Washington Legislature Passes Tax Subsidy for Boeing

A pivotal union vote for the future of Boeing operations in Washington state and for many middle class workers.

Is there a compromise to be had? Time will tell, but this rhetoric from both sides does not help

Leaders of the International Association of Machinists stood alongside Governor Jay Inslee when he announced his tax and labor plans for Boeing.

But at a raucous union meeting Thursday night, IAM President Tom Wroblewski tore up the proposed contract and called it "a piece of crap."

Hours later Boeing said it was ready to look for another location.

Egilman

I think you have hit the nail on the head when you point out

Boeing isn't kidding this time, and Seattle isn't the only game in town when it comes to building large airplanes anymore

Expansion s already underway in South Carolina as you note

The effects of Seattle being totally excluded from the new projects will have an effect on the overall economy of the area

A real look at the long term big picture is required here in my view

Thanks for the perspective and the feedback

jwc2blue

As always thanks for sharing your perspective on the issue

Corporations again hold States and workers hostage. States with right to work laws bypass union wages and often minimum wages. Jobs like wings from Japan were financed by tax payer money allowing Boeing to cut tax payers throats by accessing what would be starvation wages in the United States. If the States don't care what they are doing to the country and the economy there is little hope. Texas and Florida prove that is the plan. Voter elimination in Red states has become a game of devilish proportions.

r m e r

Hadn't heard the "hostage" chant of late but I figured it would show up sooner or later.

If you read the article, the key aspect of this situation is not the tax subsidy as much as it is concession from the union

Jobs like wings from Japan were financed by tax payer money allowing Boeing to cut tax payers throats by accessing what would be starvation wages in the United States.

Canyoushare anyfacts on wage levels in Japan on which you base your statement or is it simply a convenient piece of rhetoric?

There are unions in right to work states but there is no requirement for workers in industries to be part of or contribute money to unions.

I wonder if the wages paid to the Boeing workers in South Carolinaare higher or lower than the average wages in the state? I have not seen any data on that perhaps you have.

Is the state of Washington and the work fore there better off if there are concessions made by the union or if Boeing creates new jobs somewhere else? A slightly diminished benefit offering or fewer jobs?

A baffling question to some

Nice deflection of the voter rights but it seems that the states are putting their citizens to work in good paying jobs

Egilman

Good points

Again thanks for the perspective and feedback

Right to work states have highest # of poor per 100.

source citation please

Even if that is accurate it does not show cause & effect . In fact it might be the reverse .

Interesting graph. Boeing wages in SC vs Washington. It shows WA wages $8k per year higher. Than you have to take in account, taxes and general cost of living in each state.

indeed...

Kavika

Thanks for the info

The cost of living in SC is substantially less than Seattle not sure how much though.

I am sure that the overall costs of labor in SC are substantially less than in WA which is why companies are moving operations to SC and other states instead of WA and CA for example.

With the tool in your link if you change the jobs to Boeing machinists in Seattle and South Carolina the difference is $3K ($36K vs $33K) not really that dramatic a difference actually

R G

If the question is directed to me, I am not sure what you mean?

Frankly, Boeing would jump at the chance to cry poor mouth in Washington state. Then they could renege on the pension liability, that is most likely underfunded.

I was thinking yes, but from the corporate financial perspective. All that stuff you mentioned is just the life cycle of the business model. It makes better financial sense for them to move. So they can escape the liabilities they negotiated in the past. Once the liabilities get to big to manage, move it to _______, and declare bankruptcy in Washington. Why should the evil corps think about what they owe to thirty thousand people?

OM, no, Boeing pension planis notunderfunded. They, unlike cities, and states are required by law to be 90% funded. The city and state pension plans are the ones that are underfunded.

If I'm remembering correctly, wasn't there something in the Michgan constitution about that very issue with Detroit? I'll look for it...hold please.

Thank you for holding.

Excerpt from the constitution.

It is my opinion, that they are all trying to set legal precedent to escape their pension liabilities country wide. Even where mandated by State law.

This article was about Boeing's previous neotiation with the...

..engineer's union.

Boeing wants to reduce its pension liability which has grown larger than the Chicago-based companys entire $56 billion market value as a way to reduce the drain on its bottom line.

The company, fighting for market share against Airbus and other competitors, wants to move to a plan in which employer and employees contribute to tax-free 401(k) investment accounts from which workers can draw when they retire how much depending on how well their investments fare in the market.

But for Dave Watt , 71, a Boeing engineer for a third of a century, a successful move by Boeing to shed pensions would deprive his successors of the dependable comforts that his $1,590 monthly check allows him to enjoy.

From a retirees point of view, its good to have something, said the Redmond resident, referring to his pension checks. You know what its going to be and its going to be there every month, as opposed to something thats tied to the stock market.

OM, I don't see them pulling out of Washington, and yes, at some point corporations cannot sustain the pensions and medical for the retired without some kind of change. I'm not in favor of pulling the rug out from under current retired, but if there aren't changes in the plan for new employees, than, at some point it becomes unsustainable.

This is being played out in the public sector now.

Boeing has trained workers in Washington. A formidable but not insurmountable fact for them. Although, these jobs would go to another state, even domestic outsourcing affects many people.

Yes it isbeing played out in our courts too. It's as scary as it sounds. A terrible precedent could be set for the working class and in the case of Boeing, maybe engineers too.

Robert G

Well excuse me for asking for clarification, your comment was at the start of a new thread so I thought it might be directed to the poster.

I am not anti-corporation, but the cities/states/country should be looking for ways that encourage expanded corporate operations in their areas in my view so telling "them: to get lost is short sighted.

O M

Thefunding of private pension plans is controlled by ERISA so underfunding is unlikely

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for pension plans in private industry. ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit. ERISA requires plans to regularly provide participants with information about the plan including information about plan features and funding; sets minimum standards for participation, vesting, benefit accrual and funding; requires accountability of plan fiduciaries; and gives participants the right to sue for benefits and breaches of fiduciary duty.

ERISA also guarantees payment of certain benefits through the Pension Benefit Guaranty Corporation, a federally chartered corporation, if a defined plan is terminated.

The Department of Labors (DOL) Employee Benefits Security Administration (EBSA) enforces ERISA.

dol

Unless of course the unions have agreed to have shares of stock in lieu of cash as part of negotiating pay raises and low benefit costs at the risk of long term security

O M

Your excerpt means that the Boening pension is funded and they want to make changes that will lower that funding and free up cash now for other purposes

Kavika

That is correct

Kavika

I agree that Boeing will maintain operations in Seattle in the short term, but I doubt there will be any expansion there and over time operations on current programs would simply end through attrition.

They have already moved a significant portion of the corporate aspect to the Chicago area I believe,

O M

even domestic outsourcing affects many people

Absolutely true and more and more prevalent all the time of late. NO reason to think that this will change soon either as corporations are wooed by states and municipalities to move

Egilman

Current pension liabilities will not be changed, what will be changed is what new hires receive as a package

Excellent point thanks for sharing that perspective

Overall it is viewed as a rollback of a benefit, why? because the amount a pensioner would receive in the future will be solely dependent on what the employee chooses as his investment plan.

They will have a pension, but they (the workers) will be responsible for maintaining it, and be responsible if they wind up with nothing, not Boeing, that is why they consider it a rollback..

Good points, personal responsibility for their lives....

Should have been there three comments earlier.

Appreciate you taking the time to explain the process of commentary

Robert G

As long as I am following the "right" process and you are satisfied then I am content

I agree. But their goal in negotiations is reduce or eliminate the pension liability. This negotiation language feeds into the US trend of eliminating the liability, not just reducing it. It does not seem to be retiree oriented at all. It makes the liability look like a good business decision. However, it undermines the collective bargaining process and forces the corporate "cost" of liability reductions or eliminations squarely onto the retirees, by taking money out of their pockets.

O M

Of course the goal is to reduce the pension liability and I bet they have goals to reduce costs in other areas as well, it is the way business works.

It is going to affect future retirees not those already retired, except that there may be some small cost sharing for insurance benefits.

It will be a choice by the union members and that choice will affect Boeings future plans to expand operations and/or where to center production of new projects in WA or elsewhere.

Thefunding of private pension plans is controlled by ERISA so underfunding is unlikely

Not so fast Robert...

The New York Times

Off the Charts

Private Pension Plans, Even at Big Companies, May Be Underfunded

By FLOYD NORRIS

Published: July 20, 2012

The companies in the Standard & Poors 500 collectively reported that at the end of their most recent fiscal years, their pension plans had obligations of $1.68 trillion and assets of just $1.32 trillion. The difference of $355 billion was the largest ever, S.& P. said in a report.

Of the 500 companies, 338 have defined-benefit pension plans, and only 18 are fully funded. Seven companies reported that their plans were underfunded by more than $10 billion, with the largest negative figure, $21.6 billion, reported by General Electric.

The other companies with more than $10 billion in underfunding were AT&T, Boeing, Exxon Mobil, Ford Motor, I.B.M. and Lockheed Martin. JPMorgan Chase had the largest amount of overfunding, $1.6 billion.

I'm sure glad they didn't include all those zeroes. The issue is not always about unions either my man. College educated people get screwed too.

ERISA only sets the standards, the enforcement comes else where in the government.

O M

You are correct and I mis-spoke I should have said 401(k) plans (rather than pension plans) are controlled by ERISA