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Protecting Pensions from Peeps

Compromise essential to both sides in beloved marshmallows’ controversy

Can you imagine an Easter with no Peeps marshmallow garnishing baskets around the country? That is the picture the treats’ 95-year-old manufacturer, Just Born Quality Confections, is painting in its defense against the legal controversy it has been embroiled in since 2016.

Jimmy McDonald(Creative Commons)

Photo by Jimmy McDonald – Creative Commons

 

While the rest of the nation may see the tiny, cheerful gelatinous chicks as symbols of festivities and joy, they have become divisive in the small town of Bethlehem, Pennsylvania.

 

This controversy is one that ought to be solved internally, as both parties have mutual interests.

 

However, as of this month, a federal appeals court will decide the fate of the retirement funds of many Peeps workers.

 

Just Born Quality Confections has attempted to block new employees from entering the pension fund the company funds, along with approximately 200 other companies. Though Just Born has offered the benefit for decades, it cites the need to stay competitive in the industry as its reasoning to leave the fund.

 

Even though Just Born’s decision has been preceded by several other companies choosing to leave with similar rationale, what makes the Peeps exit so controversial is the fact that the company is attempting to also skirt the 60 million dollar federal fine imposed on companies who drop out of multi-employer pensions.

 

The fine is forced onto companies to ensure that future employees’ retirement benefits are covered. However, a company like Just Born that occupies a niche, seasonal market faces additional financial pressure as costs continue to rise. With a main product that produces half the company’s revenue during one month of the year for 28 cents per unit, profit margins are crucial to manage.

 

But for the town of Bethlehem, the site of all Just Born’s manufacturing, the company’s move to cut costs could not be tolerated. The Bakery, Confectionery, Tobacco Workers and Grain Millers Union, which Peeps workers are members of, is worried that if Just Born is allowed to avoid the fine, hundreds of other companies would follow suit and thus put thousands of workers’ retirements at risk.

 

After reviewing the company’s proposal to put employees on a 401K plan, which does not guarantee benefits after retirement, the workers of Peeps organized a strike that began on September 7, 2016.

 

The strike was initially a success, halting the factory’s production of 5.5 million Peeps per day while employees took to the streets with signs reading “No Justice, No Peeps!” However, after several weeks the union’s worst nightmare began to occur: the union members began to splinter.

 

After Just Born hired 100 new workers, people enticed by the high pay the position offered without requiring a college degree, employees rushed back to their jobs, fearful of losing their livelihood.

 

Though the strike may have been broken, the underlying problem still remains as the struggle to mediate the two realities of employees relying on the pension fund for their retirement, and the fact that Peeps pays 39 percent more on premiums than it did in its last union contract.

 

It is not totally fair to ask either party to compromise, as both have positive intentions. Union officials worry that allowing the federal regulation to be discarded will lead to even more employees’ retirements being put into jeopardy.

 

However, Just Born is trying to preserve employees’ immediate livelihood, as if they do not control rising personnel costs they will be forced to take their business overseas like their competitors. For the three generation family owned company, this is the opposite direction they want to take their organization in.

 

This controversy has ruptured the small town community of Bethlehem, once united by the fact that candy was the industry that stayed when the departure of the steel industry left the town’s economy devastated. Now the population is divided between union members, strike breakers and those who left the cause behind, with verbal animosity still seen in the workplace as reported by the Washington Post.

 

Pensions are privileges, not rights. Though it can be debated as to whether or not Just Born has made enough of an effort to save the pension from obsoletism, the fact remains that there is no federal law stipulating that pensions are mandatory. The fund is better than a 401K from an employee’s perspective, but so are longer vacations and other additional benefits.

 

The Peep’s union should find a way to reconcile with Just Born, as both parties wait on a ruling from a federal appeals court as to whether or not the company will have to pay the fine. The union and the company are equally dependent on one another, and mutually invested in the success of their product. At the end of the day, both sides want to ensure that every employee will keep their job, a fact that should become a rallying point in the midst of negotiations.

 

The employees cannot succeed without the company, and vice versa.

 

Both parties must find a way to keep their mutual interest at the forefront of their handling of the issue and find a resolution that will protect both sides’ requirements, and bridge the divides that have emerged in this iconically American, tight-knit community.

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