Recent rule change signifies disturbing trend in MLB


A lot happened in the world of sports while we were away from campus. College football crowned a new national champion, and the National Football League is just over a week away from crowning its next champion. In other sports, playoff races are beginning to tighten up already.
Needless to say, there is a lot I could have chosen to write about this week, but in the end I decided to take a look at an issue that has not received its share of attention over the last year, which to me is quite distressing.
On Jan. 1 a new compensation system took effect in the offices of both the Los Angeles Angels and the Boston Red Sox. Not exactly headline news.
However, the change represents a disturbing trend in professional sports and in the United States as a whole.
Last January Major League Baseball owners voted to allow individual teams to reduce or eliminate pension plans for non-uniformed employees, including front-office executives and staff, scouts, broadcasters and other low-level employees.
In November, the Angels and the Red Sox became the first two teams to announce that they would be taking advantage of the new regulations, effective Jan. 1.
At first glance the changes do not seem all that bad. Both teams increased their contributions to employee 401(k) plans, which are more flexible than the pension plans, and the existing pension money promised to current employees will be paid.
However, the move is indicative of the recent national shift away from financial regulations.
The recent $1.1 trillion spending bill, which was approved by the Senate in December, reversed a provision of the Dodd-Frank Wall Street Reform Act of 2010 titled the Lincoln Provision and commonly referred to as the “swaps push out” rule.
Dodd-Frank, which was the most comprehensive financial reform since the Glass-Steagall Act, was created to prevent or lessen the impact of recessions similar to the one the U.S. suffered in 2008. Incidentally, many attribute the recession partially to the deregulation that followed the repeal of Glass-Steagall in 1999.
In the time since the repeal of Glass-Steagall, income inequality has grown at a rapid rate. A recent study conducted by researchers at the University of Michigan provided some of the most startling statistical evidence of this trend. Median household income in the period from 2003 to 2013 has decreased 36 percent from $87,992 to $56,335. Meanwhile the median wealth of households in the top five percent grew over 12 percent from $1,192,639 to $1,364,834.
A recent Oxfam report predicted that by the end of next year the richest one percent worldwide could overtake the other 99 percent in wealth.
At this point you’re probably asking what in the world does this have to do with whether or not MLB teams supply pensions to their non-uniformed employees?
One of the biggest critiques of the move over the last year has been the fact that a transition of this time is typically a cost-cutting technique in businesses and industries that are struggling.
The MLB is more profitable than it has ever been. The league followed up a record-setting $8 billion revenue in 2013 with a 13 percent jump in 2014. It is signing billion dollar television contracts at an impressive rate.
Yet when the owners voted to repeal the mandatory pension plans for non-uniformed employees, they did not put in place any restrictions on how teams might otherwise aid employees in their saving for retirement. Instead they chose to leave it up to teams to compensate their employees in a competitive manner.
Yes, the free market is a wonderful thing. It is true that competition drives industry forward. I am an economics major, so trust me I appreciate the value of free market capitalism.
However, it is also true that deregulation played a major role in the recent recession and continues to play a major role in the growth of wealth inequality in this country.
Perhaps I am overreacting to what was a seemingly insignificant move by MLB owners, but I do not think the direct consequences of this act are the only measures of its ramifications.
In the past Major League Baseball has been at the forefront of addressing inequality. Just look at the stories of Jackie Robinson and Hank Aaron fighting to overcome racial boundaries.
This recent decision by owners, coupled with the financial success of the league and the national explosion of absurd athlete salaries, seems to point to a different league; one that is more interested in profits than the American people.