Teresa Ghilarducci, University of Notre Dame
De-linking Benefits for the Single Employer: Alternative Multiemployer Model
Teresa Ghilarducci considers whether the structure of multiemployer plans can be made general enough to help expand coverage to the 50 percent of American workers without voluntary work-based pensions supplementing Social Security and private savings.
Her study concludes that, although multiemployer plans in the private sector and public sector cover very different types of workers, they solve three common problems. Primarily multiemployer plans solve a collective action problem - that is, not one employer has the incentive to provide employee benefits or training without their competitors doing so. Second, multiemployer plans complement the uniform Social Security program by recognizing unique industry and occupation skill management and insurance needs. Last, multiemployer plans can take advantage of savings on large group annuities and professional management fees.
De-linking pensions from a single employer through multiemployer plans can solve portability and income security problems. Because the stylized "new" labor market shares similarities to some parts of the "old" economy workforce - unstable jobs, occupation-based demand, small employers - multiemployer plans can serve as a model for expanding social insurance across employers. The plans lower the cost of training to workers and employers by reducing the costly chance of workers leaving the industry or occupation, or - and this is the worst fear - working for a competitor, after extensive employer investments in the workers' human capital.
