The Washington Examiner
Liberals get so nostalgic about the 1950s American economy. Why, they ask, can’t corporations be forced to act as they did then, with their generous pay and guaranteed retirement benefits? The irony is that many companies are in dire straits today — becoming less competitive, facing grimmer prospects and not hiring as many new workers as they would otherwise — precisely because they are stuck with the World War II-era compensation model for which liberals pine.
Three and a half years into the Obama recovery, America’s economy is contracting again and the unemployment rate ticking upward. Many big employers are still not expanding their operations and workforce. The reasons for this vary by company, but in many cases the culprit is crushing pension debt. Rather than invest in their own operations, companies like Ford, Boeing and Verizon have been forced to pour billions into their workers’ defined benefit pension funds just to make up for their poor market performance and keep them afloat. And even then, some of the funds are barely scraping by.
“It is one of the top issues that companies are dealing with now,” Goldman Sachs pension strategist Michael Moran told the Wall Street Journal this week. Ford alone plans to put $5 billion into its plan this year — a reaction to low interest rates that are depressing the fund’s value. It is right and just for companies to honor their obligations thus, but bear in mind that that large sum would otherwise go into building the business, keeping it competitive through research and development, hiring new employees or even hiking wages. Instead, Ford’s $5 billion is necessary just to plug a hole, and even then it is not enough.