The Mechanical Contractors Association of Kansas City (MCAKC) is dedicated to competing for every mechanical contracting job in the Kansas City Market.
One of our biggest challenges when competing with a non-union shop is the cost that’s associated with the unfunded liability in our pensions.
We have great pension and benefit programs, but they add to our costs and create uncertainty when contractors are thinking about investment.
Imagine if you had a mortgage on your house, but the mortgage increased every time a neighbor went bankrupt. That’s what happens with our pensions. If one union mechanical contractor goes out of business, the amount owed to employees from that contractor is spread to every remaining union contractor. That makes investment in new technologies and areas of growth a challenge.
MCAKC Contractors are committed to working with our Local Unions to resolve this challenge. The sections below outline what you need to know about our pensions as we prepare to compete for every project.
Wages and Benefits
See this guy? He’s feeling pretty good because back in his day, non-union shops weren’t undercutting union rates.
Today, MCAKC Contractors offer the best wage and benefits packages in the industry, but the expense makes it hard to compete with non-union contractors.
In fact, Local 8 recently had to use a portion of its planned wage package increase to strengthen its pension and health and welfare benefits.
We can’t just cut our way out of this problem. We have a shared responsibility to make smart changes. That requires us to get competitive. When we compete, we generate more hours, and more hours lead to long-term stability for our industry and our pensions.
The Union Difference
In 1960 this Foreman didn’t have to worry about competition. Nearly every mechanical contracting job was a union job.
That was then. Now, despite the fact that a Journeyman in a Union Plumbing or Pipe Fitting shop makes roughly the same hourly wage as a journeyman in a non-union shop, non-union contractors are still able to beat us for jobs. That’s because wages don’t tell the full story.
The Union health and retirement benefits package adds more than $19 per hour for each Journeyman on top of his wages. So while we enjoy first-rate benefits, they also create a competitive disadvantage.
Our Retirement Plan
Fifty years ago, this guy could have gone his entire career without knowing much about his pension plan, but today we need to be smarter. We have a defined benefit, multi-employer plan.
It’s a retirement program that’s supported by contributions from more than one employer and is managed by a Joint Board of Trustees from labor and management. It provides a set amount of income upon retirement.
This kind of plan assumes that more people are paying into it rather than taking money out. Unfortunately, that’s not the case today.
The amount of money that’s owed into the system to ensure current workers receive their benefits is the “unfunded liability,” and it’s one of the biggest challenges facing Union Mechanical Contractors today.
Unfunded Liability Risk
We didn’t have to worry about “unfunded liability” in 1960.
Today, we all have to be concerned about these risks. If a contractor goes out of business, for example, it’s unfunded liability is passed along to the remaining contractors.
If fewer contractors have to absorb more costs, union pricing goes higher and becomes less competitive. That will mean fewer projects, fewer hours, and fewer jobs.
The only way to ensure that the defined pension is there for future retirees is for everyone – Contractors, Union Leaders, and Union Workers – to share the responsibility for making sensible changes that ensure the long-term health of Union Mechanical Contracting. How do we know if the pension is healthy?
Believe it or not, these folks lived in a time when the phrase “government bailout” didn’t mean a thing.
Now, it seems people are getting bailouts left and right. Unfortunately, the Pension Benefit Guaranty Corporation (PBGC), the government-run insurance program that underwrites our pensions, doesn’t have deep enough pockets to bail everyone out.
The PBGC has been under an incredible strain for the past decade. The global economic meltdown and major payouts to airlines and automakers have left it strapped.
MCAKC continues to work with federal representatives to ensure the strength of PBGC.