some cause. But they have helped to put the industry into its current state by using the whip hand they are given under the Railway Labor Act to threaten strikes and force up labor costs in the good times. Now the unions are discovering that they will lose some of the pension benefits they bargained for. The same thing will eventually happen to the Social Security benefits of workers if the AFL-CIO and AARP succeed in blocking private investment accounts.
There is really very little difference between the condition of United's defined benefit plans today and where Social Security could be in a couple of short decades unless some major renovation is made to the aging plan.

As for United, several labor unions are threatening to strike if the company goes through with its intention to default on several pension plans. That could very well be the end of United.

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