Unions That Say Prevailing Wage Law Protects Retirees Mismanage Worker Pensions
Reports show Michigan construction union pensions in ‘critical’ condition
According to Michigan Prevails, a union-supported advocacy website, a state law called the prevailing wage “strongly supports the construction industry by providing sound pension programs.” Further, it says that repealing the law would mean “reduced health care and pension coverage” for construction workers.
But the page’s trade union sponsors have a record of mismanaging their own pension plans for construction workers, which raises questions about the credibility of their claims.
Prevailing wage laws like Michigan’s prohibit governments from employing the lowest bidder on infrastructure and construction projects unless the contractor pays union wages and enforces union work rules. Opponents say the work rules and above-market level wages imposed on contractors by prevailing wage laws drive up the cost to taxpayers for government projects.
Data from the U.S. Department of Labor shows that pension funds run by some of the biggest defenders of Michigan’s prevailing wage law are in danger. The Labor Department defines pensions funds that hold less than 80 percent of the amount needed to meet their projected benefit obligations as “endangered.” Pension funds that have less than 65 percent of the required amount are considered “critical.”
The pension funds for three of the largest construction unions operating in the state all fall into one of these categories.
The pension fund of the Michigan Laborers’ Union has been in “endangered” status for four years, and as of Sept. 1, 2016, had just 77.25 percent of what actuaries say it should have to meet its promises.
Joel Archibald, business manager for Michigan Laborers’ Local 1075, said “the pensions are in a pretty good position,” better than they have been in years.
The pension fund of the Michigan Carpenters’ Union is in “critical” status with just 59 percent of the amount it should have as of Sept. 1, 2016.
The pension fund of the Michigan Operating Engineers union has been in “critical” status for seven years, and as of May 1, 2016, held less than 65 percent of the investments that experts say it should have to cover future benefits.
Federal law allows for pension plans on the critical list to reduce or eliminate “adjustable benefits” such as post-retirement death or disability benefits.
According to Unionstats.com, a database compiled by professors Barry Hirsch and David Macpherson, about 18.8 percent of private sector construction workers in Michigan belonged to a union in 2016.
Mike Jackson, executive secretary-treasurer of the Michigan Regional Council of Carpenters and Millwrights, did not respond to phone calls requesting comment. The Michigan Operating Engineers also did not respond to a phone call requesting comment.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.