Wal-Mart employees may not know this, but the United Food and Commercial Workers International Union, which organized Black Friday's "strikes" outside their stores, has a serious problem. Its pension funds are failing.
Most are in critical status (defined as less than 65 percent funded) or in endangered status (less than 80 percent funded), according to the union's own reports to the U.S. Labor Department. Without an infusion of new cash, they will not be able to pay all their obligations to future retirees.
That's why the UFCW seeks to sign up 1.4 million Wal-Mart employees -- to inject fresh money into its failing plans. This union, with 1.3 million members in North America, has been unsuccessfully battling for years to organize Wal-Mart, the world's biggest retailer.
Despite the "strikes," Wal-Mart's sales were at record highs on Black Friday. Stores were well-staffed, with employees motivated by their extra 10 percent discount on purchases.
Meanwhile, the UFCW's required union dues and underfunded pensions are somewhat less appealing for workers. The UFCW's Northern California Employers Joint Pension Trust Fund, covering 121,000 workers, is funded at 65 percent. The Tri-State Pension Plan, covering Pennsylvania, New Jersey and Delaware, with 35,000 workers, is funded at only 55 percent.
In contrast, the union's retirement plan for its officers and staff has no problems at all. It is a 401(k) and profit-sharing plan run by Fidelity Investments, so it will never suffer from underfunding. Why can't the rank and file have 401(k) plans and profit sharing too? Union officers and employees also benefit from the UFCW International Union Employees Annuity Plan, which had a market value of $4.2 million for the 2009-2010 plan year. When I called the UFCW to ask about pensions, the union spokeswoman had no comment and refused to give her name.
With 401(k) plans, participants can switch jobs and take their retirement assets with them. But UFCW members lose pension benefits if they change jobs before full vesting.
The UFCW's problems are a reflection of the long-term decline in union membership, from 24 percent of the American workforce in 1973 to 12 percent in 2011. The percentage of Americans belonging to unions will soon slip to 11 percent, according to Heritage Foundation economist James Sherk. Among private-sector workers, he projects that when the number is announced in January, the share belonging to unions in 2012 will have declined to 6.6 percent from 6.9 percent in 2011.
Hostess Brands is another casualty of collective bargaining, closing and laying off 18,500 workers because a strike by the bakers union forced it into liquidation. With union membership down, unions are eager to sign up new members in order to swell their ranks, replenish their treasuries, fund staff salaries and infuse new money into union-sponsored pension plans, many of which are underfunded.
The group organizing the protests, Organization United for Respect at Walmart, or OUR Walmart, seems to be acting as a labor union, because it claims thousands of Wal-Mart employees as members. However, it is on shaky legal footing because it has not filed financial disclosure information or elected officers, as unions are required to do under the Labor-Management Reporting and Disclosure Act.
And the UFCW likely doesn't advertise to prospective members that it spent $10 million of workers' required dues on gifts, lobbying and political contributions in 2011, according to the union's reports to the Labor Department.
It's no wonder that the UFCW and OUR Walmart aren't telling Walmart employees the full story. They might see that joining a union isn't such a good deal after all.