Last week, Boeing offered the 33,000 striking union machinists a 35% wage hike — short of the 40% raise the union initially sought — and said it would increase its contributions to employee 401(k) plans while also proposing other benefit improvements, such as an annuity option.

Missing from the contract offer, however, was the union’s biggest demand: a return of the company pension program, which has been frozen since October 2016. The workers voted to reject the proposal and continue their strike.

“That ship has sailed — but that doesn’t mean it’s not an effective bargain tactic,” said Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations. “It’s a legitimate request. But I don’t think Boeing’s even considering a pension.”

The union, the International Association of Machinists and Aerospace Workers, said Sunday that it had been in contact with the U.S. Labor Department “in an effort to spearhead getting back to the [negotiating] table.” On Tuesday, the union said its bargaining committee had a productive face-to-face meeting with the company, with the assistance of Acting Labor Secretary Julie Su.

Pensions and the American dream

A study earlier this year by the National Institute on Retirement Security found that Americans have strong views supporting pensions. A total of 77% agreed that the disappearance of pensions makes it harder to achieve the “American dream,” and 83% said that all workers should have a pension so they can be independent and self-reliant in retirement.

However, pensions in the private sector are now rare. The number of Americans actively participating in private-sector pension plans dropped to 12.6 million in 2019, down from 27 million in 1975, according to the Congressional Research Service. By a different measure, only 15% of private-industry workers had access to a pension as of March 2023, according to the Bureau of Labor Statistics.

Over this same time, participation in 401(k) plans, profit sharing and similar private-sector defined-contribution plans surged to 85.3 million in 2020, from 11.2 million in 1975, according to the Congressional Research Service.

A pension, also known as a defined-benefit plan, is typically a guaranteed payout from your employer in retirement. A 401(k), or defined-contribution plan, is a workplace retirement savings and investment plan in which contributions come out of an employee’s paycheck and may be matched by the employer.

“401(k)s just aren’t cutting it; it’s a failed experiment for millions of people. 401(k)s put all the risks and responsibilities on the individual, who may be debating between keeping the lights on or buying groceries,” said Karen Friedman, executive director of the Pension Rights Center. “Pensions have always been part of the American dream and retirement security — so that’s what’s at stake. This [union battle] is stimulating a debate on these issues.”

Boeing reiterated the statement it has made since September.

“There is no scenario where the company reactivates a defined-benefit pension for this or any other population. They’re prohibitively expensive and that’s why virtually all private employers have transitioned away from them to defined-contribution plans,” the company said.

Bank of America analysts estimated in a research report earlier this month that reinstating the pension would cost Boeing about $25 billion over a 15-year time horizon, or $1.6 billion to $1.7 billion a year.

“Given the state of affairs in the company’s balance sheet, the ask for a defined-benefit program restart would seem to be a nonstarter on a number of levels,” analysts at Wolfe Research said in a recent report.

The union is still angry over the 2014 contract that froze the pension, according to Wheaton. The union only agreed to that after Boeing threatened to move the production of new planes to nonunion facilities if they didn’t.

“They’ve had 10 years of a bad contract they’re trying to make up for,” Wheaton said. “It may seem like they’re asking for the moon and the stars, but it is built-up anger over 10 years.”

The union expressed that sentiment when announcing its rejection of Boeing’s offer last week.

“There are consequences when a company mistreats its workers year after year,” Jon Holden, president of IAM District 751, and Brandon Bryant, president of IAM District W24, said in a joint statement last week.

“Workers across America know what it’s like for a company to take and take — and Boeing workers are saying they are fully and strongly committed to balancing that out by winning back more of what was taken from them by the company for more than a decade,” the statement said.

Other union efforts to resuscitate pensions have failed. The United Auto Workers last year ratified a contract with “Big Three” automakers Ford

Wheaton said that with current tax laws and accounting requirements, pensions are too costly for most companies to carry on their books. “It’s extremely difficult to have a pension.”

In an unusual move, computing giant IBM 1.20%  said last year that it was doing away with its 401(k) match and replacing it by reopening its defined-benefit plan.

“The case of IBM was unique given that they had maintained their fund and it became significantly overfunded, meaning that they had much more money than they needed to pay off the remaining promised benefits,” said Craig Copeland, director of wealth-benefits research at the Employee Benefit Research Institute.

If the machinists succeed in pressing Boeing to revive the pension, it would likely have repercussions in other union battles, according to Copeland. “If Boeing would bring back their pension plan, it could certainly be used as ammunition for other efforts by pointing out that it can be done.”

He added, however, that “with the additional liabilities that the plan would involve for Boeing, I don’t see how they would commit to such a plan.”

“The only chance is if there is a very low traditional benefit amount with a 401(k) plan on top of it — but even then, it opens doors for future negotiations that would be tough to fund or hard to close again,” Copeland said. “I think the probability is very, very small that the plan would be brought back.”