The 33,000 striking members of the International Association of Machinists and Aerospace Workers recently rejected Boeing’s second offer. This was primarily due to the lack of a traditional pension plan. Boeing remains steadfast on this issue.
✊ WORKING PEOPLE WIN! ✊
This is a victory. We can hold our heads high.
Congratulations, @IAM751 and W24! https://t.co/YnAAmXxvNQ
— Machinists Union (@MachinistsUnion) November 5, 2024
The company asserts that reactivating a defined-benefit pension plan is not feasible due to its high costs. There is no scenario where the company reactivates a defined-benefit pension for this or any other population,” Boeing stated. They cited prohibitive expenses as the reason.
The prolonged strike is already impacting suppliers and future supply chain security. For the sake of our communities, constituents and the American aerospace industry, I hope all parties will reach an agreement and end this strike as soon as possible.https://t.co/il125gD4b4
— Governor Kevin Stitt (@GovStitt) November 4, 2024
Bank of America analysts estimate that reinstating the pension could cost Boeing more than $1.6 billion a year. In the 1980s, about 40% of US private sector workers had a pension plan. However, that number has dwindled to 10%.
A quick overview of what happened tonight at @IAM751 HQ as the union's members voted to approve a new four-year pact with Boeing and ending a 53-day strike. https://t.co/ZGeVj221Tw (via @theaircurrent)
— Jon Ostrower (@jonostrower) November 5, 2024
Jake Rosenfeld, chairman of the sociology department at Washington University-St. Louis, reflects this trend.
Machinists accept new Boeing contract
“I don’t think, in my lifetime, we will ever see pensions as commonplace as they once were,” said John Lowell, a partner at consulting firm October Three. However, Lowell noted a shift in the pension landscape. He mentioned that some employers are now offering cash balance plans, which differ from traditional defined benefit plans.
For example, IBM announced earlier this year it would resurrect its dormant pension plan. They are modifying it to a cash balance plan that includes automatic contributions from the company. In traditional defined benefit plans, employees are guaranteed a set monthly payment.
This is based on their salaries and years of service, with no contributions required from them. In contrast, cash balance plans involve pooled trusts where employers contribute a percentage of an employee’s salary. Employees do not contribute, but the payout they eventually receive is determined by a guaranteed rate of return or the performance of investment vehicles like government bonds or mutual funds.
This ongoing debate highlights the challenges Boeing faces in balancing financial sustainability with meeting employee demands. This is happening even as the company strives to resume normal production operations.
