Category Archives: poverty

The Future of Old Age in America

Note: James Ridgeway wrote this article as part of a MetLife Foundation Journalists in Aging Fellowship, a program of the Gerontological Society of America and New America Media. The article first appeared in The Guardian.

In her remarkable book The Coming of Age, Simone de Beauvoir observed that fear of aging and death drives younger people to view their elders as a separate species, rather than as their own future selves: “Until the moment it is upon us,” she wrote, “old age is something that only affects other people. So it is understandable that society should prevent us from seeing our own kind, our fellow-men, when we look at the old.”

This disconnect has, no doubt, been helpful to those who favor cutting the so-called old age entitlements, social security and Medicare – which, these days, seems to include just about everyone in Washington. Now that the congressional supercommittee charged with reducing the federal deficit has gone down in flames, some are calling for a return to the plan proposed by Obama’s Simpson-Bowles deficit commission last year. Amidst all the bipartisan warring, one thing most of these committee members agree upon is that the budget will, in large part, be balanced on the backs of old people, through cuts to social security and Medicare. The only differences are over how these cuts should be made, and how large they should be.

In the unlikely event that the rich are made to pay something toward deficit reduction, in the form of increased taxes, their contribution will pale in comparison to the share paid by elders in the form of reduced benefits. In part, that’s because the enemies of entitlements have succeeded in depicting these lifesaving government programs as the cause of our economic woes – a myth that has repeatedly been debunked, to little avail. By extension, they depict our current fiscal crisis as a standoff between the old and the young, rather than the rich and the poor. Former Senator Alan Simpson, handpicked by Obama to chair his deficit commission, was fond of talking about the perfidy of “fat cat geezers” who dared to oppose entitlement cuts at the expense of his – and everyone’s – grandchildren.

Simpson’s image of old people “who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount” seems to have gained traction as the dominant view of elders in this country. This belies the reality of the lives lived by millions of older Americans, for whom a comfortable retirement was never more than a distant dream. For them, old age means work or poverty – or, sometimes, both.

Recently, I attended the annual meeting in Boston of the Gerontological Society of America, a research and education organisation whose members study all aspects of aging. With 3,500 people in attendance, hundreds of sessions and a teeming exhibit hall, there was plenty of upbeat talk about the “encore years”. But there was also a body of research and discussion that presented a more rounded picture of old age in America – a place where “fat cat geezers” are far outnumbered by elders who, like Americans of all ages, are struggling to get by.

In one exhibit on “The Economics of Aging”, researchers from Wayne State University presented a study published earlier this year called “Invisible Poverty”, which found that one in three elders – including many living in middle-class suburbs – cannot fully cover their basic living expenses, including food, housing, transportation and medical care. It also found that certain shortcomings in the way federal poverty statistics are compiled meant that poverty among older people was more likely to be underestimated. “This widespread economic struggle faced by Michigan seniors is fairly hidden from public sight, making it an invisible poverty that takes its toll on older individuals, their families and caregivers and the community at large,” says the study.

Among the elderly poor are large and growing numbers of women. Consider the figures: over 40% of black and white women over 65 live alone, and over a quarter of these women are poor. They are likely to be isolated and they, too, are invisible. Also below the public policy radar, according to another study presented at the conference, are lesbian, gay, bisexual and transgender elders – who are now counted at over 2 million, and are expected to double in number by 2030. These people are far less likely to have partners or caregivers of any sort, because society banned or discouraged them.

For these elders, and millions of others, social security is more than an “entitlement” – it is a lifeline. According to a recent report by the Center on Budget and Policy Priorities, social security alone keeps 20 million Americans above the poverty line. It’s hard to argue that social security benefits are too generous, or that retirees enjoy extravagant lifestyles. The average social security benefit currently stands at just over $1,100 a month. As the Center for Economic and Policy Research’s Dean Baker notes, “More than 75% of benefits go to individuals with non-social security income of less than $20,000 a year and more than 90% of benefits go to individuals with non-social security income of less than $40,000 a year.” In addition, Baker points out:

“The private pension system has largely collapsed and the current group of near retirees saw much of their home equity disappear with the collapse of the housing bubble. As a result, the situation of retirees is likely to be worse in the near future, especially after taking into account the growing burden of out-of-pocket healthcare expenses projected in the decades ahead.”

So it is the search for work, not cleaning one’s fingernails, or studying French to stave off dementia, that is now a major concern for many older people. Historically they have been fired from long-held jobs because of their costly benefits and diminishing ability to handle the job, but now employers are taking a fresh look at this situation. Business, as it turns out, may very well embrace the old – because they often come at lower wages, with no benefits and scant legal protection. Given US supreme court rulings, the prospect of any of these people filing old age discrimination suits is unlikely. Rather than knocking them out of a job, it may turn out to be less expensive to keep on a skilled, elderly employee, perhaps at reduced salary and reduced hours,  than go through the rigamarole of hiring a young, inexperienced person who must then undergo training.

As the GSA conference showed, there is no point in cutting entitlements to the elderly when, in fact, so little is known about their lives and their emerging future. It means there must be a full, open debate – not backdoor political manoeuvring – on the issue. What may be happening here is the emerging outlines of a much different society than the one we now know: a society that, for example, will require a new service sector, a different slant towards medicine, which uses the old to assist the young, as friends and caregivers – instead of pitting generations against one another.

The late Theodore Roszak,who described and named the “counter culture”that took shape in the 1970s, thought old people were anything but a selfish bunch of useless geezers waiting to die, but an “audacious generation”, opening a new world of energy and hope. Let us hope, in de Beauvoir’s words, that moment is upon us.

The Myth of the Greedy Geezer

The following appeared today as an opinion piece on Al Jazeera English.

Old people are becoming everyone’s favourite scapegoat for America’s economic woes. Among the growing ranks of self-styled deficit hawks, Social Security and
Medicare are depicted as an intolerable burden to the nation’s already crippled
economy, which can only be saved through massive cuts to these so-called old-age entitlement programs. To advance this agenda, proponents of entitlement cuts have attacked not only the programs themselves, but the people who benefit from them – the selfish old folks like myself, who insist upon bankrupting the
country for the sake of their own costly health care and retirement income.

We in the over-65 set have become the present-day equivalent of Reagan’s notorious “welfare queens,” supposedly living high on the hog at the expense of the taxpayer. According to what I call the Myth of the Greedy Geezer, we lucky
oldsters spend our time lolling about in lush retirement villas, racing our golf
carts to under-priced early-bird dinner specials and toasting our good fortune
with cans of Ensure – all at the expense of struggling young people, who will
never enjoy such pleasures since the entitlement “Ponzi scheme” will collapse
long before they are old.

The fervour for entitlement-cutting remains strongest among conservatives, but these days, even President Obama is taking part, promoting the recommendations of his National Commission on Fiscal Responsibility and Reform, commonly known as the Deficit Commission (and to its opponents as the Cat food Commission, since that’s what old people will be eating when the Commission finishes its work).

The appointed chair of the Deficit Commission, Alan Simpson, is one of the primary promulgators of the Myth of the Greedy Geezer. A former Republican senator from Wyoming who is known for his colourful turns of phrase, Simpson insists that “This country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare.” The majority of the people opposed to such cuts, he claims, are “These old cats 70 and 80 years old who are not
affected in one whiff. People who live in gated communities and drive their
Lexus to the Perkins restaurant to get the AARP discount. This is madness.”…

Read the rest at Al Jazeera.

Obama’s Fiscal Commission Prepares to Carve Its Turkey

The dread report of the White House’s National Commission on Fiscal Responsibility and Reform is due out this week.  One of the Commission’s co-chairs, the putative Democrat and consummate wheeler-dealer Erskine Bowles, has been up on the Hill flogging their plan to reduce the debt by cutting the country’s already skimpy programs for the old, the sick, and the poor. His partner, motor-mouth Republican Alan Simpson, continues his ranting and ravings against the greedy geezers who want to sink the entitlement-cutting ship before it’s launched. Both of them have taken to boo-hooing because no one appreciates all the work they are doing to save the nation from certain fiscal doom, and nobody is willing to pitch in to meet this noble goal.

Fiscal Commission's Plan: Starve the Old to Stuff the Rich

Personally, I’m still waiting to hear how Wall Street is going to pitch in and do its part–or the people with high six-figure incomes who claim they still aren’t rich enough to give up their tax cuts. Or, for that matter, Bowles and Simpson themselves, who retired on fat  pensions and don’t have a financial care in the world.  Since none of this is likely to happen any time soon, we’d better take a good hard look at what these sanctimonious old coots have come up with.

We already know a lot about what to expect from the Fiscal Commission Plan, since the co-chairs released their own preliminary proposals (as yet unapproved by the 18-member Commission) earlier this month. According to people with access to the Commission’s thinking, they seem to think their best bet is to achieve consensus on a proposal to change the way Social Security’s annual cost of living increases (COLAs) are calculated. What seems like a mere accounting adjustment would, in reality, severely affect benefits over time. The National Committee to Preserve Social Security and Medicare explains the impact of this scheme:

This proposal will affect current and future beneficiaries uniformly.  The impact would occur after benefits are initiated, with each COLA, as the yearly increase in benefits would be slightly lower than would have been the case without the change.  The impact would be greater with each successive COLA.  For example, the Social Security benefits paid to someone collecting benefits for 10 years would be about 3 percent lower, on average, if the chained-CPI was used for the COLA instead of the current CPI-W.  After 20 years this reduction would reach 6 percent and 9 percent after 30 years.

This is is bad enough–especially since old people’s cost of living increases faster than the national average because of exploding health care costs. But of course, there’s more, in the form of a plan that would raise the retirement age to 67 and eventually 69. Working until you drop dead or  literally are forced out of the labor market is utilitarian nineteenth-century thinking. But at that time, at least there was an expanding need for workers in a burgeoning industrial capitalist economy. The one big profitable industry surviving in America today is so-called financial services, which consists of a small number of overpaid people passing money back and forth amongst themselves. They certainly don’t need any more workers, and if they do, they’ll get them in India. Vermont Senator Bernie Sanders said of the idea that it was not only “reprehensible,” but “also totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income.”

There was no such ringing takedown of the plan, of course, from Senate Majority Leader Harry Reid, whose mealy-mouthed statement tells us what we can expect from our Democratic Senate. “I thank the leaders of the bipartisan debt commission for their work,” Reid said. “While I don’t agree with every one of their recommendations, what they have provided is a starting point for this important discussion. I look forward to the full commission’s recommendations and to working with my colleagues on both sides of the aisle to address this important issue.”

Nancy Pelosi had somewhat stronger words, calling the preliminary proposals “simply unacceptable”–but then, she’s nothing but the soon-to-be-ex-Speaker of the House. In fact, co-chair Simpson has been predicting, with something close to glee, the “bloodbath” that’s likely to ensue next spring, when the new Republican House refuses to extend the debt limit and threatens to send the nation into default “unless we give ’em a piece of meat, real meat, off of this package.”

When all is said and done, there’s pretty much no way this so-called debate will end up without most of us, old and young alike, getting screwed. An already stingy program that ought to be expanded to cover elders as their numbers grow instead  is going  to be reduced, and the only question is how and by how much. It makes no sense, but it may well have political traction because the pols can sell it as an attack on rich grannies–“the greediest generation” as Simpson calls the old–while the young are hoodwinked into thinking it’s good for them. And since its full effect will take  years to be felt, the current crop of opportunistic politicians will be long gone into splendid retirement by the time these young people realize how wrong they are. Alan Simpson was frank about this fact in the Washington Post on Friday, using another one of his nauseatingly folksy metaphors:

 It takes six to eight years to pass a major piece of legislation. . . . On a piece of legislation that you know is going to go somewhere someday, you want to get a horse on the track. That might be not much. Then the next session you want to put a blanket on the horse. Nobody’s paying attention then. Then you put some silks on the horse. Then you clean the outfield and the infield. And then you put a jockey on the horse in the sixth year, and you can win it. Because the toughest part is to do the initial thing, and so it’s usually so watered down, it’s just gum, you could gum it. Then you begin to build it the next year, the next year and then you get it done. That’s what I see.

And just in case you thought it couldn’t get any worse, consider this warning from Allan Sloan, Fortune’s senior editor, who wrote an op-ed in the the Washington Post on Thanksgiving day:

[P]rivatizing Social Security, slaughtered when George W. Bush proposed it five years ago, seems about to rear its foul head again. You’d think that the stock market’s stomach-churning gyrations – two 50 percent-plus drops in just over a decade – would have shown conclusively the folly of retirees’ having to bet their eating money on the market. But you’d be wrong. Stocks have been rising the past 18 months, and you can bet that we’ll see a privatization push from newly elected congressmen and senators who made it a campaign issue.

Why is privatizing Social Security such a turkey? Because retirees shouldn’t have to depend on the market’s vagaries for survival money. More than half of married couples older than 65 and 72 percent of singles get more than half of their income from Social Security, according to the Social Security Administration. For 20 percent of 65-and-older couples and 41 percent of singles, Social Security is 90 percent or more of their income. That isn’t projected to change.

Arrayed against these grim prospects are a small group in Congress, led in the Senate by Bernie Sanders and Sheldon Whitehouse of Rhode Island, and in the House by Jan Schakowsky of Illinois. Says Shakowsky

Social Security has nothing to do with the deficit. Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the 9/11 attacks – there is simply no relationship between the two and attempting to conflate them does a grave disservice to America’s seniors. Taking money from Social Security retirees whose average total income is $18,000 per year and average benefit is $14,000 ($12,000 for women) is simply wrong. It places them at fiscal risk and hurts the economy because they will be unable to purchase the goods they need.  Americans in poll after poll have indicated their opposition to benefit cuts – particularly at a time when Wall Street bankers are making record bonuses.’

Schakwosky has her own plan, which will be an antidote to whatever the Fiscal Commission comes up with. But her ideas are unlikely to make any headway in the lame duck Congress or with the Democratic leadership, as they wait, already on bended knee, for the coming of the Republicans.

Roosevelt’s Thanksgiving Proclamation 1933

With unemployment insurance  about to run out for millions of people and the Congress and the President set to reduce our parsimonious social welfare system in the name of free enterprise, it is well to recall those dark days of the Great Depression when, on Thanksgiving Day 1933, Franklin Delano Roosevelt proclaimed the following:

May we recall the courage of those who settled a wilderness, the vision of those who founded the Nation, the steadfastness of those who in every succeeding generation have fought to keep pure the ideal of equality of opportunity and hold clear the goal of mutual help in time of prosperity as in time of adversity.

May we ask guidance in more surely learning the ancient truth that greed and selfishness and striving for undue riches can never bring lasting happiness or good to the individual or to his neighbors.

May we be grateful for the passing of dark days; for the new spirit of dependence one on another; for the closer unity of all parts of our wide land; for the greater friendship between employers and those who toil; for a clearer knowledge by all nations that we seek no conquests and ask only honorable engagements by all peoples to respect the lands and rights of their neighbors; for the brighter day to which we can win through by seeking the help of God in a more unselfish striving for the common bettering of mankind.

In witness whereof, I have hereunto set my hand and caused the seal of the United States to be affixed.

This from the President who got us through the Depression and charted a course to ensure safe passage for future generations.  Yet today, Wall Street bankers are richer than ever,the poverty class is growing, the elderly are about to see a reduction in their paltry dole, children starve and are sick, the health system is broken down. In answer to these dark times, the Congress and the President think not of bringing people together, but talk about money as they prepare to further dismantle Roosevelt’s New Deal. All this as  the United States slides into decline and prepares to enter the dark age.

Live Poor or Die: The New American Retirement

The very idea of retiring in America had become a mirage–tantalizing, but always sliding into the distance. Those visions of golden years spent playing golf in Tucson or bridge in Boca Raton, promoted by AARP magazine and purveyors of retirement investments, are now nothing more than a chimera for most Americans. The exception, of course, is a wealthy minority, who for the past decade has been squirreling away money they should have been paying in taxes. For everyone else, old age been reduced to three alternatives: Those of us lucky enough to have jobs can keep working indefinitely; the rest can live poor or die.

Anyone who doubts this blunt truth should take a look at a few few recent trends. Start with something called the Retirement Income Deficit. Retirement USA, a consortium of non-profits and unions, which came up with the term,  describes the deficit as follows:

Retirement USA asked the respected non-partisan Center for Retirement Research at Boston College to calculate the figure that represents our current retirement income deficit – that is, the gap between the pensions and retirement savings that American households have today and what they should have today to maintain their standard of living.   Using the data from the Federal Reserve Board’s Survey of Consumer Finances, the Retirement Research Center has calculated that figure at $6.6 trillion.The deficit figure covers households in their peak earning and saving years—those in the 32-64 age range—excluding younger workers who are just beginning to save for retirement as well as most retirees.  It takes into account all major sources of retirement income and assets:  Social Security, traditional pension plans, 401(k)-style plans, and other forms of saving, and housing. 

The measure assumes people will continue to work, save, and accumulate additional pension and Social Security benefits until they retire at age 65, later than most people currently retire.  It also assumes that retirees will spend down all their wealth in retirement, including home equity.  The deficit is thus in many respects a conservative number.

This gap is due, in large part, to the demise of the old-fashoned, fixed-income pension system. According to the Pension Rights Center, total employment in the nation today stands at 130 million, of which 108 million people are employed by private business and 22 million public. The traditional fixed-benefit  plans now cover only about 20 percent of the private workforce, and 79 percent of public workers. Half the entire private workforce today has no retirement system at all. And those with 401ks are at the mercy of the mutual fund companies, with their futures staked on the stock market. In the recession, those plans took a dive, losing one quarter to one third their assets.

Even public employees lack the retirement security they once had. There are recent reports that states, because of their own budget deficits, can’t pay retirement monies to their pubic services workers. The news is hyped by politicians and way overstated, said Keith Brainard of the Public Fund Survey, an outfit sponsored by the National Association of State Retirement Administrators and the National Council on Teacher Retirement. Still, pension plans that cover public service workers and teachers in New Jersey, Illinois, and the city of Philadelphia may be at risk, according to Brainard. About 70 percent of state employees are covered by Social Security, but a good 30 percent would be left out in the cold if the plans went down.

But that’s not the end of it. The big financial institutions that run the 401k plans have been busy applauding the comeback of the stock market, suggesting that it redeems the whole 401k concept. Unfortunately, as the recession wears on, a whole lot of people are withdrawing money from their 401ks, instead of (or in addition to) contributing to them. Fidelity Investments included the following in a recent report on developments in the second quarter of 2010:

While the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased.  Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior.  The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%.  The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years….

During the second quarter of this year, 62,000 participants initiated a hardship withdrawal, as compared to 45,000 participants who initiated one during the prior quarter.  As of the second quarter, 2.2% of Fidelity’s active participants took a hardship withdrawal, up from 2.0% one year prior.  Additionally, 45% of participants who took hardship withdrawals one year prior also took a hardship withdrawal in the 12 month period ending in the second quarter of this year.  Plan sponsors report that the top reasons why participants are taking hardship withdrawals are to prevent foreclosure or eviction, pay for college, and the purchase of a primary residence.

Fidelity has found that the average age of those taking a loan or hardship withdrawal is between 35 and 55 years old – a worker’s peak earning years – when individuals often have to deal with multiple, competing, financial challenges.  Distributions from a 401(k) or 403(b) are taxed as ordinary income, plus if you are under age 59½ you may be subject to a 10% early withdrawal penalty.

I don’t know much about the pitfalls of 401k loans, so I called up Rebecca Davis, Legislative Counsel at the Pension Rights Center. She explained that if you have a 401K worth $100,000, you can borrow up to half that amount. Before getting the money you need to work out a repayment plan that includes an interest payment to yourself. And that’s where the hitches begin.

To start with, the 401k plan may well charge you a fee for all this; that fee varies from plan to plan. Moreover, when you take the loan from your own plan you must immediately pay the government a flat 10 percent tax—because the money you have withdrawn becomes taxable income. Finally, if you quit your job or get laid off, the loan to yourself from your own plan becomes due immediately–just at the moment when you probably won’t be able to pay it back. And if you don’t pay it back, you’re subject to early withdrawal penalties.

Then comes this important bit of information: The money in your 401k is normally protected from creditors. If you go bankrupt, for example, the creditors can’t get at the money. But once the money is removed from the protective cover of a 401k, pension, or IRA, then it can be seized. So now you’re broke and jobless, and you have to use your retirement funds to pay your debts.  In other words, you are screwed from every possible direction. And if you think things are bad now, just wait until you get old.

Did I mention that Republicans and Democrats alike now want to cut Social Security? Probably not for today’s geezers, but for the old folks of the future–in other words, for precisely the same people who stand to have disappearing pensions and depleted 401ks.  

As Numbers of Uninsured Soar, Health Insurance Companies Plan Rate Hikes

The latest report from the Census Bureau, which shows a significant rise in the number of Americans living in poverty in 2009, is making news today. Less widely reported are the figures for those living without health insurance, which indicate that in 2009 there were 50.7 million uninsured or 16 .7% of population, up from 46.3 million and 15.4% in 2008. Kaiser Health News has a roundup of stories on the sharp rise in the uninsured. The details from the Census Bureau report are as follows.

  • The number of people with health insurance decreased from 255.1 million in 2008 to 253.6 million in 2009. Since 1987, the first year that comparable health insurance data were collected, this is the first year that the number of people with health insurance has decreased.
  • Between 2008 and 2009, the number of people covered by private health insurance decreased from 201.0 million to 194.5 million, while the number covered by government health insurance climbed from 87.4 million to 93.2 million. The number covered by employment-based health insurance declined from 176.3 million to 169.7 million. The number with Medicaid coverage increased from 42.6 million to 47.8 million.
  • Comparable health insurance data were first collected in 1987. The percentage of people covered by private insurance (63.9 percent) is the lowest since that year, as is the percentage of people covered by employment-based insurance (55.8 percent). In contrast, the percentage of people covered by government health insurance programs (30.6 percent) is the highest since 1987, as is the percentage covered by Medicaid (15.7 percent).
  • In 2009, 10.0 percent (7.5 million) of children under 18 were without health insurance. Neither estimate is significantly different from the corresponding 2008 estimate.
  • The uninsured rate for children in poverty (15.1 percent) was greater than the rate for all children.
  • In 2009, the uninsured rates decreased as household income increased: from 26.6 percent for those in households with annual incomes less than $25,000 to 9.1 percent in households with incomes of $75,000 or more.
  • These figures are sure to reignite the health care squabbling in Congress, and add to the Tea Party shrieks that Obamacare won’t cure the health care mess, which is now more of a disaster than ever. While their analysis is flawed, the Tea Partisans’ conclusion is, sadly, pretty much on the mark. 

    In the wake of health care reform, insurance companies are raising their rates–apparently, in preparation for the tepid new rules that won’t go into effect for years, and thus give the industry plenty of time to jack up their prices and protect their profits.  The Wall Street Journal reports that premiums for individuals and small businesses will go up in 2011, in some cases by as much as 20 percent. 

    Once the reform measures do go into full effect, the government is supposed to turn the 50 million uninsured into new customers for the price-gouging private insurance companies, which will enjoy no competition from a public option. As I have been arguing since this so-called debate over the future of health care began, it all looks like a sham exercise by Congress that will only end up extending the grip of the insurance and pharmaceutical industries in the health care market. 

    Any serious economic recovery will be stopped in its tracks by these numbers. And with more price hikes in store, God only knows what the 2011 figures will look like.

    The End of Retirement

    American workers have little to celebrate on this Labor Day. That’s especially true for older workers, who face the end of any possibility of a secure retirement, so hard-won during the 20th century. In my recent Mother Jones piece on the subject, I wrote:

    I contemplate my future at a time of deep recession with no pension and a depleted 401(k). And it occurs to me that the very notion of a comfortable, paid retirement may turn out to have been a temporary phenomenon, with a life span almost precisely the same as my own…And I have to wonder if someday the tale of a foolish generation of Americans, who imagined that a lifetime of work would be rewarded with a comfortable and secure old age, will become just another footnote in the annals of the market.

    One commentary on the subject came earlier this year from AFL-CIO President Richard Trumka, speaking at the National Institute on Retirement Security. His conclusions regarding the possibility of change may be overly optimistic, but his analysis is sound. Here’s an excerpt:

    Today’s retirement security crisis is just one of the many painful consequences of the failed economic policies of the past 30 years—policies of radical deregulation and corporate empowerment.  

    They’ve culminated in the worst economic decade in living memory—job loss, wage loss, collapse of the housing and financial markets, enormous growth in inequality and the massive destruction of wealth.  

    These policies allowed — and even encouraged — employers to walk away from what had been a system of shared responsibility.  The result?  Today, fewer than 20 percent of private-sector workers have real, defined-benefit pensions. 

    As a country, our challenge now is to build a new economy on a solid foundation of good jobs, opportunity, a return to shared responsibility and a level playing field that allows both workers and business to thrive.

    Keeping the promise of retirement security must be part of this great transformation in American life…part of the legacy we seek to build and the future we envision. 

    Today only 13 percent of workers say they are very confident about having enough money for a comfortable retirement—that’s the lowest level in 16 years.  And this lack of confidence is justified.  The majority of America’s workers will face retirement with far less security than their parents.

    That’s especially painful to me—because it was our union movement that created retirement in the United States.  Before the rise of the labor movement in the 1930s and 40s, elderly Americans were the most impoverished age group in our society, and only a privileged few received government or employer pensions.

    With the enactment of Social Security and the growth of union-negotiated pensions, elderly Americans became the least impoverished age group.

    After the New Deal, it was collective bargaining that set the pattern for labor markets—and not just for workers covered by union contracts.

    These were the years that produced the three-tiered American retirement system:  Government provided a foundation with Social Security, employers provided defined-benefit pensions and individuals saved for their retirement. 

    With this system, our parents could retire after a career of hard work, confident of a stable income they would not outlive.  They could sleep at night knowing that, should they die, their spouse would continue to have a dependable income. 

    For millions of Americans—teachers and bus drivers, factory workers and flight attendants, construction workers and nurses—reliable, employer-funded pensions made their lives immeasurably better.

    That was a legacy.  That was the world I grew up in back in Nemacolin, Pennsylvania.  A world where working people had real pensions they had won at the bargaining table and on the picket line…

    …A world where retirement, which had been a dream realized only by bosses, had become a reality for tens of millions thanks to Social Security and collective bargaining. 

    Today, all three tiers of that retirement system we built are in danger.  Employers are increasingly abandoning their pension plans.  Workers with lost jobs and stagnant incomes are unable to save.

    In this bleak landscape, Social Security stands out as the one feature of what passes for our retirement system that works for all Americans.  But too many in Washington seem bent on perpetuating the Bush administration’s attacks on Social Security. 

    The labor movement took on those people and beat them in the Bush era — and we will do the same in the Obama era.

    When people lump together Social Security attacks with deficit reduction efforts, we have to remind the public of this basic fact: Social Security is NOT contributing to our budget deficit—in fact, the buildup of the Social Security Trust Fund is financing our budget deficit. 

    And while the program faces a funding shortfall over the next 75 years, in pension plan terms, Social Security is 88 percent funded over that 75 year period of time and by any measure would be considered a healthy pension plan.  Relatively modest adjustments—WITHOUT benefit cuts—can address even this long-term issue. 

    Social Security is the most important family income protection program and the most effective anti-poverty program ever enacted in the United States.  One-third of Social Security beneficiaries receive more than 90 percent of their income from Social Security.  Two out of three depend on it for more than half of their income. 

    Social Security is the sole source of income for nearly one in five seniors.  The average Social Security benefit is just little more than a minimum wage income—meaning a typical retiree needs almost twice the average monthly Social Security benefit for a reasonable standard of living.

    And if that’s not bad enough, growing Medicare cost-sharing means our seniors will need higher benefits just to maintain the replacement rate of the past 25 years.

    Social Security benefits must remain at least as robust as they are today…quite frankly, INCREASING Social Security benefits would be a massive boost for our economy right now and for our long-term ability to provide all Americans financial security in retirement.

    Social Security is the ONLY reliable and guaranteed benefit for the growing number of people without pensions.  But Social Security by itself cannot provide retirement security for most Americans.

    And despite all the flashy new investment products the financial services industry markets, traditional defined-benefit pension plans remain the soundest vehicles for building and safeguarding retirement income security. 

    If you are lucky enough to have a union, there is still a good chance that you have a pension plan.  Sixty-six percent of union workers have pensions, compared with only 15 percent of nonunion workers.  But unions are under increasing pressure at the bargaining table to allow employers to cut or eliminate real pensions. 

    In the private sector, the funding rules for single employer pension plans in the Pension Protection Act of 2006, coupled with new accounting standards, have contributed to an environment in which even healthy companies are freezing their pension plans entirely or closing them to new hires.

    Our current economic downturn has made this much worse.  In many parts of this country, public-sector workers have the right to form unions.  Not surprisingly, state and local government workers are four times more likely than private-sector workers to have defined-benefit plan coverage.  But public-sector plans are under attack through legislation and ballot initiatives.

    In the private sector, over the past decade, many employers have abandoned their real pensions for 401(k) plans—plans with little or no employer money … plans with no protection for workers against market risk or outliving your money … and plans with high investment management fees.

    We hear different reasons for this, but here’s the bottom-line problem:  Our current system lets employers off the hook.  They can refuse to provide any benefits at all.   If there ever was an implicit social contract, it has eroded.  My friends, that is NOT the vision I have for America. 

    Unfortunately, the vision put forth by policy makers in both political parties and the White House is for tepid reforms that address only the shortcomings of the 401(k) system.  I think we were all glad that the president included retirement security as a national issue in his State of the Union address last week. But his remedies fall short.

    Tinkering with 401(k)s by adding automatic enrollments as a plan feature will not bring about the change we need.  And what good is individual annuitization if you don’t have any money in your account and you are at the mercy of the insurance industry on pricing?

    At best, I’m afraid, these proposals will marginally increase retirement savings for those who already can afford to contribute, and will do nothing to make employers take some responsibility in this crisis.

    In this crisis economy workers can barely meet day-to-day expenses.  How much then can they save on their own for retirement?  Plainly put: There is no way that 401(k) plans can adequately substitute for the loss of a guaranteed lifetime benefit.

    Look at the data: The median account balance in 401(k) type plans for 62-year-old workers is worth an annuity payout of about $400 a month.  $400 a month.  That just doesn’t cut it.  And most workers will outlive their savings.

    A Time magazine cover story last fall on the failure of 401(k) plans about summed it up:  “This isn’t how retirement was supposed to be.”   After a lifetime of hard work, workers deserve to retire with dignity—with the economic security they have earned. 

    It is imperative to strengthen and preserve what remains of the current private-sector pension system by working on two tracks—through collective bargaining and through legislation…