Miners’ new contract provides hefty raise but diverts new hires to 401(k) plan

Members of the United Mine Workers of America last week approved a new contract with the Bituminous Coal Operators Association that provides the largest pay raise for miners in the union’s 121-year history and preserves the current level of health care coverage for active miners, retirees, and their families. But the agreement also allows the operators to divert newly hired miners away from the current defined benefits pension plan and into a 401(k) plan.

“The membership saw clearly that this agreement provides a strong measure of security for themselves and their families,” said Cecil E. Roberts UMWA president. The new pact received a “yes” vote by 70 percent of the UMWA members covered by it.

Active miners will get a $1 an hour raise in July, then another $1 an hour raise in January. After that, they get a $1 an hour raise for each year of the next four years of the contract. When the contract expires in December 2016, union miners’ average pay will be about $30 per hour.

The contract also attempts to address the under funding of the miners’ current pension plan, which as a result of the 2008 financial crisis in 2010 was pronounced “seriously endangered” by the US Department of Labor’s Employee Benefits Security Administration.

Under the old contract, coal operators covered by the contract contributed $5.50 per hour worked to the miners’ defined benefits pension plan, which covers 70,000 retirees and 25,000 active UMWA members. Under the new agreement, the company will continue to contribute $5.50 per hour worked for currently employed miners. But miners hired after January 1, 2012 will be diverted into a 401(k) plan and operators will contribute only $1 an hour worked to the new hire’s 401(k).  In January 2014, that amount increases to $1.50 per hour worked.

“Putting the new miners in a 401(k) plan relieves the pressure that the (coal operators) were going to have to jack way up funding the old plan,” Jim Thompson, editor of Coal and Energy Price Reports, told the Wall Street Journal.

The Bituminous Coal Operators Association represents mainly Consol Energy of Canonsburg, Pennsylvania and its subsidiaries, but other unionized coal companies are required by law to adopt the pension language in the contract between UMWA and the association. However, they are not required to adopt other provisions.

But Roberts said that the recently approved agreement represents the industry standard for unionized coal companies and he expects the other companies to agree to similar wage and health care language.

“We will be taking this agreement to the other companies immediately, and looking for them to agree to the entire contract,” Roberts said. “Our message to them will be simple: This is the industry-wide agreement. This is the agreement our members who work at your operations overwhelmingly ratified, and we will accept no less.”


5 thoughts on “Miners’ new contract provides hefty raise but diverts new hires to 401(k) plan

  1. This is what the Texas Legislature tried to do to state employees: divide current workers from new workers, with the new workers getting a 401(k) and the old workers getting to keep their traditional pension plan. This is a really bad, bad trend. The more it happens, the more pressure is put on workforces that still have pensions to accept the 401(k). In this case the union members were bought off with good pay raises–which the Texas Legislature has certainly not offered to Texas state employees!

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