The tendency in recent discussions about union density has been to focus on organizing and solidifying organizing gains. Where will the labor movement find new members? Which sectors are amenable to union organizing? Will newly organized workers win contracts that lock in their organizing successes? These are some of the right questions. But there is another question that is deeply evocative for people of my age who watched the deindustrialization, deregulation, and deunionization of the American economy that destroyed middle-class union jobs during the 1980s, 1990s, and 2000s: can workers keep the union jobs they already have?
It's obvious that filling a bucket with water is much easier if the bucket doesn’t spring a leak. The same is true of union density: it’s easier to grow union membership if unions stop or slow any loss of union members. Right now, one struggle to retain thousands of union jobs is playing out in a bankruptcy court in Delaware.
Yellow Corporation , a nearly 100-year-old trucking company once known as YRC, filed for bankruptcy in August 2023. The court is in the process of liquidating Yellow’s assets to pay off its creditors, which include the U.S. Treasury and the Teamsters’ Central States’ Pension Fund (more about both of those later). How the court disposes of the assets will determine whether any of the 22,000 Teamsters who used to drive trucks for Yellow will have a shot at retaining their jobs.
One option for the court and its “liquidator” is to break Yellow into pieces and sell the pieces: its “rolling stock” (i.e., trucks) could be sold to one group of buyers, while its terminals, which include valuable real estate, could be sold to another. Yellow and its Teamsters jobs would cease to exist. A second option is to sell the entirety of Yellow to a firm that is qualified to operate it as a successful trucking company and, perhaps, reemploy some or all those 22,000 Teamsters drivers.
Enter Jack Cooper Transport, a large unionized car-hauling company, and the Teamsters. Jack Cooper, a woman-owned enterprise, is a serious player in the world of trucking. It counts all three of the Big 3 automakers as clients. But most importantly, for these purposes, it has the strong support of the Teamsters leadership and a bipartisan group of U.S. Senators eager to see Yellow survive as a going concern. Of course, bankruptcy proceedings are not about politics. They are about money and, more precisely, settling and discharging a bankrupt company’s debts. The good news for you, dear reader, is that the financial machinations associated with acquiring a trucking company out of bankruptcy are most certainly beyond the scope of this labor blog . . . with two important exceptions.
Re-enter the U.S. Treasury Department. As explained by Jarrett Renshaw of Reuters, the Treasury Department is responsible for
$700 million in COVID pandemic loans given to Yellow Corp by the Trump administration in 2020. . . . The loans currently come due in September 2024. Jack Cooper’s bid effort [to buy Yellow out of bankruptcy] hinges largely on whether Treasury extends the payback period to 2026, allowing Jack Cooper to offer more favorable terms for Yellow, because it would not have to pay the loan back right away.
In sum, the Treasury Department could play an important role in determining whether Jack Cooper can buy Yellow and reemploy some or all the Teamsters drivers. It’s not as easy as it seems. One necessary precondition is that the Treasury Department must review its legal authority and assess whether it is permitted to extend the loans’ maturity dates. Even if it is, the law may impose criteria for extending the loans that Treasury would be required to apply fairly. Congress set the parameters for those loans, not the Treasury, and Congress rarely gives an executive department free rein, especially when large amounts of money are involved. I encountered this challenge many, many times during my three tours of service in the federal government. Outside stakeholders want their government to make what appears to be the obviously correct policy and practical choice to solve a serious problem. Yet, the law may not authorize that choice. It’s frustrating for everyone involved.
Nonetheless, if there is any discretion in the law, we would have to expect President Biden’s Treasury Department to lean strongly in favor of preserving good union jobs. That’s a centerpiece of the Biden-Harris economic agenda: creating and retaining good union jobs to help grow and stabilize the economy. Twenty-two thousand is a lot of jobs, and truck driving jobs are important. Truck drivers and trucking companies are essential to supply chains that determine whether commerce will flow in the U.S. Snarled supply chains were a majority contributor to inflation and the slow improvement in supply chain management has helped bring the inflation rate down to manageable levels. In fact, the Biden Administration considered truckers and trucking so important to the effort to address supply chain failures that it launched a Trucking Action Plan in April 2022. The Yellow Corporation bankruptcy gives the Treasury Department an opportunity to prevent supply chain disruptions before they arise. Yellow was an important player in the less-than-truckload trucking market before its bankruptcy, and it could return to prominence, if powered by Jack Cooper’s management and Teamsters drivers.
Let’s bring the Central States Pension Fund back into the story. Yellow owes Central States $6.5 billion, likely for unfunded liability for its employees’ pensions. Central States is subject to a fiduciary duty to recover as much of that money as possible. Yet, Central States has been resistant to the Jack Cooper offer, according to the Wall Street Journal. This is hard to understand for both economic and mission-focused reasons.
On a strictly financial basis, more companies employing more truckers who participate in the Central States plans, as Yellow’s drivers would continue to do if it survives bankruptcy, means more contributions flowing into Central States’ coffers. This means the Jack Cooper deal should put Central States in a stronger long-term financial position. In addition, according to the Journal, Jack Cooper is offering Central States and other unsecured creditors shares in the company that pay a 7% dividend, which is a robust return by any measure. Since Central States is an “unsecured creditor” in Yellow’s bankruptcy, it likely will receive pennies on the dollar for its outstanding debts if Yellow is dismembered and its pieces sold. I’m no economist, but more money and a continuing income stream seem better than a lot less money right now, at least in this circumstance.
Central States’ role in this important story goes beyond economics. First, we should expect that a pension fund created to serve truckers (and other workers) would be looking desperately for a way to say “yes” to saving truckers’ jobs. Central State has a mission that is core to rebuilding the middle class. Jobs should be part of that mission, as well, as long as Central States complies with the Employee Retirement Income Security Act (ERISA), which closely regulates pension plans. Don’t worry, dear readers, I don’t want to discuss ERISA in detail any more than you do.
Second, and this is very important, Central States itself was on the verge of bankruptcy just a few months ago. Because of President Biden’s American Rescue Plan, Central States received $35.8 billion in financing from the Pension Benefit Guaranty Corporation. That funding guarantees Central States will remain solvent for decades. More than 357,000 Central States participants, including a lot of truckers, will receive their full pensions as a result. That’s vital to families and communities across the U.S. Yet, once again, we should expect that this massive public investment, partly funded by tax dollars paid by Yellow’s former drivers and supported enthusiastically by their union, would inspire Central States’ leadership to work as hard as they possibly can to find a way to save Teamsters jobs at Yellow.
At the end of the day, the Yellow bankruptcy story is about many things. Superficially, it may appear to be a business story about another corporation that failed due to mismanagement. But it is also a worker power story about union jobs and union density. Saving 22,000 Teamsters jobs is every bit as important as organizing new workers in new industries. It would send the message that union jobs survive. That they bring stability. Workers considering whether to organize a union with their co-workers need to hear that message.
