No One Else Was Going To, So These Teamsters Saved Their Own Pensions
“When Don first got his letter saying his pension was going to be cut 52 percent, it was one of those moments like when President Kennedy was killed and 9/11,” said Dana Vargo, spouse of a retired Teamster. “You remember exactly where you were.”
“My letter said, starting in a couple months, your pension will go from $3,000 a month down to $1,500,” said Greg Smith, who had put in 31 years as a freight Teamster. “When people got those, all of a sudden the phone started ringing.”
It was 2015 when all 410,000 current and retired Teamsters in the Central States Pension Fund received that letter, informing them they would be spending their golden years broke. Congress had just made it legal for a multi-employer pension fund in “critical status” to yank back retirees’ hard-earned income. The Teamsters international had been complicit.
What chance did a bunch of ordinary retired truck drivers and their spouses have to stop the cuts? And yet, they did exactly that.
First they got the cuts at Central States, which covers 25 states, slowed down, then stopped them dead. But the underlying problem was still looming—the fund was going to run out of money.
Central States wasn’t the only multiemployer fund in hot water, either. Some funds actually did slash retirees’ pay, including Ironworkers Local 17 in Cleveland and the Western Pennsylvania and Upstate New York Teamster plans. Among the others in danger were retired miners, machinists, and musicians.
Finally this March, the pension activists won a total victory: $86 billion from Congress, as part of the big economic stimulus bill, to restore all the ailing multiemployer funds to health, and to pay back everyone whose pensions had already been slashed.
They did it with sheer persistence—and because no one else was going to.
“It was the grassroots effort and the continuous pounding on them,” Vargo said. “Pre-Covid when we could go to Washington we were always showing up uninvited, finding them in the halls and saying ‘When are you going to help us?’
“I’m sure that even though 50 percent of the legislators didn’t vote for the bill, they are so glad that we are going to go away.”
By the time retirees started opening those awful letters in 2015, a handful of Teamsters had been sounding the alarm for years. That’s why Smith’s phone was ringing—he was part of a grassroots network that Teamsters for a Democratic Union had helped start in Ohio.
Smith got to enjoy only a year and a half of serene retirement before TDU organizer Ken Paff called to warn him about the “Solutions Not Bailouts” plan being promoted by a joint union-employer group, the National Coordinating Committee for Multiemployer Plans—with the Teamsters signed on in support. The gist was, we have to destroy the pension to save it.
The shortfall was real. For most troubled funds, the biggest underlying problem is simple: not enough current workers compared to the number of retirees. Chalk that up to employer schemes like deregulation and union-busting, along with unions’ failure to organize.
The problem got worse in 2007 when the Teamster leadership let UPS pay a lump sum to withdraw from the Central States fund. Then it and other pension funds took a bath in the 2008 financial crisis, intensifying the crunch.
But none of that should have been the retirees’ problem. They were owed those pensions, in compensation for work done long ago. “Companies would come to us when we negotiated and say, ‘We only have so much money, do you want health or wage or pension?’” Smith said. “We would say, ‘Instead of putting a dollar in our wages, take half of it and put it into the pension.’ You do that over and over. Then at the end of your career you retire, and they come and say ‘Sorry.’”
What happens if a pension fund can’t pay its obligations? It’s insured by a federally chartered entity, the Pension Benefit Guaranty Corporation, which would pay out only a fraction of the benefits owed. Even so, Central States is so big that if it defaulted, the PBGC would go belly-up too. That’s why Congressional intervention was needed.
The idea of Solutions Not Bailouts was to legalize taking the money out of retirees’ hides, instead of coughing up from the public treasury.
IT STARTED IN OHIO
With TDU’s help, about a dozen people started the Northeast Ohio Committee to Protect Pensions—the first of many such committees. Smith, a longtime TDU activist, brought organizing knowhow.
They drafted Mike Walden, a retired truck driver from Akron, as their chair. Walden wasn’t a TDU member, but he was glad to have their help. “Of course we had some pushback, because a lot of Teamsters didn’t like TDU,” he said. “But I just told people we need to all work together to keep that pension.”
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Soon Committees to Protect Pensions formed in Columbus, Youngstown, Canton (led by Vargo and her husband), and Cincinnati. Ultimately there were 65 across the country, and a national organization with Walden as president and Vargo as secretary.
As the organizing gained steam, Teamster President James P. Hoffa belatedly quit the board of the group that was promoting Solutions Not Bailouts. The union officially opposed the Multiemployer Pension Reform Act—the 2014 law that enabled pension cuts—and gave the grassroots movement some support.
STANDING ROOM ONLY
After the letters went out announcing the cuts, monthly meetings of the Kansas City Committee to Protect Pensions ballooned from 125 people to 450.
Tim Pagel in Houston saw the same effect. For years he’d been hearing from TDU about looming threats to the pension, but Local 988 officers shrugged off his proposals to organize. Impressed with how pension committees elsewhere were using Facebook, he started his own local group, which quickly grew.
By 2016, local officers agreed to bring an expert from the Pension Rights Center to speak at the hall. The PRC became an invaluable resource and link to gain more allies, such as the AARP. “I don’t think I’ve ever seen that many people in our local hall,” Pagel said. “They couldn’t get into the parking lot. They had the double doors open because people were lined up outside the building trying to hear.”
The Treasury Department appointed “Special Master” Kenneth Feinberg to recommend whether to approve Central States’ proposed cuts. He held public meetings to hear from retirees. In city after city, hundreds turned out to give him an earful. In Minnesota, retirees mounted picket lines at Congressmembers' offices, rallied in the state capitol rotunda, and turned out 750 people to Feinberg's meeting. A number of Teamster locals, including Louisville Local 89, joined the fight.
Thousands of retirees traveled to D.C. to rally at the Capitol. A month later, feeling the pressure, Feinberg nixed the Central States cuts.
‘SHARED SACRIFICE’ PUSHED
That still left the bigger problem—the pension funds needed money. The activists visited D.C. over and over to lobby for government help. Senator Bernie Sanders twice introduced the Keep Our Pension Promises Act, which would have gotten money to shore up the PBGC by closing tax loopholes for the rich.
Then Senator Sherrod Brown of Ohio introduced the Butch Lewis Act, named for a beloved TDU leader and pension activist who had “passed away from the stress,” Walden said; his widow Rita Lewis became a prominent voice in the struggle.
Foes in the Senate kept pushing “shared sacrifice”—that retirees should feel some pain. But her husband had already made his sacrifice, Vargo said: “He worked all those years, missed all those family events, to get a pension for our family.”
Besides, Pagel points out, the pension bailout is peanuts compared with Trump’s tax cuts for the rich, which swelled the federal debt by $1.9 trillion.
THE RIGHT TO RETIRE
In the end the stars aligned. Democrats took the Senate. The Butch Lewis Act was attached to the stimulus bill and didn’t need a filibuster-proof 60 votes. Republicans were busy aiming their fire at Sanders’ $15 minimum wage.
By defending their own pensions, the activists landed a blow for everyone’s right to retire. After multi-employer pensions it could have been cuts to single-employer pensions, and then Social Security.
“The first three-fourths of this fight was educating the members about the pension, and that was over many years,” Pagel said. “We built up such a groundswell of anger at what was happening that Hoffa and all his minions, they couldn’t ignore it anymore.”
“We knew there was nobody going to help us but us,” Vargo said. “It’s really a lesson that I’m happy to pass on to my kids and grandkids. You group together with other people of similar thought and you keep fighting. There’s just no other way.”