1) An upcoming decision by the Employees Retirement System of Texas to lower its earnings assumption from 8 percent to as low as 7 percent could be costly to state retirees and those who are closing in on retirement, the Texas Tribune reports.
That's because a lowered expectation on rate of return, even if reasonable in the investment world, could persuade the Legislature to worsen the deal for retirees, who haven't gotten a pension bump-up since 2001. The article quotes Brother Seth Hutchinson of the Texas State Employees Union:
Jerry Wald retired early after 21 years of state service and left behind the stresses of his supervisor role at the Department of Aging and Disability Services. But a decade after he stopped punching the clock, the 67-year-old has a different sort of anxiety: watching the buying power of his monthly state pension check shrink.
"Every year I'm alive, I'm losing money," said Wald, who lives in Houston.
Though health care, food and most everything else keeps getting more expensive, the monthly pension checks for thousands of retired state workers haven't increased since 2001. An amalgam of factors, including chronic legislative underfunding that's only recently been addressed, has kept the Employees Retirement System of Texas from adjusting its payments for the rising cost of living.
And now a looming vote by the retirement system's board of trustees has retirees even more worried. On Wednesday, the board will consider lowering its earnings assumption for the $26 billion trust fund and changing its predicted rate of return from 8 percent per year to as little as 7 or 7.25 percent, based upon the recommendations of a financial firm hired to perform a broader study of the system.
The move may sound innocuous, but it could have major implications for the state budget and the retirement system's beneficiaries.
Labor advocates fear the Legislature would respond to the change by shifting more financial burden onto the system's beneficiaries, either by forcing current employees to chip in more for their future pensions, cutting benefits or closing off the fund to future retirees.
Lowering the expected rate of return wouldn't affect how much money flows into the retirement system, but it would dramatically alter its long-term balance sheet. Under current assumptions, the fund is projected to grow large enough to cover its liabilities within 35 years. Under a 7 or 7.25 percent expected rate of return, the fund would never be expected to grow large enough to provide full benefits to retirees into the future.
"We're very, very concerned about it," said Seth Hutchinson, vice president of the Texas State Employees Union. "The Legislature in recent years has made a lot of progress in investing money to shore up the pension fund, and state employees have done the same. Lowering the assumed rate of return will just undo that progress and just move the goalposts further back for state retirees."
The Employees Retirement System handles benefits for about 240,000 active and retired state employees, elected officials, law enforcement and prison officers and judges. On average, the system's beneficiaries receive $1,600 per month - which now buys what less than $1,200 would have in 2001, a 25 percent drop in purchasing power.
Doug Danzeiser, who directs an office at the Texas Department of Insurance and is one of three appointed trustees of the retirement system's six-member board, said he has received hundreds of emails from retirees concerned about the upcoming vote.
"It's a difficult situation," said Danzeiser, who added that he trusts the analysis of the board's hired experts.
A host of other states already have lowered their predicted rates of return for state pension funds, a change some financial analysts say is needed, largely because low interest rates have limited earnings for the type of low-risk investments that pension funds generally favor.
Read more: https://www.texastribune.org/2017/08/22/texas-state-workers-fear-fallout-changing-math-pensions/
2) As the nation debates the aftermath of Charlottesville, the AFL-CIO passes along a column on the historical connection among racism, anti-Semitism and so-called "right to work" laws.
Berry Craig of the Kentucky AFL-CIO reports Texan Vance Muse was closely tied to the development of the "right to work" concept. This newsletter has occasionally discussed Muse's background, which is again relevant after the working people of Missouri garnered about three times the number of petition signatures they needed to seek postponement of a "right to work for less" law and instead set up a November 2018 statewide referendum on the subject.
By the way, "right to work" only became reality after a veto by President Harry Truman was overridden by a GOP-dominated Congress. The 1948 election, in which Truman scored a monumental upset over New York Gov. Thomas Dewey, flipped the partisan makeup of Congress:
"The drive for such laws was fueled by Texas businessperson and white supremacist Vance Muse, who despised the doctrine of human equality represented by unions," wrote Roger Bybee in The Progressive.
Muse, a Klan fan, was "the Karl Rove-meets-David Duke brains behind the whole right to work movement," wrote Mark Ames.
Under a right to work law, workers at a union shop can enjoy union-won wages and benefits without joining the union or paying the union a service fee to represent them. The idea is to weaken strong unions, destroy small unions and keep workers from organizing.
The Texas Legislature passed a right to work law in 1947 but changed the measure to its current form in 1993.
Muse, who also was rabidly anti-Semitic, saw right to work as a twofer: Right to work would help smash unions and help maintain segregation and white supremacy in Texas and elsewhere in the Jim Crow South. Without right to work, "white women and white men will be forced into organizations with black African apes whom they will have to call 'brother' or lose their jobs," he harangued.
In 1936, Muse started the reactionary, racist Christian American Association in opposition to President Franklin D. Roosevelt's New Deal. Muse allied the group with the KKK. FDR was running for re-election and Muse bitterly opposed him.
The year before, a Democratic Congress passed the National Labor Relations Act. Also known as the Wagner Act, the legislation gave workers legal protection to organize and bargain collectively.
"The appallingly racist views of Muse and his Christian American Association coincided with the mentality of corporate managers dedicated to holding down wages and maintaining the tight control over workers dating back to the days of slavery," Bybee wrote. "The CEOs of the 1930s recognized that Muse's segregationist 'right to work' concept would break up unified worker efforts to claim the rights granted under the 1935 National Labor Relations Act."
Dr. Martin Luther King Jr. also recognized the racist origins of right to work.
"In our glorious fight for civil rights, we must guard against being fooled by false slogans, such as 'right to work,'" he warned in 1961. "It is a law to rob us of our civil rights and job rights. Its purpose is to destroy labor unions and the freedom of collective bargaining by which unions have improved wages and working conditions of everyone....Wherever these laws have been passed, wages are lower, job opportunities are fewer and there are no civil rights. We do not intend to let them do this to us. We demand this fraud be stopped. Our weapon is our vote."
Also in 1961, Dr. King told the AFL-CIO Convention, "Our needs are identical with labor's needs-decent wages, fair working conditions, livable housing, old age security, health and welfare measures, conditions in which families can grow, have education for their children and respect in the community. That is why Negroes support labor's demands and fight laws which curb labor.
"That is why the labor-hater and labor-baiter is virtually always a twin-headed creature spewing anti-Negro epithets from one mouth and anti-labor propaganda from the other mouth."
3) A Houston Chronicle article on an International Association of Machinists strike that began yesterday against Wyman-Gordon, an aerospace company in Houston, points up one of the fundamental reasons for the walkout is an effort to establish a two-tier system in which new workers would receive lower pay and benefits.
IAM rightly isn't buying a proposal to drive a generational wedge between union members. Older workers are showing solidarity with young workers and workers who haven't even been hired yet. But take note: the company's proposal also would weaken disability coverage for older workers.
The Chronicle could not reach the company, so we don't know how management is justifying selling future workers down the river:
Byron Williams, District 37 president and directing business representative, said the strike is aimed in part to help the next generation of workers by "giving them a fair, equitable start to take care of their families, have a hope for retirement and send their kids to college."
Williams said the proposed contract would reduce pay for short- and long-term disability by 10 percent and would limit employees to six months on short-term disability and then 18 months on long-term. Currently, employees can stay on long-term disability until age 65.
The company was also seeking to reduce breaks to 15 minutes from 20 minutes, which concerns union members because they work in a building without air conditioning.
Finally, the contract would pay entry-level employees significantly less and freeze their wage increases for three years.
"The new guys, I'd love for them to have just as good a life as I've got," said Kenny Stevens, 58, who inspects parts at the Houston facility.
Stevens was walking the picket line from 10 a.m. to 2 p.m. with Michael Black, 64, who makes the tools used to forge products at the facility.
Wyman-Gordon's Houston facility manufactures aircraft engine components including blades, fans and motors. It also manufactures seamless pipes for the energy industry.
There were 30 to 35 employees on the picket line when the strike began at midnight. During the day, five to 10 people walked the line in four-hour shifts...
Black said the proposed contract also would hurt older workers.
"Some of the contract language, I believe, is unfair to the guys who are in their 50s and 60s," he said, citing proposals like the one to cut disability benefits.
He said establishing a different pay scale for new employees would be unfair to younger workers and could create a division among hourly employees doing the same work for different pay. He said it could affect the union's ability to attract new members in a right-to-work state.
"How can you ask someone to join your union, and you've accepted a double standard?" he asked.
This is Black's fourth strike in his 43 years with the company, which has gone through some name changes during that time.
Read more: http://www.houstonchronicle.com/business/article/Machinists-and-aerospace-union-strikes-at-11948420.php