Chicago: A strike for our times
mainLike Brexit and the Trump election, the musicians’ strike at the Chicago Symphony Orchestra denotes a society where two halves have lost all faith in each other.
The players want a restoration of past prestige and security, perhaps illusory (Brexit). The board speaks of balancing the books and making other people pay (Trump).
It is a sad – yes, tragic – outcome in an organisation where dedicated people are found at every level and the desire to make the best music ever heard is universally shared.
In common with other current divisions, people on both sides of the line feel powerless.
The pickets will be out at eight a.m.
This is a situation that almost every business, whether for profit or not for profit, faces today. The issue is not the salaries but the change from a “defined benefit” to a “defined contribution” pension plan. Having been through this myself on both sides of the table, I assure you that this is a difficult, but solvable situation.
The current tenured members of the orchestra with enough seniority (usually 20 years) for the status of “fully vested” are not about to surrender their guarantee of a certain percentage of their final salary upon retirement for the rest of their life. When salaries were much lower, this was fundable, today with a longer actuarial life-span and six-figure salaries, the projected costs would bring any not-for-profit to its knees (and not in prayer).
My suggestion, however naive, is to continue the current defined benefit for fully vested musicians above a certain age (60 yo for example), Then offer a payout to other vested musicians equivalent to the money they could lose under a new defined contribution system which they could then invest in the new plan. New members would be required to join the “defined contribution” plan. This means that for every dollar (non-taxable until they retire) that they contribute to their own pension, the CSO would match that amount (also not taxable until retirement) $ for $ up to a certain limit (usually a percentage) agreed by contract.
I’m sure that others have proposed this to the CSO, but the orchestra needs to fund a new plan and the musicians must eventually be willing to contribute to their own pension knowing that the CSO will match them annually.
The Board needs to stop acting like bottom-line capitalists running a for-profit business and the musicians should use their creativity and flexibility to resolve this impasse. BTW, Board members could endow a fund to cover any budgetary gaps caused by the buyouts and the new plan assuming there are a few deep pockets around the table.
Maestro Muti has sided with the musicians and if the Board wants to keep him on the podium, they must solve this and quickly. He has been known to walk and I doubt that he actually needs the job.
Thanks, Robert, for your comment. I look at things in a similar way.
The thing I’d like to know is this: did management and board of Trustees provide the Musicians with actual financials during the year of negotiations? I hope they did, instead of throwing the latest I-990 at the ones who are engaged in the work of making music.
That being said: the present contentious situation is indeed the chance to turn a crisis into opportunity – one which is boldly forward-looking, with the potential to become a fine example for other organizations of comparable stature and size.
My wish to all involved: be not afraid to leave the Brexit- and Trump-style trenches and embrace Creative Imagination (lots of it!).
It’s about much more than only the Chicago Symphony Orchestra.
Didn’t Philadelphia declare bankruptcy to solve (bypass?) its pension obligations? Are there correlations between the situation with these two orchestras?
Answer to #1: yes.
Answer to #2: Somewhat, since Chi’s endowment and general financia health is higher than Philly’s.
The primary issue seems to be switching the pension plan from a Defined Benefit plan to a Defined Contribution plan.
The CNN Money site asks the following question and then answers it: “Just how common are defined benefit plans?” “Not very. The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types.”
My former employer made the switch and the world didn’t end. Older employees such as myself were given option of remaining in the old plan or switching to the new plan with good incentives. At age 53 I had the option of going either way. I did some calculations and opted to switch. I’m 69 years old now, retired, and am glad I opted to switch. My employer handled the entire process well. Why can’t this sort of compromise happen between the two involved parties here, the union and the orchestral administration?
It is worth noting that the 4% figure is a bit misleading — now only 4% of workers have a defined benefit plan, and it tends to be management who actually makes up most of that 4%. It’s an expensive benefit, given to those most valued by those with the control of the purse strings.
The orchestra members can currently expect to collect a much larger pension payment from their DBPP than they will get if the pension becomes insolvent and the PBGC takes over — I think the current benefit cap is about $68,000 per year. This is a very high stakes game of chicken! My expectation is that the people close to retirement age will be fighting tooth and nail to keep it in the hopes that they’ll be able to retire before it is eliminated (I am assuming that they are not proposing to eliminate the pension for the people already retired), but anyone who won’t be retiring before the next contract renewal battle should be concentrating on getting the best defined contribution plan.
I’m glad you had a good experience with your defined contribution plan; statistically, most don’t. That your employer handled it well indicates that your situation is an outlier. I am not convinced by the argument that since defined benefit plans are increasingly rare, we should resign ourselves to them disappearing.
It is not inevitable that workers’ lives need become ever less secure, and that fewer and fewer people can enjoy a comfortable retirement, especially as the world is producing ever more wealth and workers are getting more and more productive.
The brutal status quo is the result of a grotesque imbalance, as political power gets increasingly consolidated into the hands of those who can purchase legislators to do their bidding, and unions find their power eviscerated. The middle class started getting squeezed when people started confusing Ronald Reagan’s right wing bromides with reality. There is no reason that the pendulum cannot swing back. In fact, we are clearly seeing signs that this is happening.
Excellent comment
The better analogy of the Chicago strike is not to Brexit but to the French retirement reforms that are roiling France emblematic of the yellow vest riots.
Any pension plan that guarantees a percentage of salary to the retiree for the rest of his/her life is a pyramid scheme, a Ponzi scheme made up of more younger employees.
Only state employees enjoy such a retirement plan, and the state must constantly cajole its citizens to keep producing babies, so that the work force never ages and never diminishes in order to continue to contribute to the pension plan so that their parents and grandparents can enjoy their retirement at 50% 66% of their salary until death.
At some point, the system goes bankrupt.
No one is happy, not the older workers/musicians who don’t want to see their pension disappear, not the younger workers/musicians who don’t want to contribute into a bankrupting system that they will not benefit from when they hit retirement.
I don’t expect to see the Chicago musicans donning yellow vests and burning down Michigan Avenue, but such is the dilemma they face.
Nonsense. France has a low birth rate and a disproportionate number of old people. Orchestra musicians tend to be evenly divided along the age spectrum; in fact the Chicago Symphony is currently younger than it has been in years. Furthermore, the CSO does not “guarantees a percentage of salary to the retiree for the rest of his/her life.” Never has.
Only the New York Phil, Boston, and SF Symphony retain a defined benefit plan (among the Big “5”), everyone else is on the defined contribution plan, including even LA Phil (if any orchestra could afford a defined benefit plan, it’d be LA), and given Deborah Borda was president of LA, it will not be too long before NY abandons defined benefit as well…
Hey, here’s an idea, instead of soliciting $500 million for naming rights to the hall, how about naming rights to the pension plan: The David Geffen Defined Benefit Plan.
The picture you are using is from a student group that was protesting budget cuts to education,
nothing to do with the Current CSO situation.
“It is a sad – yes, tragic”
I hope they don’t become homeless beggars overnight if they don’t get their raise.
It takes a very weird and desperate type of creativity to drag Brexit into a dispute within an orchestra in Chicago.
Why not also drag in Syria and Climate Change, just for good measure?
It’s called an analogy. If you don’t like the analogy, just say so.
Not to minimize, but there are other orchestras with bigger issues than this. This should get solved rather quickly.
But just think about Indianapolis. Lawsuits for age discrimination, no concertmaster or principal trombone, blew through a $30 million endowment, and more people working in “administration an production”, than actually playing in the symphony. Lots of overpaid, non-musicians in this business. Fundraising being the biggest frauds.
At the least you did not compared Muti with Boris Johson. Thanks Ghosh! Lol
As a federal employee I have a defined-benefit pension plan. It’s one of the attractions of federal service; I make a very decent living but am far from wealthy, but I know that I’ll have a secure retirement (together with a TSP, IRA and social security). I assume members of the CSO have planned their retirements with a similar three-legged approach (pension, IRA, social security), which incorporates some risk for the organization and some personal investment risk. I completely understand why they don’t want to change that risk profile. Not to mention that the CSO is a benchmark, and if they give in on this, other orchestra managements will try this. They probably don’t want to be the first. And I can understand; the CSO as an institution has better ways to insulate itself from investment risk than an individual musician (doesn’t the board have anyone from Goldman, Schwab, or Nuveen who could help them out?).
They are not the first “benchmark” – remember the ’11 “bankruptcy” in Philadelphia which abrupty ended their defined benefit pension?
Exactly. And IMHO, the sole reason for the POA Chapter 11 was the pension funding. The “re-structuring” was an expedient method of making that change.
Exactly.
Fine. The second. In any case if the legendarily hard-nosed CSO members can be brought to heel on this, it will be open season on defined-benefit pensions in the orchestra world.
After having been ruined in the late Reiner years, they need an acoustically better hall as well. Legend among us brass players, is that the ‘gang’ of old (brass section) blew so loud because they were trying to hear themselves by bouncing the sound off the back wall. I can’t verify if that’s true, but it makes some sense.
I support this strike. They deserve all they can get. NYC musicians will stand by our colleagues, as always. One thing in jeopardy is their pension plan. It would be nice if all the big orchestras in the US, including Chicago, would be equally supportive of musicians across the US whose pension plan with the AFM-EPF is about to undergo massive cuts. All the big orchestras have separate pension plans in addition to the multi-employer plan. We support Chicago. Do they support us?
Actually, the LA Phil IS in the AFM-EPF. In the EPF’s current state, support is a little irrelevant. No matter what MPS or any other group proposes, the math and current GOP congress members are not on our side.