The old-fashioned defined-benefit plan is not the best fit for the modern economy.
Shawn Fain, the president of the United Auto Workers union, wants to bring back the old-fashioned pension. That would be a mistake — both for the auto industry and its workers. There are good reasons that defined-benefit plans are increasingly rare, and trying to bring them back makes about as much sense as trying to revive the US economy of the 1960s.
It’s a commonly held view that defined-benefit plans contributed to the decline of US automakers. Freezing the pensions for new hires in the 2000s was a big part of the reform that enabled them to stay competitive with foreign automakers.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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