Re: Addendum On The IBM Pension Case.
From: Dean Lawrence R. Velvel
I wish to briefly bring you further up to date, as it were, about events discussed in the posting on the IBM pension case.
That posting explained how the opinion written by The Reactionary Easterbrook allowed older American workers to get screwed over by a dishonest and unfair change in their pensions (a dishonest, unfair change away from the type of pensions that federal judges like The Reactionary Easterbrook have.) The blog also fit the dishonest change into the broader picture of how American workers, who suffer loss of jobs and loss of pensions, have been getting screwed over by big business, while high executives who run their companies into disaster, even bankruptcy, get rewarded by huge salaries, stock options, golden parachutes and the like.
Recently, The Wall Street Journal -- not exactly a fount of left wing liberalism or socialism, as one repeatedly points out -- carried an article showing that the change in pensions exemplified in the IBM case is even worse than one realized. The change, which screws over persons who have worked for a company for 20 or 30 years, is adopted, of course, to lower companies' costs at the expense of the workers. According to the Journal, researchers at Cornell, Colorado and the University of California at Irvine have found that, in the years when pensions were changed and employees screwed over, "incentive compensation for the chief executive officers" of the culprit companies jumped dramatically. "For example, filings show that when Cooper Tire & Rubber Co. converted its pension to a cash balance plan in 2002, the CEO's incentive pay rose to $1.5 million -- the highest level in a decade -- from $702,000 the year before. After a similar move by Clorox Co. in 1996, the incentive compensation for G. Craig Sullivan, its chief executive, jumped to $5.6 million from $961,000 the year before." On "average incentive compensation for the chief executive officers jumped to about four times salary in the year of the pension cut, from about three times salary the year before. Companies that didn't change their pensions saw little change."
But this is not all. It seems that, just a few days before The Reactionary Easterbrook rendered his awful decision, "Congress approved a measure that would deem cash-balance plans legal. While the [Easterbrook] ruling will be appealed, and the bill has yet to be signed into law by President Bush, employer groups say the recent actions are a green light for employers to change their pensions."
So what we have goes even beyond what was discussed in the prior blog. What we have, indeed, is a situation in which the pensions desperately needed and relied on by average workers are cut dramatically so that highly paid executives can make even more money -- can make millions more -- and Congress (as well as the Seventh Circuit) has approved this. It's another example of the rich getting richer on the backs of the middle class and the poor, while the Congressional hacks who are paid off, bought and sold by big business (as if this were the Gilded Age -- well, maybe it is) approve this monstrous result.