Even a financial whiz with the skills of Warren Buffett couldn't have kept Detroit or Stockton, Calif., from bankruptcy. Public-sector unions have been living large at the public's expense through absurdly generous retirement schemes. In Stockton, a city of 300,000 in California's San Joaquin Valley, a municipal employee can retire at the tender age of 50 and continue collecting an annual check for 90 percent of his final salary for the rest of his life. "Annual" wasn't good enough for Detroit, where some retirees collected 13 monthly paychecks every year.
We'll know this week whether private-sector unions have learned that the good times eventually must end. Members of the International Association of Machinists in Seattle will vote Friday on Boeing's proposed contract change to keep production of the new 777X airliner in Puget Sound for the next decade. Boeing can't afford the platinum-plated union pension schemes of the sort that drove Detroit and Stockton off the cliff onto the fiscal rocks. Boeing offered Seattle employees a choice: Switch to a traditional 401k plan like those enjoyed by millions of Americans, or watch your jobs fly away.
Kshama Sawant, a newly elected Seattle councilman, wants a "takeover" of the Boeing plant at Everett, Wash., so workers "can retool the machines to produce mass transit like buses, instead of destructive, you know, war machines," she told a television interviewer. Mrs. Sawant has drawn crowds of unionists demanding the rejection of the new contract.
In the real world where the rest of us live, right-to-work states are doing everything they can to lure Boeing to their precincts. Boeing has already moved some manufacturing to South Carolina, and Alabama is seriously flirting with the nation's largest aviation company. Union officials have taken note. The national president of the International Association of Machinists — the man who led the damaging strike against Boeing in 2008 — now says the union must come to the bargaining table. "Some may believe this is a 'fake' play by the company," president R. Thomas Buffenbarger said in a letter to members. "Your union, based upon information that indicates otherwise, must take the threat seriously."
It was just a year ago that Hostess Brands closed its doors after the union wouldn't take the threat of bankruptcy seriously and rejected a revised contract. The company opened its books to show that it was losing millions, but the union refused to budge. The company closed its doors, filed bankruptcy and Twinkies disappeared. New investors have brought a new company to life, without union bakers. Twinkies and the cupcakes are back. They call it "the sweetest comeback in the history of ever." Last month, Atlantic Express, a bus company in New York, was forced to make a similar decision when the union rejected a hail-Mary contract to enable it to stay in business. Atlantic's workers spent their Christmas holiday filing for unemployment benefits.
Boeing won't disappear if the union rejects the new contract. The company will transfer operations to states where union bosses do not hold the sway as they have in Seattle. Right to work is the future of American manufacturing. At some point, even the politicians in Seattle will find that out.