• print
  • decrease text sizeincrease text size

Where Did All Our Pensions Go?

Share this post

A total of 84,350 pension plans have vanished since 1985. This figure shocked Pulitzer Prize-winning authors Donald L. Barlett and James W. Steele, who just released their latest book, “The Betrayal of the American Dream.” Their chapter on retirement chronicles the heist of the American dream’s secure retirement by the financial elite and is a very important section of the book, says Steele, who spoke with the AFL-CIO about the retirement crisis. Steele says there is another number we should pay attention to: $17,686. That’s the median value of 401(k) accounts in 2011. For most working people, the amount in their 401(k) account would pay them less than $80 a month for life.

“What’s happening with retirement is almost parallel to what you see happening in other parts of the economy,” says Steele.

The elite has its agenda to eliminate pensions with the shift to 401(k)s, which cost companies less. Now, there’s a revenue stream for Wall Street and an obligation shift to people with little or no experience understanding how to deal with their own retirement issues….This is typical of all the other things the economy elite has been doing for decades with deregulation, unrestricted free trade and tax cuts—these things are all related.

“In the ’50s, ’60s and ’70s, the amount of workers with access to pensions was significantly rising,” says Steele. “We fully underestimated the speed in which the downturn would occu, and how Congress went along and encouraged it.”

Barlett and Steele write that the shift from defined-benefit pension plans to 401(k)s began in the 1980s. Companies realized 401(k)s would substantially reduce corporate costs. Workers were told that pensions no longer made sense and were outdated since people moved around from job to job. The 401(k) was marketed as more “portable.”

Steele says 401(k)s were engineered by corporations as another way for the wealthy executives to set aside money. They were never intended to be a principal retirement plan, only a supplement.

“Once corporate America got on to this, the idea took root,” says Steele. “The entire obligation shifted to the employees.”

Congress ignored the concerns raised by trade unions and other pension rights organizations. And the consequences are dire for middle- and lower-income workers.

“This is so typical of what has been happening over the last two to three decades,” says Steele. “This is the slow, steady erosion of economic security Americans had (or thought they had)….Now economic pundits, corporate folks and Wall Street people are saying people just have to work longer, in part because retirement plans now in place will not provide much security to people as they get older.”

Barlett and Steele feature stories of average people who did everything right (saved, worked hard) but are still living on the edge of poverty because of policies that enhance the rich at the expense of everyone else.

Over and over again, people thought they had something good. They were working hard and then, through no fault of their own, lost it all. Most people we talked to in the book are employed.

People thought it was something they had done to lose their job or benefits….They didn’t realize it was part of a broader pattern. There are great swaths of working people who are affected and we think it’s our fault. For most of these people, it’s not their fault, it’s just the way policy has been organized. Systematically dismantling pensions and retirement is the perfect example.

With the decline of pensions, it’s even more important to strengthen, not cut, Social Security benefits. Although the country dodged a bullet in 2005, when Bush’s plan for Social Security privatization fizzled, Steele says we still need to be vigilant to protect our benefits from the Wall Street casino.

Don and I make this point that the 2008 recession wouldn’t look a whole lot different from the Great Depression if we didn’t have Social Security and Medicare because there was no safety net then.

The economic elite, says Steele, attack Social Security because it’s a large pool of money for Wall Street to play with.

Nobody should kid themselves that they’re not going to come back and try to implement some parts of that [privatization]….The amount of money at stake is too good and that’s all they care about—access to that money, not American workers.

You can purchase “The Betrayal of the American Dream,” on Amazon.com and Barnesandnoble.com.

This post originally appeared in AFL-CIO Now on October 7, 2012. Reprinted with permission.

About the Author: Jackie Tortora recently joined the AFL-CIO as the blog/social Media editor. Before that, she was a Social Security and Medicare advocate for a national seniors’ organization.

Share this post

How Unions Help Build the American Dream

Share this post

Both Democrats and Republicans stress that the ability for people to move up the economic ladder to build better lives is at the heart of the American Dream. But new data from the Pew Center on the States pits the Republican tenet on economic mobility against another deeply held Republican belief that unions are a heavy and evil anchor on the economy that must be cut away.

Where there is a strong union movement, there is more economic mobility. If unions are strengthened, upward mobility will increase.

David Madland and Nick Bunker at the Center for American Progress Action Fund write in a new issue brief looking at the Pew figures:

Six of the eight most mobile states have high unionization rates—Connecticut, Rhode Island, New Jersey, Utah, Massachusetts, Colorado and Maryland—and all but 1 of the 10 least mobile states—South Carolina, North Carolina, Mississippi, Arkansas, Tennessee, Alabama, Louisiana, West Virginia, Georgia and Oklahoma—have low unionization rates and laws that discourage unionization.

The 10 states with the highest unionization rates—New York, Hawaii, Michigan, New Jersey, Washington, Minnesota, Illinois, Ohio, Wisconsin and Oregon—perform considerably better on a range of measures of mobility than the 10 states with the lowest levels of unionization.

What’s the connection between unions and greater opportunity for people to move up? Midland and Bunker outline several reasons:

First, unions help workers negotiate for higher and rising wages. Labor unions are particularly effective at boosting the wages and mobility of young, immigrant, low-wage and African American workers. Unions also push for increased job training and career ladders, which both help boost mobility over a lifetime.

It’s not just in the workplace where there is a union advantage. Labor unions, they note, help get ordinary citizens involved in politics to advocate for public policies that help boost mobility such as the minimum wage and investments in education. States with higher levels of unionization have more generous social safety nets that lift workers up, as well as cushion blows.

Mitt Romney’s plan to boost economic mobility and build a wider path to the middle class centers on cutting taxes for the wealthy—who have long passed through the middle class on their way to gated communities and private islands. But, say Madland and Bunker, the tight connection to unionization and upward mobility shows:

Policymakers that are concerned about boosting mobility and strengthening the middle class should add increasing the strength of organized labor to their list of policy solutions.

Read the full report “Unions Boost Economic Mobility in U.S. States or download the report.

This blog originally appeared in AFL-CIO on September 20, 2012. Reprinted with permission.

About The Author: Mike Hall is a former West Virginia newspaper reporter, staff writer for the United Mine Workers Journal and managing editor of the Seafarers Log. He came to the AFL- CIO in 1989 and have written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety.

Share this post

Working Harder for Less Mocks the American Dream

Share this post

Worsening unemployment. Millions of home foreclosures. Two-income households unable to support families. America’s workers are facing economic disasters so severe, even the national media is paying attention.

But the current crisis has long roots. America’s working families have been suffering through what is now a generation-long stagnation of wages and rising economic insecurity.

Steps must be taken immediately to shore up our flagging economy and provide much-needed assistance to working families. The AFL-CIO union movement supports an immediate moratorium on home foreclosures and the passage of a second fiscal stimulus package, including extension of unemployment insurance and federal aid to states and cities to prevent further cutbacks of vital public services.

Yet short-term measures will not be enough.

We must restore the balance between workers and their employers to ensure that workers can bargain fairly for an equitable share of our nation’s prosperity. Working families have been left behind over the past three decades, as virtually all income gains have gone to the wealthiest Americans.

Between the mid-1940s and mid-1970s, inflation-adjusted wages doubled for most U.S. workers, but between 1979 and 2007, they grew only 7 percent. Since 1979, productivity, or output per hour, has grown 70 percent—10 times as fast as real wages.

As a result, income and wealth are more unequally distributed in the United States than in any other developed country and are more unequal today than at any time since the 1920s. Even more alarming, American intergenerational economic mobility is falling and is already lower than in many European countries.

In a House subcommittee hearing on the economy last week, Rep. Jim McDermott (D-Wash.) summed it up this way:

In short, many Americans are working harder for less. Less income, less job security, less health and pension coverage, less time at home, and less opportunity. Left unchecked, this trend will strike at the very core of the American dream.

Economic Policy Institute (EPI) economist Jared Bernstein describes it this way:

The difficulties facing American workers predated the recession. There may be no more telling statistic…than the fact that the real wage for the median male was lower in 2007 than in 1973.

For the last few decades, [workers] have been losing employer-provided health coverage, or paying more out-of-pocket for premiums, health services, or medications. Their pensions are less secure, and have flipped from majority guaranteed benefit to guaranteed contribution, shifting the risk of an adequate retirement benefit from their employer to themselves and their family.

Correcting this long-term imbalance will require multiple strategies. We need policies that ensure a just global economy. We need a government that provides quality services, adequate public investment and fair taxes. And we need to ensure that when workers seek to join together to improve their wages and access to health care and retirement security, they can do so without employer harassment and intimidation.

In 2007, full-time union workers were paid $863 in median weekly income, compared with $663 for their nonunion counterparts. In March 2007, 78 percent of union workers in the private sector had jobs with employer-provided health insurance, compared with only 49 percent of nonunion workers. Union workers also are more likely to have retirement and short-term disability benefits.

America’s workers know union membership helped build the nation’s middle class. Some 60 million workers say they would join a union if they could. But the nation’s labor laws are broken, letting greedy employers harass and intimidate employees who seek to form a union. In the post-World War II years, our nation’s middle class mushroomed because workers from the factory lines to the office steno pool could join together and form unions, enabling them to negotiate for better wages, affordable health care and retirement security. Their purchasing power helped strengthen communities, and their solidarity pushed through such vital policies as job safety standards and Medicare that benefited all working Americans.

But some 92 percent of private-sector employers, when faced with employees who want to join together in a union, force employees to attend closed-door meetings to hear anti-union propaganda, and 75 percent hire outside consultants to run anti-union campaigns. When America’s workers are unable to win a voice at work, the American Dream becomes harder and harder to reach.

That’s why passage of the Employee Free Choice Act is a top priority for the union movement. The Employee Free Choice Act is a crucial step in moving our nation toward a just economy. It would level the workplace playing field by enabling employees to sign up for a union through a majority verification (card-check) process or labor board election, whichever they choose. It also would provide for mediation and arbitration if management and the union can’t work out a contract in 90 days. Because even after workers successfully form a union, in one-third of the instances, employers refuse to negotiate a contract.

Chris Williams, who teaches introductory physics at Pace University in the New York City area, has experienced this firsthand. As an “adjunct faculty” member, Williams couldn’t survive on his wages from Pace, where the average pay for teaching a 15-week, three-credit course is just $2,500. So while a tenured professor might earn $100,000 annually, an adjunct in the next classroom with the same qualifications would earn only $15,000 for the equivalent of a full-time workload.

Williams and other adjuncts joined the New York State United Teachers/AFT (NYSUT/AFT) in December 2003. But, once at the bargaining table, Pace dragged its heels, and today, the adjuncts still have no contract. Williams, a strong supporter of the Employee Free Choice Act, puts it this way:

Anything that can speed that process has to be good for workers. It’s clear that people need someone to represent them collectively. At the moment, the balance of power is almost completely with the employers. It’s long overdue that workers shift the power a little bit in our favor.

The health of the U.S. economy will turn on whether we let corporations get away with paying poverty wages to those responsible for teaching those who, ultimately, will lead our country. And so will the future of our nation.

(Show your support for the Employee Free Choice Act by signing a petition for its passage here. We plan to present 1 million signatures supporting the Employee Free Choice Act to the next Congress and president.)

About the Author: Tula Connell got her first union card while working her way through college as a banquet bartender for the Pfister Hotel in Milwaukee (represented by a hotel and restaurant local union—the names of the national unions were different then than they are now). With a background in journalism—covering bull roping in Texas and school boards in Virginia—Tula started working in the labor movement in 1991. Beginning as a writer for SEIU (and OPEIU member), Tula now blogs under the title of AFL-CIO managing editor.

Share this post

Subscribe For Updates

Sign Up:

* indicates required

Recent Posts

Forbes Best of the Web, Summer 2004
A Forbes "Best of the Web" Blog


  • Tracking image for JustAnswer widget
  • Find an Employment Lawyer

  • Support Workplace Fairness


Find an Employment Attorney

The Workplace Fairness Attorney Directory features lawyers from across the United States who primarily represent workers in employment cases. Please note that Workplace Fairness does not operate a lawyer referral service and does not provide legal advice, and that Workplace Fairness is not responsible for any advice that you receive from anyone, attorney or non-attorney, you may contact from this site.