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Social Security COLA at Risk with Chained CPI Proposals

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Today’s announcement that Social Security recipients will receive a modest increase (1.7%) in their cost-of-living adjustment (COLA) was a small but welcome boost for seniors who are seeing prices increase on necessities, from health care to food. However, even this modest increase could be jeopardized if proposals floating around in Washington to “tweak” the current COLA formula by tying it to the so-called “chained CPI” are passed.

Senior advocates and retirement experts say the current formula, the CPI-W, is already inadequate. Higher health care costs and expenses seniors face are not accurately addressed in the CPI-W.

The Alliance for Retired Americans Executive Director Edward Coyle says:

The current formula, used for today’s announcement, already badly understates the inflation experienced by seniors and disabled Americans, who make up the majority of Social Security beneficiaries. However, the change some in Congress want would exacerbate this flaw in a way that is particularly damaging for women who, because of their greater life expectancy, receive benefits over a longer period of time.

The National Committee to Preserve Social Security and Medicare says:

The typical 65-year-old, who filed for benefits at 62, would lose about $130 per year in benefits. By the time that senior reaches 95, the annual benefit cut will be almost $1,400, which is a 9.2 percent cut.

The AFL-CIO, along with the Strengthen Social Security coalition, sent a letter to Congress today expressing its opposition to the chained CPI:

The purpose of an inflation adjustment is to ensure that the value of Social Security and other modest but vital benefits does not erode over time. The proposal to switch to the chained CPI would, over time, slash the benefits of both current and future beneficiaries. Specifically, it would cut the basic benefit—currently averaging a modest $13,500 for all beneficiaries—and break the bipartisan promise not to cut the benefits of current seniors.

Although some in Congress may say this is a modest tweak or a change to more accurately reflect inflation, nothing could be further from the truth.

A chained CPI means cuts are larger the longer you receive benefits.

Says the Strengthen Social Security coalition:

One of the most problematic aspects of the chained CPI is that the cuts are larger the longer you receive benefits – meaning that the chained CPI would disproportionately hurt many women, veterans, people with disabilities, and others. For example, veterans wounded in combat and others disabled at young ages would be disproportionately hurt. Seniors, especially women, who live long lives would also be hurt disproportionately.

The AFL-CIO Executive Council supports an across-the-board increase in Social Security benefits.

This post originally appeared in AFL-CIO Now on October 16, 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.


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Where Did All Our Pensions Go?

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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.


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Older Workers Have Highest Long-Term Jobless Rate

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Image: Mike Hall

Older workers who lose their jobs have the highest rate of long-term unemployment compared to any other age group. In 2011, more than half of jobless workers, ages 50 years and older, were out of work for more than six months. The trend continues this year.

Christine Owens, executive director of the National Employment Law Project (NELP), told the Senate Special Committee on Aging this afternoon:

“The prospects are dim for older workers who lose their jobs….They face pointed discrimination when they go looking for work, and they are especially vulnerable to financial instability. Congress needs to take extra steps to address the difficulties that some of the most seasoned members of the workforce are experiencing.”

report from the Government Accountability Office (GAO) also found that long-term unemployment of older workers means significantly reduced retirement income, especially for those defined-contribution retirement plans such as 401(k) rather than traditional guaranteed defined-benefit pensions. In addition, older jobless workers are often forced to tap into those retirement savings.

Sen. Herb Kohl (D-Wis.), chairman of the Special Committee on Aging, said:

“Left unchecked, long-term unemployment among older workers is a problem that will continue to grow as our workforce grays.”

Kohl has introduced the Older Worker Opportunity Act, which would provide tax credits for businesses employing older workers with flexible work programs.

Employers and job search agencies claim they do not discriminate against older workers. But Sheila White, unemployed since she lost her job as manager of a women’s clothing store in January 2010, sent out hundreds of résumés and had 15 interviews. She told the panel she rarely received a response after the interview.

“It then occurred to me that a potential employee could look me up on the Internet and lo and behold there was my age, clearly printed for all to see! I sensed my inability to find work had something to do with age, but I couldn’t prove it. Many jobs required me to enter my date of birth to even complete my online application.”

Owens said that one tool to combat age discrimination is the Protecting Older Workers Against Discrimination Act that would preserve the rights of older job applicants and employees who are turned down for jobs or treated differently at work in part due to their age.

She also called for the passage of the Fair Employment Opportunity Act that would prohibit employers and job recruiters from excluding the unemployed from job consideration simply because of their unemployment status. In the past few years, many firms’ ads and websites state that jobless workers will not be considered. As Owens said:

“Because long-term unemployed workers are disproportionately older, older workers are more likely to be affected by exclusionary hiring practices based on employment status.”

Click here for the full testimony from all the witnesses.

This blog originally appeared in AFL-CIO on May 15, 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 has written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety.


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What Are the Biggest Taboos at Work?

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Last week, I was watching George Carlin on HBO. I started thinking about his famous list of the seven things you can’t say on television. So this week I’m going to present the Workplace911 variation on Carlin’s list — a list of five taboo words for today’s workplace. 

The first taboo in today’s workplace is the word “felony.” Corporations don’t like prison records. However, ex-offenders don’t need to worry too much, because this will change for two reasons. First, the dramatic increase of executives who visit the big house. If these guys keep getting arrested, every head honcho is going to have a rap sheet, and they have to work somewhere.

OK, Martha Stewart hasn’t gone out and hired a bunch of her former prison bunk mates to work at her company. But she has been speaking out about ex-offenders as potential contributors to society. And over time this will have an impact. That leads to the second reason why some of the sting may come out of the word felony at work. Though there are 44 million Gen-Xers in the workforce, they are greatly outnumbered by the 76 million baby boomers who will start planning for retirement in the next couple of decades. We’ll have to run our economy while millions of workers worry more about weekends and Winnebagos than their work. Something’s got to give, and the modern workforce is going to have to get creative to find new workers. I predict that with more than two million incarcerated in the U.S. and a dwindling supply of workers, ex-offenders will become more common around the office.

The second taboo at work is not a word but an acronym: “TMI” — too much information. This can apply to all manner of information, but of particular note is the often uncomfortable revealing of personal medical situations. People don’t want to hear about your medical challenges, your itchy rash, your surgery or your prostate, etc. Yes, the practice of avoiding running your mouth and disclosing TMI rules at work today.  Find a therapist, a mate or a relative who really cares about the medical details of your life. But don’t share it with your coworkers, because hearing about those things makes them uneasy and can make work an uncomfortable place to be.

The third taboo at work revolves around the word “relationships.” Don’t go there. People don’t want to hear about your marital or relationship problems. Through the years I can’t believe how many people have shared intimate information about their relationships with me. Call me a prude, but I think pillow talk should be reserved for conversations that actually take place over pillows.

The fourth taboo is the word “why.” As in “Why did you…” “Why do we…” Most corporations don’t take kindly to being asked this simple question. Sure, there are bosses who can handle it. I just think that they are rarer than most people think. Sometimes it’s better to just bite your tongue and forge ahead with an assignment, even if you’re not totally sure about the outcome. People who constantly question the worth of a project or a boss’s decision often get tagged as malcontents. So be careful when you drag out the “W” word.

And finally, the fifth taboo — “bravado.” 

Most of us learn at a very early age that we are never to show weakness or vulnerability at work. Bravado is the way; do what you can and fake what you can’t. I personally believe that the lack of vulnerability weakens organizations because it prevents real connection and real interactions between people.

If I had a magic wand I’d hope that we could all do a much better job of being more vulnerable at work. Sure it’s tough, but isn’t it time that we all brought a bit more humanity to our jobs? And what better way is there to do this than being genuine and vulnerable with the people we work with? So stash that bravado and learn to show a softer side — it will humanize you in the eyes of your coworkers and probably encourage them to do the same.

My five taboo words at work — felony, TMI, relationships, why and bravado. I’d love to hear yours.

Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. If you have a question for Bob, contact him via bob@workplace911.com.


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Three Concepts That Need to Be ‘Laid Off’

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It’s time to review three ideas that need to be “let go” in 2009.

1. Credit Checks of Job Applicants. According to the Society of Human Resource Management and Kroll, 43% of employers run credit checks on potential employees, up from 36% in 2004. These checks involve rent, student loans, credit cards and mortgages and can make the difference between someone getting hired or having their application tossed.

In the best of times this is a dubious measurement to use when looking to hire someone. But given the rapidly increasing foreclosure rate, ballooning credit card debt and the general demise of capitalism as we’ve know it, credit checks of job applicants are a joke. A very bad joke.

I’d make an exception for people who handle substantial amounts of money as part of doing their jobs, but for a truck driver, administrative assistant or nurse, this is unnecessary. Personally, I believe that it violates our 4th Amendment right against cruel and unusual punishment and this is coming from a guy with a good credit score.

Let’s stop pouring salt in the wounds of our fellow citizens. Credit checks are wrong in the hiring process and need to be stopped.

2. Bonus Formulas. It seems every day that pigs can fly, at least on Wall Street. One day we hear from the President about $18 billion in bonus payments at companies receiving TARP government bailout bucks. Then the next day the headline is that 700 Merrill Lynch workers

received million dollar bonus payments each.

Clearly this proves that there is a parallel universe, one where pigs party like crazy. I think we need to toss all the old bonus formulas and swap them for calculations that actually don’t reward people when the markets sink by 50%. Is that too much to ask?

I’m all for pay for performance, but Wall Street seems to focus on the wrong “p” in the first part of this sentence at the expense of the second “p.”

3. Retirement. Ouch. Retirement has been pushed back for many of us. Instead of kicking back in our early 60s, many of us will now be working until our 70’s. We’ll have no choice.

We might not have a choice about how long we work, but we do have a choice about where we work. That’s why it’s so important to really focus on what we want to do with our careers, to decide what is meaningful and important to each of us.

And this may be the silver lining of the current mess. That it could push many people into jobs that hold more meaning for them.

As a special guest this week, we’re bringing in the star of the Apprentice, and former high roller, to bid adieu to credit checks, bonus formulas and retirement.

Donald: “You’re fired!”

Rosner: “Thanks Mr. Trump.”

About the Author: Bob Rosner is a best-selling author, award-winning journalist and contributor to On The Money. He has been called “Dilbert with a solution.” Check out the free resources available at workplace911.com. You can contact Bob via bob@workplace911.com.


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