12.20.08
The End of Retirement?
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[1]http://www.alternet.org/story/113981/
AlterNet December 19, 2008
Pension Funds Collapse: The End of Retirement?
By Shamus Cooke, Information Clearing House
Unless things change fast, human history will show that the phenomenon
of “retirement” was limited to one generation. After World War II,
when European and Japanese economies stood in tatters, American
capitalism could fulfill “the American dream,” since there was little
foreign competition to speak of. For the first time ever, workers were
promised that — after working thirty or so years — they would be
able to securely retire. That was largely the case … for one
generation.
The second generation is having a devastating reality check. 2008 was
supposed to be a watershed year for retirement: it was the first year
that the baby-boomers turned 62, and the retirement frenzy was to
begin (since people could begin to draw on their social security
benefits). Early in the year, however, a study was conducted that
found one-fourth of these boomers were delaying retirement (only the
baby-boomers who were actually able to plan for retirement were
studied). The economy has since nosedived, and many more retirements
are being delayed. The unfortunate reality is that many who planned on
retiring will work until the grave, joining the millions of other
baby-boomers who never had such dreams.
The experts are calling this the “perfect storm” for retirement.
Everything that could go wrong is in fact going wrong. This storm,
however, was not created by supernatural forces, but the coordinated
effort of big-business and their puppet politicians.
The deliberate destruction of the pension and its replacement by the
401(k) was, of course, a giant step towards attacking retirement; but
now that the economic crisis has emerged, we’re beginning to see just
how ruinous the effects are.
At the end of September, just as the crisis was beginning to gain
steam, it was discovered that in the previous year the value of stocks
in 401(k) accounts had fallen by nearly $2 trillion! Much more has
been lost since then. This is especially devastating since almost
one-third of 401(k) participants in their 60s had 80 percent of their
money in stocks (pension funds have been similarly destroyed).
The 401(k) was the scheme of the century. Corporations offloaded their
“burdensome” pensions and used the combined forces of the media and
politicians to sell the ruse to the public, to the great benefit of
Wall Street. Workers were told that the boom-slump cycle was over, and
that stocks were a sure thing. There were additional factors to invest
in stocks: interest rates were so low that investing in bonds and
other less-risky instruments offered only tiny returns; and since
employers stopped contributing to retirement funds, a bigger return
was required.
More importantly, corporations have been driving down real wages since
the seventies, allowing less money to be saved for retirement,
creating a mood of desperation.
Every “safe bet” for investing has been proven unsafe; the recession
has left nothing untouched. After the dotcom bubble burst — taking
with it millions of people’s 401(k) savings — the housing market
became the place to invest. Now the safest possible investment, too,
has turned sour. For millions of people, the home they lived in was
their nest egg, which they had planned to sell and move into a smaller
place. No more.
Rep. Robert Andrews (D-NJ), who chairs the House subcommittee on
health, employment, labor and pensions, put it bluntly: “Some will
have very little, some will have almost nothing, and some will have
nothing when they retire”. Of course, people who “have nothing” do not
retire.
This process is being accelerated by the newest trick of big business:
declaring bankruptcy to destroy “pension obligations”. These
obligations apply with equal weight to workers already retired, many
of whom are seeing their pensions slashed in half, forcing them out of
retirement.
Now even the threat of bankruptcy is constantly used in union contract
negotiations to scare workers into concessions, since after achieving
bankruptcy, labor agreements are torn up. The threat of closing the
company’s doors is a very effective form of intimidation.
This phenomenon is at the center of the GM debate. The corporate
politicians in congress cannot decide whether to appoint a “Car Tsar”
to oversee the destruction of the autoworkers pensions, or use the
proven method of bankruptcy. Not a day goes by that the corporate
media doesn’t join hands to assail the pension and health care
benefits of the “spoiled” GM workers. The hypocrisy is sickening.
This after the UAW had already agreed to the most shameful concessions
in 2007. Although concessions are often made in the name of “job
security,” the result is that corporations become emboldened by such
acts. Eventually, every benefit of workers that contradicts company
profit will be targeted. The demand for concessions never stops, and
soon the point arrives when the benefits of having a union become
questioned, since dues money is not paid with concessions in mind.
The autoworkers struggle is at the forefront of the pension battle
nationwide, since their struggles in the 1930′s originally paved the
way for pensions. Equally important is the pension struggles emerging
with public employees, the last stronghold of workers who receive
them. Public employees will find their pensions under immense attack
as the economic crisis intensifies, and government budgets are
depleted (see “State Budget Crisis Deepens” on this site).
Fighting the corporate strategy of bankruptcy and business closures is
an immediate need of working people. This tactic will increase in
number as the crisis deepens and companies strive to “restore
profitability” by drastically lowering wages. If a company attempts
such a criminal act, the workers should demand a bailout for
themselves; the government should take over the plant so that the
workers can keep their jobs, such as was done for the banks.
Management must be sacked and instead of a government bureaucrat, the
workers themselves should run the business.
To win this program, new levels of organizing and solidarity are
needed, such as the example of the United Electrical Workers, who
occupied their factory and organized in a brilliant fashion. They won
a stunning victory by utilizing the methods of the original
autoworkers struggles from the 1930′s. If a fight is to be waged, it
must be done seriously and with determination, uniting both retired
and active workers. The UEW workers have shown the way forward for the
labor movement, which can no longer rely on union concessions or the
promises of Democratic politicians, but only their own collective
strength.
Shamus Cooke is a social service worker, trade unionist, and writer
for Workers Action ([2]www.workerscompass.org ). He can be reached at
[3]shamuscook@yahoo.com
References
1. http://www.alternet.org/story/113981/
2. http://www.workerscompass.org/
3. mailto:shamuscook@yahoo.com