Tim Ryan's Good Idea to Shield Worker Pensions

On May 20, Rep. Tim Ryan (D., Ohio) introduced the Prioritizing Our Workers Act of 2019, also introduced in the Senate by Sen. Joe Manchin (D., W.V.). The technical explanation of the bill is that it would classify unfunded worker pension benefits as “administrative expenses” in a Chapter 11 bankruptcy proceeding. A layman's explanation is that the bill would require that pension benefits owed to workers be honored before other creditors of a bankrupt company are paid back. Such a change to bankruptcy law faces formidable political obstacles and would have substantial effects on financial markets. But while some critical technical aspects would need to be worked out, Ryan's proposal moves in the right direction from the standpoints of both economics and fairness, as the following piece attempts to explain.