Corporate irresponsibility

Peter Rachleff

April 19, 1993|By Peter Rachleff

RESPONSIBILITY" is a buzzword coming out of Bill Clinton's Washington. Government is expected to be more responsible about spending and about cutting deficits. Taxpayers are asked to demonstrate their responsibility by contributing more money. Students are expected to take greater responsibility, providing community service in return for college loans. The poor are expected to be more responsible for pulling themselves out of poverty.

But little has been said about the widespread corporate irresponsibility that plagues America -- hurting workers and retirees, and placing a heavy burden on communities across the country.

In February, the Government Accounting Office (GAO) reported on corporate violations of the federal Work Adjustment and Retraining Notification Act (WARN), which requires companies with more than 100 employees to provide 60 days' notice of a plant shutdown or mass layoff. The GAO reported that employers give the required 60 days' notice in less than one-third of the shutdowns in 1990 and 1991 and layoffs involving more than 100 workers.

But violations of WARN are only the tip of the iceberg. Corporate abrogation of pension and health-care responsibilities is a serious problem which could soon become a taxpayer's nightmare.

Eight million retirees across the country rely on health insurance benefits which they bargained for as workers. Many large employers have unilaterally raised retiree co-pays and deductibles, despite contractual agreements in which they had promised to hold them steady.

Several large companies have informed pensioners that they can no longer provide the medical benefits promised in their retirement packages. Millions of American retirees will be forced to turn to Medicare, thus passing another corporate bill on to taxpayers.

The Pension Benefit Guaranty Corporation (PBGC) list of the 50 companies with the largest underfinanced pension plans shows a 13 percent increase in guaranteed benefits not backed by money in retirement funds. Every year since 1988, pension liabilities have outpaced asset growth, doubling the amount underfinanced.

The PBGC was created by Congress in 1974 to guarantee payment of pensions. Its programs cover more than 40 million American workers. If many of them are to receive the pensions they earned, and have been promised, taxpayers will end up holding the bag -- not the corporations for which they worked.

There is little hope that the government will crack down on the many irresponsible corporations that continue to violate the WARN Act, refuse to fully fund pensions or renege on promised benefits. Regulatory agencies have had their budgets cut, their staffs reduced, and, in many cases, have had their direction turned over to officials hostile to the very concept of regulation. If charged, corporate scofflaws can expect a mere slap on the wrist.

Some optimists hope that the Clinton administration will turn this situation around. Unfortunately, in an atmosphere of tightened budgets, of promised "partnerships" between government and business and of fears of alienating Wall Street, there is little basis for optimism.

But to ignore the dangers of corporate irresponsibility would be a serious mistake. American companies know they can play fast and loose with health care and retirement funding. They realize that if mistakes are made and money is lost, the taxpayers will be forced to pick up the tab. This mentality brought us the savings-and-loan crisis and the costly taxpayer-funded bailout that followed.

The rules regarding corporate scofflaws need to be enforced. Violators should face tough penalties. American taxpayers must demand responsibility, and must insist on immediate action from elected officials.

Litigation is another option. In a recent community lawsuit, a Michigan judge enjoined General Motors from closing its Ypsilanti plant. The judge ruled that, after nearly two decades of providing GM with $1.3 billion in tax breaks, the community was justified in believing its actions would keep the plant open. Local courts around the country may soon become grounds for similar battles.

Workers, retirees and communities should realize that they do not have to be the passive victims of corporate irresponsibility. But they must act now -- before today's irresponsible corporate behavior becomes tomorrow's economic crisis.

Peter Rachleff is a labor historian at Macalester College in Minnesota and author of "Hard Pressed in the Heartland," a book about the strike against the Hormel meat-packing company in the 1980s.

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