The break-up of the AFL-CIO is further proof of the demise of the union movement.
Much of the press focused on how the unions differed in their approach to rebuilding. The AFL-CIO wanted to keep spending its money on political races to help elect Democrats — and we saw how well thatworked. The breakaway unions — the Service Employees International Union and the Teamsters — wanted to devote their time and funds to recruiting new members. But the best-kept secret around is that neither approach is likely to reverse the decline of unions because they no longer speak to the needs of employees.
For example, all three of these unions think that so-called defined benefit plans, paid for by employers, is the only pension system they can support. The problem, though, is that many large, unionized firms are dumping their pension plans into taxpayers’ laps, where benefits are paid at a fraction of the original promise.
That union distrust carries over to personal retirement accounts funded by Social Security taxes.Take this claim by the SEIU: “The privatization plan undermines retirement security by cutting benefits by 30-50%, even for those who don’t choose a private account. For those who do use risky private accounts, their retirement savings likely won’t make up for these cuts.”
The truth is that the Standard & Poor’s 500 index has returned an average of 8.5 percent over the last 56 years, says the St. Louis Federal Reserve Bank.
Unions know that. But they would rather live in the 20th century’s pension system than the 21st century’s. Ironically, if Congress does nothing about Social Security, it will have to bail out that program — just as it is bailing out private pension plans.
When any group lies to its members as the unions have, it loses those members. But the unions are still singing their libelous tune — and paying the price.