The Employee Retirement Income Security Act of 1974

The Employee Retirement Income Security Act of 1974: A Political History

JAMES A. WOOTEN
Copyright Date: 2004
Edition: 1
Pages: 430
https://www.jstor.org/stable/10.1525/j.ctt1pp7rw
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  • Book Info
    The Employee Retirement Income Security Act of 1974
    Book Description:

    This study of the Employee Retirement Income Security Act of 1974 (ERISA) explains in detail how public officials in the executive branch and Congress overcame strong opposition from business and organized labor to pass landmark legislation regulating employer-sponsored retirement and health plans. Before Congress passed ERISA, federal law gave employers and unions great discretion in the design and operation of employee benefit plans. Most importantly, firms and unions could and often did establish pension plans that placed employees at great risk for not receiving any retirement benefits. In the early 1960s, officials in the executive branch proposed a number of regulatory initiatives to protect employees, but business groups and most labor unions objected to the key proposals. Faced with opposition from powerful interest groups, legislative entrepreneurs in Congress, chiefly New York Republican senator Jacob K. Javits, took the case for pension reform directly to voters by publicizing frightening statistics and "horror stories" about pension plans. This deft and successful effort to mobilize the media and public opinion overwhelmed the business community and organized labor and persuaded Javits's colleagues in Congress to support comprehensive pension reform legislation. The enactment of ERISA in September 1974 recast federal policy for private pension plans by making worker security an overriding objective of federal law.

    eISBN: 978-0-520-93139-8
    Subjects: Health Sciences

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Tables
    (pp. ix-x)
  4. Foreword
    (pp. xi-xii)
    Daniel M. Fox and Dallas Salisbury

    The Employee Retirement Income Security Act of 1974 (ERISA) affects Americans’ pensions, disability, health and life insurance, and severance pay. Its history has not received sufficient attention, however, in part because of its technical complexity and the priorities of academic research on government and politics. Wooten’s history marks the thirtieth anniversary of the enactment of ERISA. He grounds the book in both an exhaustive survey of primary sources and his professional practice as a lawyer and an historian of contemporary policy.

    Wooten’s central theme is that the substance of policy for economic security has been important to powerful lawmakers and...

  5. Acknowledgments
    (pp. xiii-xvi)
  6. Introduction: “A Minor Miracle”
    (pp. 1-16)

    On September 2, 1974, Labor Day, President Gerald Ford signed the Employee Retirement Income Security Act of 1974 (ERISA).¹ ERISA was Congress’s attempt to devise a comprehensive regulatory program to protect millions of American workers who looked to private pension plans for financial support in their retirement years. By all accounts, it was landmark legislation. “I think this is really an historic Labor Day,” Ford said, “historic in the sense that this legislation will probably give more benefits and rights and success in the area of labor-management than almost anything in the history of this country.”² Senator Jacob Javits (R,...

  7. 1 POLICY-MAKING FOR PRIVATE PENSIONS: The Genesis and Structure of a Policy Domain
    (pp. 17-50)

    By the time Congress passed ERISA in 1974, businesses in the United States had been pensioning employees for almost a hundred years. Over the course of a century, a few ad hoc arrangements had become a major institution of American life. The private pension system came to embrace complex networks of purposes, roles, and relationships that linked employers, unions, service providers, and millions of employees. These networks and the legal rules that governed them defined the “political topography” of pension reform.¹ Government regulation would benefit some stakeholders in the private pension system and burden others. The structure and organization of...

  8. 2 “The Most Glorious Story of Failure in the Business”: The Studebaker-Packard Corporation and the Origins of ERISA
    (pp. 51-79)

    By many accounts, the road to ERISA began in December 1963, when the Studebaker Corporation shut down its auto production plant in South Bend, Indiana.¹ When Studebaker closed the facility, the pension plan for hourly workers did not have enough funds to meet its obligations. Retirees and retirement-eligible employees received their full pension, but the plan defaulted on its obligations to younger workers. Some received a cash payment worth a fraction of the pension they expected, while others got nothing at all. The shutdown was a catalyst of the nascent campaign for pension reform. The plight of employees at Studebaker...

  9. 3 “The ‘Bible’ in This Field”: The President’s Committee on Corporate Pension Funds and the Origins of ERISA
    (pp. 80-115)

    The reforms in ERISA embody a worker-security theory of pensions. This view received its most important early expression in the report of the President’s Committee on Corporate Pension Funds (Cabinet Committee). TitledPublic Policy and Private Pension Programs,the report was both a blueprint and a catalyst for the campaign for pension reform.¹ The Cabinet Committee argued that basic principles of fairness and the substantial federal tax “subsidy” for private pensions obliged pension plans to deliver the benefits they promised. The report urged Congress to establish federal minimum vesting and funding standards to ensure that pension promises were secure. The...

  10. 4 “A New Legislative Era in This Country”: Pension Reform from Blueprint to Bill
    (pp. 116-150)

    The public officials on the Cabinet Committee hoped to draft legislation based on their report, but this task posed a stubborn, though common, dilemma. The groups the committee proposed to regulate—employers and labor unions that ran private pension plans—said regulation would do more harm than good. Agency officials did not know enough about pension plans to assess these objections. And the groups that did have pension know-how were the very employers and unions that opposed the committee’s recommendations. Why should they help the administration prepare regulations they opposed? Faced with this quandary, the Cabinet Committee resolved to prepare...

  11. 5 “A Major American Institution . . . Built upon Human Disappointment”: Agenda Setting in the U.S. Senate
    (pp. 151-189)

    When the Ninety-first Congress convened in January 1969, pension reformers faced a tactical problem. The Cabinet Committee had provided conceptual foundations for pension reform, and Jacob Javits and the Labor Department had proposed legislation. The problem was that the opponents of pension reform had a great deal more political clout than its supporters. If pension reform was to become a reality, reformers had to bring new participants into their coalition. On the initiative of Jacob Javits, the Senate Labor Subcommittee undertook the task of “selling” pension reform to the media, the public, and the Senate. Through adroit use of “horror...

  12. 6 A Green Light in the Senate
    (pp. 190-216)

    Less than a year after Russell Long killed S. 3598 and dealt Javits and Williams a bitter defeat, the Senate gave them a resounding victory. The turnabout owed everything to the Senate Labor Subcommittee’s promotional campaign. Simply put, Javits and Williams had persuaded their colleagues that Congress should pass a comprehensive pension reform bill. Soon after Congress convened, Russell Long realized that the Finance Committee risked losing jurisdiction if it dragged its feet. What is more, Javits and Williams’s promotional efforts prompted state legislators to look into pension reform. The prospect of state regulation led business groups to reverse course...

  13. 7 A Donnybrook in the House
    (pp. 217-240)

    Although there were tense moments when the Senate considered pension reform, the parties generally proceeded in a cooperative fashion. The House was another story entirely. At the behest of the AFL-CIO, John Dent sought to parlay the Labor Committee’s preemption power into exclusive jurisdiction over pension reform. This gambit led to a row with the Ways and Means Committee that stalled pension reform in the House. The standoff between the committees in turn triggered a clash within organized labor. The Steelworkers union, which badly wanted an insurance program, pressed for rapid passage of a pension reform bill. The AFL-CIO, which...

  14. 8 Enacting ERISA
    (pp. 241-270)

    The House and Senate versions of H.R. 2 were similar in purpose and in many particulars, but there were also significant differences. Reconciling the two bills would have been difficult under any circumstances, but the conference on H.R. 2 promised to be especially trying. The issues were extraordinarily complex, the composition of the conference committee (which drew members from four committees) was very unusual, and tempers were short after the wrangle in the House. Most important, however, the conference on H.R. 2 began just as the various judicial and congressional proceedings prompted by the Watergate break-in reached their denouement. After...

  15. Epilogue
    (pp. 271-286)

    As I have emphasized at many points in the book, ERISA introduced a new conceptual frame of reference for federal pension policy. Before the mid 1960s, lawmakers generally thought of pension plans as tools for managing employees. This view entailed a permissive approach to private-sector practices. In particular, the federal government left it to the parties to the employment contract—employers, employees, and unions—to establish the terms of the pension promise. In contrast, ERISA reflects a worker-security conception of private pension plans. According to this view, pension plans are tax-subsidized vehicles for providing retirement income to workers. The reformers...

  16. Notes
    (pp. 287-400)
  17. Index
    (pp. 401-415)
  18. Back Matter
    (pp. 416-416)