The $200 Million Mystery

-

First, many thanks to the 480 employees – a fantastic number — who signed the petition demanding that publisher Fred Ryan offer workers a fair contract. Your passion is making a difference.

But we must do more. Urgently.

The Post has signaled that it is closer than ever to a take-or-leave-it position. Among other things, the company continues to insist on cutting severance pay in half. And the Post is still trying to cut health-care benefits for part-timers – a cost to the company of $35,000 a year – unless the Guild agrees to the company’s pension and wage proposals.

In fact, we have arrived at a moment where we can truly see how absurd – and mysterious – our new owner’s position is. Amazon founder and multibillionaire Jeff Bezos is insisting on slashing retirement benefits although he has absolutely no need to do so. The pension fund is wildly overfunded, and by law it can only be used for retirement benefits.

We sense that it’s a pure power play, and that management’s fundamental belief is that it should be able to do whatever it wants, whenever it wants, without resistance from the people who work here. And although the Post wants to make this look like something that affects only older employees, or that it’s just about retirement, the truth is, we have come to the big reveal about Bezos and what he has in store for everyone, especially younger employees.

That’s because, if the Post can do such a radical and unfair thing now, imagine what it will do to you in the future. The Guild has already shifted its fight to protect young employees – and the Post is resisting more than ever.

Here’s the deal: The pension has about $371 million in assets and $169 million in liabilities. This is an astounding surplus — virtually unknown in modern American business. There is no conceivable reason to cut benefits from a fund so hugely overfunded.

The company has never offered a reason, either. We hear vague talk about limiting long-term liability due to market fluctuations. But the most likely scenario is that this nearly $202 million surplus will keep growing, its assets steadily outpacing liabilities, until doomsday. What’s more, the company is currently invested aggressively in the stock market – 85 percent in risky equities – as if the company feels some feverish need to boost its stash even more.

We ask you, Mr. Bezos: Why?

Why on earth are you insisting on cutting retirement benefits when you’re sitting on a Scrooge McDuck-sized pile of cash? Why have you shot down every compromise offered by the union if there is zero risk that the company will ever have to use operating earnings to contribute to it?
According to experts with Cheiron, the financial firm that has helped us try to meet the Post halfway on retirement plans, here are some theories about what Bezos could do with that pile of money:

• Bezos could buy another company whose pension fund is underfunded and use the Post’s overfunded pension to shore it up – thereby lowering the overall purchase price of the target company. It could be another media company or an aerospace corporation – who knows? There are dozens of companies whose pension funds are in bad shape.

• Bezos could sell off his pension liabilities to an insurance company that would then be responsible for paying out pension benefits to all participants for the rest of their lives. To assume such risk, an insurance company charges a premium, but the Post removes a big liability from its books. That’s useful if Bezos should want to sell the Post at some point. For us, it adds more risk because we would lose the federal guarantee of life-long pension payouts, no matter what.

• Bezos could try to take the tax-free money back out. But this is the most unlikely scenario because he would have to pay a huge amount in taxes on that money. Our analysts say it would almost be dollar for dollar, and so it’s unlikely this is what he’s thinking.

We have made three compromise pension proposals, each crafted to address management’s stated concerns about potential long-term liability. Our most recent offer accepted management’s structure for pensions. The traditional pension would be frozen: a major concession from the Guild. Everyone would go into the Cash Balance pension plan. However, we also proposed a change in the formulas used for calculating benefits.

This would still allow the Post’s long-term liabilities to drop, but it would also improve retirement benefits for everyone compared to the Post’s proposal. It would particularly benefit our younger, newer workers, the ones hired since 2009. We are also fighting to extend the Cash Balance pension to all future employees.

Management’s response? “No.” And “no” again. The company’s latest bulletin preposterously claims that our proposal would increase the company’s liabilities. Our numbers show otherwise. The management assertion seems to be a novel interpretation of the data that has escaped our professional actuaries.

Management also keeps saying that its pension proposal affects only about half the employees in the Guild-covered unit. But watch out. If management gets its way by treating all future employees as third-class citizens who will get neither the traditional nor the Cash Balance pension, you can be sure that the next time we bargain, the company will say, “If having no pension is good enough for these newcomers, why isn’t that good enough for everyone?” And why should we think the Post will be less ruthless two years from now?

In fact, the Post is now claiming it has run out of options. Under U.S. labor law – which is slanted toward the powers that be, not unions – the company has the right to impose its last best offer in the event of a good-faith impasse.

The situation is urgent. We are calling on everyone to join us Friday May 15 for an open, all-hands-on deck discussion about next steps. We will discuss all options open to us. There will be three meetings at 12:30 p.m., 1:30 p.m. and 7:00 p.m. And if you haven’t joined the Guild, please do so now — and sign a friend.

The Guild Bargaining Committee

Units in this article: The Washington Post