The War on Dignified Retirements

Good Fences

By J.J. Goldberg

Published March 23, 2011, issue of April 01, 2011.
  • Print
  • Share Share

It’s a remarkable coincidence that the 100th anniversary of the Triangle Shirtwaist fire follows so closely on the heels of the great Wisconsin labor awakening. Like the yearly coincidence of Purim and St. Patrick’s Day, with their overlapping themes of national redemption and drunken revelry, the Wisconsin-Triangle convergence raises a host of fundamental questions about the nature of our society and the mutual obligations of individual and community.

Here are a few: Has a century of progress made unions and collective bargaining obsolete? Is it really progress when we eliminate workplace disasters by eliminating workplaces? Can we say we’ve learned the lessons of the Triangle tragedy if half of us have learned that rich and poor alike deserve equal access to health care and parental leave, while the other half want to bring back the good old days when workers knew their place and owners were free to run their businesses as they wished without interference from pesky regulators and unions?

In Wisconsin, alert readers recall, Republicans and Democrats are locked in battle over the rights of public employees to bargain collectively through unions. Republicans, speaking on behalf of the employer, namely the ordinary taxpayer, want to restrict bargaining to the dollar amount in the employee’s paycheck and keep the union out of matters that they see as nobody’s business but the employer’s, such as employee health coverage, working conditions and pensions. Democrats, speaking for the employees, meaning many of those same taxpayers, maintain that the unions are entitled to bargain over those benefits, particularly since they have already shown good faith by conceding all the employers’ other demands in advance.

The struggle is part of a furious national debate over compensation and union rights for federal, state and local government employees. There are some 23 million in all, just under one-sixth of all employed Americans. They include park rangers, trash collectors, police officers, restaurant health inspectors, child welfare investigators and prison guards, but most of the public’s attention — and criticism — is focused on teachers.

Why teachers? Perhaps because of bitter memories, buried deep in our national subconscious, of mean old Mrs. Schwartzman in seventh-grade science who assigned too much homework. Classroom memories fade, but the wounded child has re-emerged years later as an angry taxpayer, incensed at the idea of Mrs. Schwartzman retiring in comfort to Florida. Memories of science class cut deep. Maybe this is the real reason for all the talk about “class warfare.”

Lately the debate has come to an emotional head around the charged issue of Mrs. Schwartzman’s pension. Apparently her condo in Boca Raton is what is bankrupting state treasuries from coast to coast. And you thought it was the subprime mortgage crisis and the collapse of the American economy. Silly you.

Pensions of the sort teachers receive, paying a fixed monthly retirement income for life, used to be widespread. A generation ago they covered about half of all American workers, after rising steadily since the 1930s. For the first time in American history, old age was no longer synonymous with poverty.

Since pensions peaked in 1979, however, companies have been dumping the plans in a stampede, claiming they’re too expensive. Today only 19% of private-sector workers have pensions with a defined payout, according the federal Bureau of Labor Statistics. Instead, companies that still have any retirement plan at all usually offer what’s called a defined-contribution plan, better known as an IRA or 401(k). That’s where you get a tax break to put your own money away and hopefully save enough so that when you retire you can live on the interest. Frequently the company matches a fraction of your payment, but it’s a bargain compared to what firms had to put aside for traditional pension plans. Mostly the workers are on their own, and the picture isn’t pretty.

About half of all working Americans today have one of these self-service retirement accounts through their job. According to the Federal Reserve, the median balance in these accounts in 2004 was $60,000, enough to yield a princely retirement income of $400 per month. And that was before the crash. After 2008 the average account lost about one-third of its value.

Even in “the most optimistic view of 401 (k) holdings,” the Fed reported in 2004, a worker with a median income of $50,000, saving diligently for 30 years, can hope to amass a balance of $145,000, which “even when combined with Social Security will not produce adequate replacement” for his working salary — that is, not enough to live on. In other words, these accounts just don’t work.

Among public employees, nearly 80% have old-fashioned, defined-benefit pensions. The vast majority of them manage, like Mrs. Schwartzman, to retire with dignity. (It’s no coincidence that about 35% of public employees belong to unions, compared to 7% of private-sector workers.)

But for the rest of the workforce, the five-sixths in the private sector, prospects are darker. The bottom line: Of 75 million baby boomers approaching retirement age over the next two decades, more than half face a future of severe hardship.

Now, the Republican governors in Wisconsin, Ohio, Idaho and elsewhere aren’t dumb. They recognize a crisis when they see one. But the crisis they see isn’t the millions of Americans nearing retirement age without a means of support. The crisis is that their own employees still have pensions.

To be fair, states face a genuine fiscal crisis. State pension funds have a combined $1 trillion gap between what they have amassed and what they’ve promised in future payments. This isn’t due to extravagant union demands, though. The trouble is that during the bubble years the pension funds invested their holdings in risky stocks to get higher returns. That allowed states to put less into the pot and lower taxes. Unfortunately, the crash blew a big hole in those plans.

The only options now are to raise taxes back up or to cut their employees’ future lifeline. For Republican governors, it seems, it’s a no-brainer.

So here’s my question: Is that the kind of country we want to live in?

Contact J.J. Goldberg at goldberg@forward.com and follow his blog at blogs.forward.com/jj-goldberg


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • What does the Israel-Hamas war look like through Haredi eyes?
  • Was Israel really shocked to find there are networks of tunnels under Gaza?
  • “Going to Berlin, I had a sense of something waiting there for me. I was searching for something and felt I could unlock it by walking the streets where my grandfather walked and where my father grew up.”
  • How can 3 contradictory theories of Yiddish co-exist? Share this with Yiddish lovers!
  • "We must answer truthfully: Has a drop of all this bloodshed really helped bring us to a better place?”
  • "There are two roads. We have repeatedly taken the one more traveled, and that has made all the difference." Dahlia Scheindlin looks at the roots of Israel's conflict with Gaza.
  • Shalom, Cooperstown! Cooperstown Jewish mayor Jeff Katz and Jeff Idelson, director of the National Baseball Hall of Fame, work together to oversee induction weekend.
  • A boost for morale, if not morals.
  • Mixed marriages in Israel are tough in times of peace. So, how do you maintain a family bubble in the midst of war? http://jd.fo/f4VeG
  • Despite the escalating violence in Israel, more and more Jews are leaving their homes in Alaska to make aliyah: http://jd.fo/g4SIa
  • The Workmen's Circle is hosting New York’s first Jewish street fair on Sunday. Bring on the nouveau deli!
  • Novelist Sayed Kashua finds it hard to write about the heartbreak of Gaza from the plush confines of Debra Winger's Manhattan pad. Tough to argue with that, whichever side of the conflict you are on.
  • "I’ve never bought illegal drugs, but I imagine a small-time drug deal to feel a bit like buying hummus underground in Brooklyn."
  • We try to show things that get less exposed to the public here. We don’t look to document things that are nice or that people would like. We don’t try to show this place as a beautiful place.”
  • A new Gallup poll shows that only 25% of Americans under 35 support the war in #Gaza. Does this statistic worry you?
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.