Bankruptcy No Excuse to Gut Detroit Workers’ Pensions

The city of Detroit has become the backdrop of a fierce battle to cut public employee wages and pensions in the wake of the Motor City’s recent filing for bankruptcy.

The IAM and other labor groups stand in solidarity with Detroit city employees who have unjustly become scapegoats for the Motor City’s bankruptcy. The police officers, firefighters and other city workers who previously made deep concessions to keep the city afloat should not be subject to further cuts in wages or their pensions, which they have paid into and rightfully earned.

“It’s a lie to say Detroit’s economic downfall is due to the greed of its hard-working public service employees,” said IAM International President Tom Buffenbarger. “Instead of seeking real solutions to the city’s financial troubles, some would rather target the livelihood of the people who have worked tirelessly to keep Detroit running amidst extremely limited resources. Detroit needs emergency financial assistance, not state-mandated poverty for its public employees.”

Click here to see an article in The Washington Post that exposes the “Five Myths about Detroit.”

Schemes to defraud city workers have a long history in Detroit, but the fate of the city was sealed when Republican Gov. Rick Snyder appointed bankruptcy lawyer Kevyn Orr to be the city’s emergency manager this March. On July 18, 2013, in a city that in the 1950s boasted more than two million residents (it’s now at 700,000) and was the world’s most innovative and productive auto manufacturing center, Orr filed Detroit for Chapter 9 Bankruptcy.

Detroit’s misery can be traced back to a number of long-standing economic and social factors: one is the implementation of bad trade deals like NAFTA that encouraged Ford, GM and Chrysler to move good-paying jobs out of the city. As a largely one-industry town, Detroit’s middle class practically vanished with the auto manufacturing jobs, stripping the city of its tax base and starving its remaining citizens of public services. It didn’t help that state funding to the city was cut by $66 million from 2011 to 2012, or that federal aid to Detroit has been slashed by $160 million since 2002.

The AFL-CIO’s Executive Council has called on President Obama and Congress to provide emergency federal assistance to Detroit, and for the state of Michigan to match that aid.

“Neither Gov. Snyder nor Mr. Orr have shown good faith in this matter,” said the AFL-CIO’s Executive Council in a statement. “Mr. Orr said publicly he has ‘bent over backwards’ to work with constituencies in Detroit, but this is not true. While Mr. Orr did have significant discussions with bondholders prior to the bankruptcy filing, despite many requests Mr. Orr has not had a single meaningful discussion with the unions representing the overwhelming majority of Detroit’s employees. No good faith. No bargaining—even though the law requires it prior to bankruptcy.”

For now, Detroit public employees have Michigan Attorney General Bill Schuette on their side. Schuette has said he will defend city workers in bankruptcy court, noting the state constitution is “crystal clear” in stating that pension plans are a contractual obligation that may not be reduced.

Click here to read the entire AFL-CIO resolution defending Detroit city workers.