Boeing Co. workers are doubling down on reviving their legacy pensions, rejecting a labor deal with generous pay packages even as similar union efforts to restore those retirement benefits have failed.

Two rounds of negotiations with the International Association of Machinists and Aerospace Workers to end a five-week strike have resulted only in offers to boost worker 401(k)s, signaling restoration of pensions axed a decade ago may be more of a bargaining chip than a viable request.

But members of the International Association of Machinists and Aerospace Workers appear to be holding out, rejecting on Wednesday a proposed four-year agreement that would have guaranteed 35% wage increases and enhanced 401(k) plan benefit matches by setting them well above the national average at 8%.

Unions are finding success making pensions a fixture of high-stakes labor negotiations, even though the economics of guaranteeing income for retirees is a nonstarter for most 21st century businesses. They are using a post-Covid financial revival to cash in on the debts they think they’re owed for giving up pensions when times were tough, but they run the risk of overselling that promise to workers, observers say.

“Employees want to go back to traditional pension plans, but they’re asking for a dinosaur,” said Jane B. Jacobs, a Tarter Krinsky & Drogin LLP partner. “It’s never going to happen.”

The United Auto Workers union held out for six weeks against Detroit’s Big Three last year in part due to a long-shot bid to bring back pensions for younger members, ultimately relenting to accept instead historic gains in pay and the elimination of wage tiers.

Mondelez International Inc.-owned Nabisco workers in five states settled in 2021 for compounding wage hikes, 401(k) plan increases, and signing bonuses after the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union promised to reinstate pensions the company froze in 2018.Pensions fell out of favor on Wall Street decades ago after repeated economic downturns left employers feeling trapped. Shiny new 401(k) plans offered an easy out by shifting the burden of saving enough to live off of from the employer to the employee to “control their own destiny,” Jacobs said.

Union-brokered multiemployer pensions endured as long as they could, but even they began freezing plans to new participants about 10 years ago, as labor unions faced the impossible choice of preserving their pensions or members’ jobs.

In their 2014 collective bargaining agreement, Boeing ended workers’ pensions and guaranteed them marginal wage increases over the next 10 years.

“The union and the workforce were very bitter then and apparently that’s continued to this day,” said Harry Katz, a labor professor at Cornell University. “Some younger workers like working with the market and like investing whereas many of the older workers, who switched from defined benefit and are used to that, are pissed off by that switch.”

‘Ship Has Sailed’

A schism may now be opening between workers and their union leaders left trying to strike a careful balance between how they communicate with their members and how they negotiate with management.

“The negotiators came to a settlement, but the employees just didn’t accept it,” said Craig Copeland, director of wealth benefits research at the Employee Benefits Research Institute, addressing the Boeing vote. “Someone must have thought this was as good as they could do.”

The UAW and BCTGM agreements suggest that union leadership understands the economic reality—that pensions are too costly and uncertain for publicly traded companies to absorb again, said Allen B. Roberts, an employment litigation member at Epstein Becker & Green PC.

After 64% of his members voted down the Boeing proposal this week, IAM District 751 president Jon Holden said he wanted to hear what Boeing would offer instead.

“The loss of the pension is still right at the heart of this” for many union members, Holden said. “We’re going to put all cards on the table” to see what Boeing can offer in lieu of the pension plan, he added, according to a Bloomberg News report.

The union had recommended against the 2014 agreement that froze the machinists’ pension, but supported an earlier proposal this year that would have ended the strike without restoring a defined-benefit retirement plan.

Pensions have greater liability and risk to employers given that turbulence in the economy—such as the Covid-19 pandemic or a recession—or changes to the mortality and age expectancy rates can make it more difficult to pay workers the benefits they were promised.

“Unions are starting to come around to that realization that, sure, you can throw it on the table, maybe as a bargaining chip, but it’s not a realistic goal in negotiations,” said Glenn Spencer, senior vice president at the employment policy division at the US Chamber of Commerce. “If a company is going to give you a 40% wage boost, they’re not going to then put a defined benefit plan on top of that. And even if it’s a more modest boost, I think that that ship has sailed.”

But fiery rhetoric at the outset on the restoration of pensions can sway how members vote, Roberts said.

“Something that is at least improbable in terms of a negotiated outcome will get such attention with such emotionality ascribed to it that it could run away from leaders, and it could quite possibly impair the successful conclusion of negotiations,” he said.

UAW President Shawn Fain has said his members aren’t done making the case for a pension.

“We made unbelievable strides in uniting our membership, but we weren’t able to kill the biggest tier of all—between those who have a pension and post-retirement health care, and those who don’t,” he said earlier this year.

To contact the reporters on this story: Austin R. Ramsey in Washington at aramsey@bloombergindustry.com; Diego Areas Munhoz in Washington, D.C. at dareasmunhoz@bloombergindustry.com; Parker Purifoy in Washington at ppurifoy@bloombergindustry.com.