Category Archives: unions / labor

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…

The Cleveland of Harvey Pekar

Cleveland photo by scottamus (Ohio signs set) from flickr

I didn’t know anything about Cleveland when I first went there in the late 1970s. I got off the plane, not expecting much, and went to the office of Dennis Kucinich, then the mayor. Kucinich, in what I now recognize as the Cleveland political style, immediately launched into an attack on the new people-movers that were being installed at the airport. From there he went on to the power company and from there to the banks, and behind the banks, the mob (which later put a hit out on him). That was my introduction to the city of Cleveland–a city steeped in corruption that had nonetheless managed to elect this crusading “boy mayor”–and it won from me a kind of  grudging respect that I’ve never lost.

I asked one of his aides if there were any independent journalists there, and he sent me to Roldo Bartimole, who was then–and still is now–the city’s leading muckraker. Meeting Bartimole was a crash course in Cleveland politics. But if I wanted to really know about Cleveland, someone told me, I should read Harvey Pekar. Pekar was a comic book writer, and at that time he was still an underground figure in an underground world, operating in the shadow of R. Crumb, another Cleveland native who had helped him get his start. Pekar worked as a file clerk in a VA hospital, and he lived in and wrote about the old Cleveland neighborhoods that looked like it hadn’t changed in decades–low-key but no-nonsense, a little shabby but comfortable. And he matched his city. As the obituary in the Cleveland Plain-Dealer put it:

Pekar chronicled his life and times in the acclaimed autobiographical comic-book series, “American Splendor,” portraying himself as a rumpled, depressed, obsessive-compulsive “flunky file clerk” engaged in a constant battle with loneliness and anxiety.

After that visit I did read Pekar, and ever since then, any thought of Cleveland for me has conjured up his work. I recalled it one afternoon during the 2004 elections, at a Democratic campaign rally in a Cleveland housing complex. The candidate, whose name I can’t remember, never showed up. I met a middle-aged couple standing off to the side. The man was wearing an AFSCME jacket and the woman a raincoat. It was cold and they were passing a cup of coffee back and forth. The woman’s “Bush Gotta Go” sign hanging limply from the crook of her right arm.  They didn’t seem to know much about the candidate, either. I asked why they were there. “Oh,” the woman said in a matter-of-fact voice, “you know, to help out.” There are people like that all over Cleveland. A lot of them are still union people, including some who don’t have union jobs. They’re not flashy and they don’t waste words, but they have a kind of resolve. They don’t really expect much to change, but they come along anyway to help out. They know that most of life consists of just showing up. Nobody pays much attention to them–but in Harvey Pekar’s comics, they were the superheroes.

In the last decade, the world bent over backwards to make Pekar into some sort of star, like when he was on Letterman or when the movie about him came out. But that wasn’t really him. He was like Cleveland’s old neighborhoods, a little run-down but with some kind of resolve that kept him going. According to the Plain Dealer, 

R. Crumb said Pekar’s work examined the minutiae of everyday life, material “so staggeringly mundane it verges on the exotic.” Pekar himself summed it up as revealing “a series of day-after-day activities that have more influence on a person than any spectacular or traumatic events. It’s the 99 percent of life that nobody ever writes about.”

Ripping Off Workers’ Pay to Increase Executive Pensions

You just can’t win. Here’s news from the always helpful Pension Rights Center on how executives deliberately structure pension plans in in a way that shortchanges rank-and-file workers, so that high riding executives get more money. In other words: stealing from the poor to give (even more) to the rich.

Certain rules in the Internal Revenue Code are designed to prevent employers from discriminating against non-highly paid employees in their pension plans. Unfortunately for the retirement security of their employees, some employers look for ways to get around the nondiscrimination rules.

Instead of sponsoring pension plans that treat all participants equally, some employers circumvent the rules by creating “carve-out” pension plans. These plans often provide rich benefits for senior, well paid employees-often the company’s owners and officers-while covering only a relatively small percentage (or in some cases none) of the non-highly paid employees. While these plans may comply technically with the tax rules as they are now interpreted they are fundamentally unfair. 

Case in point: An article in Physicians News Digest promotes the use of carve-out plans, noting that they allow doctors to “focus the majority of an employer’s contribution to a select group of employees, usually key or highly compensated employees.” In other words, a medical practice can save big bucks by providing one plan for its doctors, while offering many of its lower-paid employees a different, less valuable plan:

By including the key or highly-compensated employees in a defined benefit plan and the remaining employees in a more affordable 401(k) plan, you can keep your retirement plan in compliance with non-discrimination regulations, while keeping expenses at a minimum.

We have discussed the merits of a traditional pension over a 401(k) plan several times in the past. The truly insidious aspect of carve-outs is the fact that the higher-paid employees – the ones who are more likely to be able to save for retirement on their own – are given the better plan, while the lower-paid workers – the ones who can least afford to save for retirement – are stuck with an inferior one. 

Have these employers forgotten that the success of their business is not just a one-(wo)man show?  Or do they just not care?

Moreover, the IRS could probably limit somewhat the discriminatory impact of these plans by issuing new regulations on the technical rules that employers exploit to make carve-outs possible. 

On Memorial Day in Normandy, Evidence of What We Won–and Lost

Photo: Eisenhower National Historic Site, National Park Service

On June 5, 1944, the eve of the largest invasion in history, General Dwight Eisenhower visited the English airfield where paratroopers were preparing to take off for their drop into France. “Quit worrying, General,” one of the soldiers told him. “We’ll take care of this thing for you.’’ The following day, 175,000 men landed on the beaches and fields of Normandy.

For children growing up in Washington, D.C., shushed into silence behind the blackout curtains while our parents bent over radios bringing the long-awaited announcement of the attack, it was all beyond  comprehension–save that every little boy was climbing into a tree to pretend he was flying his Spitfire over the Channel, or parachuting into the French countryside.

At age seven, I was one of those boys. Last week I had the good fortune to meet another member of my generation, whose experience of D-Day was something quite different. His name is Pierre Bernard, and he is retired to his family’s farm in the village of Maisons, a stone’s throw from the beaches that became the site of what the French call the Débarquement. In the spring of 1944, Pierre was twelve; with his parents and siblings, he worked the farm and waited for the Allied troops to arrive and free them from Nazi occupation. When that day finally came, Pierre recalls, the Germans simply vanished. British and then American troops soon passed through the village, moving quickly inland. His family was luckier than many others: Some 12,000 French civilians were killed during the battle for Normandy, along with more than 75,000 troops on both sides.

Today, long retired from his job as a cook in Paris, Pierre oversees a bed and breakfast in his old stone farmhouse. He’s never learned to use a computer, so his daughters help arrange who is to come, while Pierre, along with his two dogs, goes out each morning to bring back fresh baguettes and croissants. He serves them along with the jams and pates he makes himself, and sits quietly at the head of the family table, contentedly watching his guests eat breakfast.  And he’ll gladly trade war stories with a visitor who, like himself, is too young to have fought, but old enough to remember.

Normandy today still inspires awe at the courage of the men who stormed Fortress Europe: Omaha Beach, so wide and unprotected; the cliffs of Point du Hoc, higher and steeper than I could have imagined. But by now, the genuine remnants of the war—half-buried German bunkers, wrecked ships, and thousands of well-tended graves—are outnumbered by nostalgic renderings of the real thing: Army surplus stores are filled with Eisenhower jackets, berets, and rucksacks (many of them supplied by German companies). Towns compete for tourists–and a place in history—with tanks on their village squares and little museums dedicated to every aspect of “Jour J.” In Sainte-Mère-Église, where an American paratrooper famously got caught on the church steeple, a dummy is suspended from a parachute to commemmorate  the event. Then there are the British and American visitors tearing around in rented World War II jeeps, windshields down, and even a half-ton olive drab truck.  They look far too young to be veterans; too young even to have been alive at the time. The men and women who fought that war are fast disappearing (some 850 U.S. WW II vets die every day, according to the VA), and those who lived through it as children are now well into our old age.  

I was struck by how different Pierre’s old age in France is from mine in the United States—not because of anything that happened during the war, but because of what happened afterwards. In the postwar years, along with most other European countries (victors and vanquished alike), France implemented guaranteed pensions as well as national health care. Under a social welfare system that epitomizes what’s derisively referred to in the U.S. as the “Nanny State,” the average worker in France retires at age 60 on a full pension with complete medical care and various tax breaks. (And that’s after years of working 35-hour weeks, with two-month vacations.)

And what about aging Americans–including the waning ranks of the “greatest generation” that came before mine, who helped free the French and the rest of Europe, and then financed the continent’s recovery through the Marshall Plan? What can we expect? The most minimal of public pension systems, which was created before the war and has been under attack ever since; a private pension system that is now a shell of collapsing structures; personal savings decimated by Wall Street; and a partial and increasingly expensive health care system. More and more of us plan to work quite literally until we die–that is, if we can manage to keep our jobs, since we have little protection against age discrimination and no job security of any sort. In America, the war fought by “Citizen Soldiers” made our world all too safe for wealth and corporate power, often at the expense of the very men and women who won it.

In France, conservative President Nicolas Sarkozy has been chipping away at the Nanny State. His latest scheme—to raise the retirement age to 62—brought mass demonstrations across the country last week, and threats from the still-powerful unions. But even if Sarkozy’s latest initiative succeeds, as it well may, France’s elders will still be better off than their American counterparts have ever been.

Here in the U.S., we face a political juggernaut—most recently manifested in Obama’s “debt commission”–intent on cutting Social Security benefits, raising the costs of Medicare, extending the formal retirement age from 65 to 67 and beyond, and further tying our retirement and that of future generations to the vicissitudes of the securities markets through 401Ks and IRAs. Few voices are raised in protest against this attack on old-age entitlements. In fact, it seems to be one of the only true examples of bipartisanship in American politics, now that the Democratic Party, which once fought to build what social safety net we have, has collapsed into the arms of Wall Street. I expect it will progress with no more difficulty than “welfare reform,” in which another Democratic administration gutted our meager provisons for the poor.

In a Washington Post op-ed last Sunday, American Enterprise Institute president Arthur C. Brooks declared that “America’s new culture war” is a “struggle between two competing visions of the country’s future. In one, America will continue to be an exceptional nation organized around the principles of free enterprise–limited government, a reliance on entrepreneurship and rewards determined by market forces. In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution.” If only this were remotely true.  In fact, that battle was lost long ago—if it was ever fought at all.

Perhaps I only imagine that Pierre’s life is more tranquil than mine because he enjoys the security that comes with “European-style statism,” while my own well-being remains “determined by market forces.” But I don’t think so. Sixty-six years ago, as a small boy playing pilot in the lush green trees of a Washington spring, I could not have guessed that Pierre, waiting in his farmhouse nestled in the hedgerows of Normandy for the jeeps and tanks of the First Army, would someday become a symbol not only of my country’s greatest victory, but of its saddest defeat.

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Michael Elswick Went to be with the Lord on Monday April 5

Many younger people spend their time deriding the coal industry without taking into consideration the lives of the people who work in the mines. The miners are simply dismissed as a handful of left-behind workers from another era, who are now standing in the way of “sustainability.” What these people don’t understand is that coal was the backbone of the Industrial Revolution and the engine that powered America. It’s not just going to disappear; you can’t wipe out a history of 150 years, and you can’t forget about the people who have risked–and still risk–their lives in the mines every day.

Coal is a dirty business, and as I’ve written myself, a lot of the coal companies are just as dirty. There’s no doubt that changes have to be made in the coal industry for environmental reasons, not to mention the safety of workers. But until the climate changers get themselves down into the hills and hollows of West Virginia, Virginia, and Kentucky, and see the human faces of the coal business, they’re not going to get anywhere.

Ken Ward, a reporter for the Charleston Gazette in West Virginia, is a journalist who gets coal. If you want to know about the business and what it means to the people who live in these hills, take a look at his writing from time to time. This morning I went to Ward’s Coal Tattoo blog and found this entry,which seems to me to tell it all. So I am reprinting it in full.

elswick

Michael Lee “Cuz” Elswick, 56, of Elkview went to be with the Lord on Monday, April 5, 2010, after a terrible mining accident.

He was preceded in death by his mother and father, Lee and Willidean Elswick of Wharton.

Michael was an employee of Massey Energy, a dedicated coal miner of 36 years. He was a member of the Dunbar First Church of God and a very dedicated husband, father, grandfather and friend to all he met.

Michael is survived by his loving wife of 36 years, Bobbie Elmore Elswick; son, Jeremy Elswick; daughter, Jami Cash and husband, Philip; and grandchildren, Justin and Hannah Cash, all of Elkview; sister, Pam Miller of Wharton; and brothers, Larry Elswick of Charleston and Steven Elswick of Wharton.

He will be very deeply missed by all who knew and loved him.

God bless all the families who lost their loved ones that horrific day at the UBB Mine.

Obama’s Flyover: The President Should Have Gone to West Virginia

During the blitz of World War II, the British Prime Minister Winston Churchill went into the streets of London to stand with his people against the Nazis. But nowadays, our leaders are mostly absent in times of travail. After 9/11, George W. Bush took three full days to make it to New York, waiting until the coast was clear before claiming his photo-op with the firefighters and cops and rescue workers at Ground Zero. And when Katrina devastated New Orleans, Bush opted for his famous flyover, viewing the suffering from a the comfort of Airport One at 2,500 feet. 

Last week, Barack Obama continued the tradition. It seemed the president just couldn’t find the time to take puddle jumper down to Massey Coal’s Upper Big Branch mine in West Virginia  to comfort the families of those who died in the worst coal mine disaster in 40 years. Nor did Michelle Obama or even Joe Biden, who is talked about as the the administration’s liaison to working-class whites.

The governor of West Virginia, Joe Manchin, was on hand as the futile rescue attempts took place, but but his state is such a pawn in the hands of the coal industry that it was hard to take him seriously. Today, at least, he did take the step of appointing Davitt McAteer, a longtime reformer who headed the U.S. Mine Safety and Health Administration under Clinton, to oversee an independent investigation into the disaster. As I wrote last week, McAteer, who headed a similar investigation after the 2006 Sago disaster killed 12 miners, is without question the best man for this job. But his work will only have meaning if the government implements–and enforces–the safety improvements he recommends.

Obama, too, has promised launch an investigation into the causes of the mine explosion. But there already have been investigations into Massey Energy’s violation of federal safety laws. This was an especially dreadful disaster because the U.S. government, which had been equipped with mine safety laws at the insistance of  reformers, wouldn’t adequately enforce them, allowing Massey to drag its feet and rack up violations until the inevitable happened. That mine was just waiting to blow up, and the feds effectively stood by and permitted a greedy company put profits ahead of its workers’ lives.

Instead of an investigation, Obama ought to call a federal grand jury to weigh criminal penalties against the owners and top officers of the company. And he ought to have taken the time to personally visit the place where 29 men died because the government–including his own administration, as well as his predecessor’s–failed to do its job.

Obama, like Bush before him, might have taken a lesson from what Lyndon Johnson did in the immediate aftermath of Hurricane Betsy back in 1965–as described in this brief passage from the Louisiana Weekly:

On September 10, 1965, the day after Hurricane Betsy plowed through southeastern Louisiana, President Lyndon Johnson flew to New Orleans.  He went to the people, to shelters where evacuees were gathered, to neighborhoods all over the city.  There was no electricity and, so that people could see and hear him at one shelter, he took a flashlight,  shined it into his face and said into a megaphone, “My name is Lyndon Baines Johnson.  I am your president.  I am here to make sure you have the help you need.”
 

Wall Street Brushes Aside Massey Mining Disaster; Gives Stock the Go-Ahead

For years, Massey Energy has been engaged in what a Washington Post editorial called “a distressing effort to render ineffective the mining regulations that were strengthened in 2006 to bring a measure of safety to a very dangerous job.” By ignoring–and then challenging–an array of safety regulations, the company avoided a lot of expense and bother. Of course, it also placed its workers’ lives at risk–but apparently, Massey gambled it could lose a few miners and still make a profit.

This morning’s news from Fox‘s “MarketWatch” proves the company right, as Wall Street analysts conclude that the “financial impact” to Massey of the 29 deaths “will be immaterial.”

NEW YORK — Massey Energy on Monday drew an upgrade to buy from hold at S&P Equity Research, while analysts cut their 2010 earnings estimate by 7 cents a share to $2.55 a share on production losses and costs following an explosion that killed 29 miners. “We believe that the financial impact of the Upper Big Branch mine tragedy to Massey Energy will be immaterial,” S&P said in a note to clients. “Our opinion is based on our analysis of industry mining accidents, Massey’s indemnification to litigation via insurance, and our belief that the company has ample capacity to mitigate most of the 1.6 million tons of production that was expected to be sold from Upper Big Branch.”

Also worth reading today: Art Levine’s piece on Truthout about Massey’s history of union-busting, and its effect on mine safety.