33,000 Boeing workers end strike: No pension in new contract, but 401(k) contribution boost
Retirement plans were a hot button issue for union workers, who wanted Boeing to bring back their lost pension plans, however, Boeing said they were “prohibitively expensive.”
While the 33,000 Boeing machinists did not end the strike on Monday with a renewed pension plan, the 2-month strike did give them a boost to 401(k) contributions and their paychecks. The workers’ strike, which halted airplane manufacturing at plants around the Northwest, ended with a 59% vote in approval of the contract offer from Boeing.
“During every negotiation and strike, we must continually evaluate where our leverage stands going forward,” International Association of Machinists and Aerospace Workers (IAM) President Jon Holden said in statement. “We believe that we have secured one of the strongest contracts in the aerospace industry.”
Retirement plans were a major sticking point between Boeing and its union workers. The striking machinists wanted the world’s largest aerospace manufacturer to bring back the traditional pension plan Boeing ditched a decade ago, as part of a deal with machinists to build its 777 jetliner in Washington.
Boeing, which replaced the pension with a 401(k) plan, had resisted attempts to restore the pension plan. “It does come down to potentially exploring other defined-benefit options, which we are willing to do,” said IAM President Joh Holden, at a press conference.
Workers will also receive a 38% pay raise over the next four years, a $12,000 ratification bonus, reinstated performance pay, and a 100% 401(k) match, up to 8% of pay.
The contract does not include a renewal of the workers’ pension plan, but Boeing is offering a $215 per year pension multiplier for those vested in the Boeing Co. Employee Retirement Plan.
The ratification bonus combines the previous $7,000 ratification bonus offer and the $5,000 lump sum contribution into workers’ 401(k) plans. Members can choose how the total bonus amount is received—in a participant’s paycheck, as a contribution to their 401(k), or a combination of both.
Last week, the union rejected a proposal that offered a 35% pay hike and increased contributions to the company’s 401(k) plan, as well as Boeing’s offer to make a one-time contribution of $5,000 to 401(k) plans and to match 100% of employee contributions, up from 75%, on the first 8% of a worker’s pay. Boeing also offered to increase pension payouts for the 42% of IAM members who are still part of the pension plan, allowing a worker with 20 years of employment to receive a pension payment of about $2,100 a month, up from $1,900.
“There is no scenario where the company reactivates a defined-benefit pension for this or any other population,” Boeing said in a previous statement. “They’re prohibitively expensive, and that’s why virtually all private employers have transitioned away from them to defined-contribution plans.”
Over the last few decades, pension plans have been replaced in most workplaces by 401(k) plans. Last year, IBM, once a leader in the shift away from defined benefit plans to defined contribution plans since 1984, announced that it was suspend its 401(k) match and 1% automatic contribution and instead make a monthly account credit toward a hybrid pension plan – consisting partially of a DC plan and partially of a DB plan.
Related: 3M to freeze pension plans in 2028: Will other companies follow suit?
The IAM Union has been in communication with the Department of Labor “in an effort to spearhead getting back to the table,” according to the union website.
Acting Secretary of Labor Julie Su issued the following statement yesterday on behalf of the strike: “President Biden and I congratulate the 33,000 machinists at the Boeing Company on their historic new collective bargaining agreement. This agreement, with its record wage increases, retirement improvements, guaranteed productivity bonuses, and commitments by the company to keep production in Puget Sound, demonstrates what is possible when workers have a real voice on the job …
“This agreement proves yet again that collective bargaining works. It is one of many historic wins for working people that are reshaping and strengthening American industries. With this new agreement ratified, Boeing and its machinists can now move forward to build and strengthen their partnership, which will be critical to Boeing’s success.”