Making Corporations Keep Their Promises to America’s Retirees

by Mike Hall, Sep 25, 2007

James Robertson spent 33 years working for Bethlehem Steel. He says it wasn’t unusual to punch in at 4:30 a.m. and work 10-hour shifts, six days a week. When it came time to put in for his pension, the retired United Steelworkers (USW) member said, in response to new legislation designed to end corporate bankruptcy abuse, “I was good and ready.”

But his retirement dreams were shattered when the company declared bankruptcy, shedding its promises to provide retiree pension and health care benefits, as has happened to millions of other workers. Says Robertson:

I thought a deal was a deal. Turns out that deal wasn’t worth the paper it was written on.

Robertson’s hard-won pension was slashed by more than one-third, and he lost the health benefits he was counting on to treat a degenerative bone disease, high blood pressure and elevated cholesterol. He asks:

How, in America, can you be promised one thing, count on one thing, for 33 years and then suddenly have it disappear? We worked for those benefits. But the company was allowed to walk all over us as if we didn’t matter. This shouldn’t be allowed to happen.

The new legislation introduced today would change the nation’s bankruptcy laws and ensure that workers and retirees are not the last in line behind banks and businesses, when a company files for bankruptcy. Says AFL-CIO Secretary-Treasurer Richard Trumka:

Today, the bankruptcy system has effectively become a device for the wholesale transfer of wealth from workers to other creditors. Businesses have used it as a backdoor way to slash wages and benefits for current workers and break promises to retirees. Workers have been pushed further and further to the back of the line of those who will be made whole by the companies they have faithfully served.

They are left wondering how to provide health care to their children when a bankruptcy court decides that’s a low priority, or contemplating losing their homes because they are legally required to stay in a job where they now earn half as much.

The bill, Protecting Employees and Retirees in Business Bankruptcies, was introduced in the U.S. House by Rep. John Conyers (D-Mich.) and in the Senate by Sen. Dick Durbin (D-Ill.). The bill would protect wages, pensions and health care and would require that company executives share the pain. In a twisted abuse of bankruptcy laws, many times corporate executives emerge with higher pay, bonuses and other compensation. (Click here to see a report on the bills’ introduction from the Machinists News Network.)

Richard Pascarella has seen that firsthand in his more than 18 years at United Airlines, where the Machinists (IAM) member is now the lead ramp service man at Dulles International Airport, outside of Washington, D.C. In 2003, when United first filed for bankruptcy, he says he understood. The entire airline industry was in an economic tailspin.

We all had to take our share of the blows.

But the second time United filed for bankruptcy, it was different:

This time, they slashed our pensions to the bone. I had counted on retiring with a pension in the neighborhood of $3,000 a month. That’s history. Now I get $760 a month—a large chunk of which will go to health insurance—which used to come with the job.

Meanwhile, they gave big bonuses to the CEO’s—I guess for doing such a great job going bankrupt. And they laid off a bunch of people they claimed they couldn’t afford, then hired a whole bunch of new managers.

Trumka says the legislation would help end CEO abuse of bankruptcy:

The legislation also focuses on the important abuses going on in executive compensation that turn bankruptcy into an ordinary business strategy that enriches executives while impoverishing workers. Under this bill, if executives think their employees’ pensions and health care must be gutted, the executives themselves must sacrifice equally.

Says Pascarella:

The way bankruptcy law works now, your pension, your health care, your paycheck are never really safe. You can work hard and do a good job and help make the company better, but in the end, you really can’t count on anything.

Click here to read about what leaders of the USW, Flight Attendants-CWA (AFA-CWA),  Air Line Pilots (ALPA) and other witnesses had to say about corporate bankruptcy abuse and the need for reform at a House hearing earlier this month.

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