The American work ethic is strong.
Find a good job, stay with your company, work hard for promotions and perks, maybe play on the company softball team if you can swing a bat and still have a good throwing arm. And then, after, say, 30 years of labor, the prodigal “safety net” of late life – retirement. usually.
In a late-night run for a chocolate-chip cookie treat at a fast-food restaurant last week, I was handed my warm snack by a woman who was at least in her 60s. My roommate had to pick up some items at our local discount store recently and happened to notice how many greeters were senior citizens.
In the past, Americans have enjoyed well-compensated retirement benefit packages that included pensions, health care and retirement lump sums, making retired life feasible if not sometimes a little tight.
Unfortunately, our generation will most likely witness the demise of the “safety net” unless there are some serious changes in attitude towards retirement benefits.
The Washington Post reports that more than 700 pension funds have collapsed in the past five years, forcing the Pension Benefit Guaranty Corporation (the federal agency that insures pension programs) to pick up paying those pensions’ recipients.
The PBGC reports that they now operate with the agency’s largest deficit to date, $22.8 billion, down from a near $10 billion surplus at the end of 2000, with its largest claims coming from the airline, steel and automotive industries.
Assistance has come in the form of new legislation from Congress. The bipartisan legislative effort that overwhelmingly passed the House and Senate, the Pension Protection Act of 2006, was signed into law two weeks ago by President Bush.
The act seeks to bail out faltering pension programs by forcing corporations to pump billions over the next seven years into their pension funds while making it easier to expand 401K and IRA contributions and closing loopholes for pension payment evasion by pension plan administrators.
The Pension Protection Act of 2006 has been praised by many as well-needed legislation to prop up the shaky foundations of many Americans’ pensions.
But while the act is a step in the right direction, Americans need to do more to address the change in attitude among employers towards pensions and other retirement benefits.
Automakers like G.M. and Ford have cut pension programs and retirement benefits. Other industry giants like Lockheed Martin, H.P., and countless others have scaled back benefits, shifting to 401Ks, IRAs and HSAs to save hundreds of millions to billions a year on employee benefits. Approximately 44 million Americans have some form of pension compensation – less than a fifth of the population.
Legislation will help stem the tides of attack on retirement benefits for middle-class Americans, but there is a larger issue at stake: the nation’s failure to provide for the economic security of those Americans too old to work.
While corporations and state and local governments can cut losses by losing their pension, healthcare and other retirement programs and produce profits in the short run, it is the swollen American upper-middle class that will suffer eventually.
The employee benefits cut now will cost much more in the long-run, as the expenses of old age for these workers that were normally caught by the “safety net” of economically secure retirement will now fall upon social programs such as Medicare, Medicaid, Social Security and Welfare; tax-payers’ dollars. The family structure will also be largely impacted, reflected by the fact that the fastest growing home in America is the multi-generational home.
Personally, I don’t want my parents to have to work at a discount store in their golden years, telling people “hey, you can’t park here” or “would you like a cart today?” after more than 30 years of honest work.
I don’t want to do that myself.
Poor workers will still have low-wage jobs, the wealthy will still control the means of production, but unless Americans demand the protections of their retirement, your pension could go to pay the daily wages of an entire Mexican factory very soon.
Drew Haugen is a senior international studies major. His column runs occasionally in the Collegian. Replies and feedback can be sent to email@example.com.