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[Commentary] © 2003 Philip Hyde, The Timesizing Wire, Box 622 Cambridge MA 02143 USA (617) 623-8080
Eroding Retirement, May-June/2003
6/26/2003 eroding retirement, as documented in the Wall Street Journal & NY Times -
6/25/2003 eroding retirement, as documented in the Wall Street Journal & NY Times -
- Medicare drug plan far from cure-all, irate retirees find - A 'doughnut hole' coverage is rated U (unappetizing), by Sheryl Stolberg, NYT, front page & A25.
"I don't think they care a rip about the senior citizens," Vela Fox, 85, of Nashville said of Washington lawmakers and their Medicare drug plans. [photo caption]
..\.."If I went up there and had that bill written tomorrow, I would fix it to where senior citizens had their prescription drugs paid for. Not partial, but all of it. Now that's Vela's opinion." Mrs. Fox's opinion, passionate though it be, will not become reality for her and countless other elderly people who have spent years waiting for a Medicare prescription drug benefit....
- U.S. expected to sue Enron over losses by workers - An effort to recover millions of dollars in retirement savings, by Mary Walsh, NYT, C5.
The Labor Dept. is expected to sue about 20 officials of the Enron Corp. and its retirement plans today, arguing that they breached their fiduciary duty to protect Enron employees from the huge losses they incurred when the company's stock price collapsed. ...Civil lawsuits that have already been filed say the workers lost more than $1 billion in total.
[And looking ahead -]
The Labor Dept.'s lawsuit will also ask the court to bar the defendants from having any control over employee benefit plans in the future. It is expected to be filed in Federal District Court in Houston, where about 20 civil lawsuits involving Enron's retirement plans have already been consolidated....
6/24/2003 eroding retirement, as documented in the Wall Street Journal & NY Times -
- A pension 'guaranty', editorial, WSJ, A12.
Weary of worrying about Fannie Mae and Freddie Mac? Then how about another troubled, quasi-government agency with an implicit claim on tax dollars - the Pension Benefit Guaranty Corp. [PBGC]. The PBGC is responsible for insuring the pensions of 44 million people. One year ago it had a surplus of $7.7 billion. Today its deficit is $5.4 billion.
[Thanks to the "come on in & grab all you can" example that the Bush administration has set in Washington. The federal government has made free with the Social Security fund and corporate leaders, following the leader, have made free with their own corporate pension funds.]
...All of this was predictable because the PBGC is a walking example of what economists call "moral hazard." In insuring private pension plans, the agency is writing an implied taxpayer guarantee all too attractive for any company in distress to exercise. The government shouldn't be in this business....
[If we hadn't taken the wrong fork in 1933, the govt wouldn't be in this and the many other micromanaging, blank-check "businesses" it was dragged into, in a misguided attempt to make up for the jobs and consumer markets that were being lost to downsizing instead of timesizing in response to waves of worksaving technological innovation.]
Benefits can currently be increased as long as a plan is at least 60% funded. This leeway gives companies incentives to make promises they cannot keep. Thus troubled companies increase pension benefits instead of wages. And why not? The cost of a wage increase is immediate, while the cost of benefits can be deferred for 30 years and ultimately passed on to the PBGC if the company fails....
[Compare the erosion of retirement in this item -]
Senate pushes ahead on Medicare - Bill's backers rebuff bids to expand drug coverage for some elderly patients - Coverage gap, by David Rogers, WSJ, A2.
[If the workweek were as short as it should be for our levels of technological hyperproductivity, we could retire every week for a very long weekend all our lives and support ourselves a lot longer and live a lot longer. And compare the government micromanagement in this item -]
Chain in accord on workers' required clothes - California law makes companies pay the cost if employees must wear certain clothes, by Steven Greenhouse, NYT, A16.
[CEOs' strategy has always been to yell and scream about the need for the "discipline of the workforce," overlooking their own desperate need for discipline. Check out what one wealthy company was sticking to employees -]
Abercrombie & Fitch, the trendy retailer for the college set, has agreed to apy $2.2m to settle an investigation in which the State of Californiaa accused it of illegally requiring employees to buy and wear its clothes.... Abercrombie agreed to the settlement on Friday.... Several other retailers, including the Gap and Polo Ralph Lauren, face class action suits that say they improperly require employees to buy and wear their clothes to project a specific look....
[All the kind of thing, and there are zillions of shades and styles of it, should not be a matter of litigation, but a matter of employees' walking to plentiful other opportunities if employers drift off into any of the many arrogant neverneverlands they seem to be able to come up with during labor surpluses when jobseekers are desperate. As Arthur Dahlberg said, "Unlike most critics of capitalism, I believe that as an economic system it has had a long enough trial but never a fair trial, because never, except for a few years during the World War [I and also II], has capitalism been permitted to function under a chronic scarcity of labor. It has always been forced to operate under a scarcity of job and business opportunity; and under such conditions, I maintain that capitalism is necessarily in unstable equilibrium. I contend, however, that under a chronic and genuine scarcity of labor, capitalism is potentially almost an ideal economic system - that it can secure all and more than communism has to offer, at the same time that it avoids communism's major difficulties and evils.... For I believe that our balking, backfiring profits economy can - by injecting one planned adjustment - be made to work in socially desirable ways, and even be made to satisfy high-grade engineering standards of efficiency, with even less involved governmental interference and industrial control than we already have." ("Jobs, Machines and Capitalism," 1932, pp. xii-xiii, 23.) The "one planned adjustment" he was referring to (compare our "single all-sufficient control") was workweek reduction of a sufficient degree to engineer a management-disciplining scarcity of labor. The best general concept for such a reduction was Walter Reuther's unemployment-countering "fluctuating adjustment of the workweek," and the best specific design for such a reduction, integrating central-bank and population variables as well as a self-resolving overtime feature, is the five-phase Timesizing program. Talk about social software! The first economy, however small, that implements this program and makes the breakthrough, will so rapidly outdistance its rivals in technological innovation, no longer self-censored by job concerns, that they will feel like the Mudmen of New Guinea watching jets land at Port Moresby aerodrome. And it may well be able to race through the next two balancing programs (incomes and wealth) that we've been projecting would take a century apiece. So much for the Big Question implied in Einstein's comment, "It's becoming appallingly clear that our technology has surpassed our humanity." The essence of humanity is sharing, primarily through exchange. The right/Republicans have the taking part down pat = "favor the supply side," the left/Democrats have the giving part = "favor the demand side." The deep center puts them together = go with the balance "side" - it's the only whole-systems approach. Timesizing answers the question, "What do we try next now that not only the exports solution is exhausted, but also the rate-fiddling solution of the monetarists?" -]
Ahead of the tape...- Fed-free zone, by Dave Kansas, WSJ, C1.
All eyes on Wall Street will be riveted today on a bespectacled graybeard in Washington ["silverback" maybe - Greenspan has no beard]. But the monetary gang already has played most of its cards....
[i.e., interest rates are already down nearly as far as they can go (zero), as they are also in Japan, the second-biggest economy, and where they'd be heading in Germany, the third-biggest and France, the fifth-biggest, if the EU wasn't blocking.]
6/21/2003 one good news about retirement for a change (or is it?), as documented in the WSJ & NYT -
- Employees may pay more on retirement plans - Labor Dept. says companies can pass along some administrative costs, by Kathy Chu, Dow Jones via WSJ, D3.
...The Employee Benefits Security Administration, a division of the Labor Dept..\..said in mid-May that plan sponsors can pass along..\..expenses related to processing requests and calculating benefits under defined-contribution plans. These costs can run anywhere from a few dollars to hundreds of dollars, depending on the paperwork and resources involved....
6/19/2003 two good newses about retirement for a change (or are they?), as documented in the Wall Street Journal (WSJ) & NY Times -
- [another weird backbend from GM (see 6/19 #1) -]
G.M. to raise $10 billion for pension gap - One of the Big Three take advantage of low rates and bets on a recovery [ohoh], by Hakim with Fuerbringer, NYT, B1.
DETROIT...- General Motors said today that it would borrow $10B by selling bonds and other securities, and would use substantially all of the money to reduce its pension deficit of more than $19B....
[So it's going to borrow from Peter to pay Paul, with zero additional business involved (unless the indefinitely deferred 'recovery' materializes)? Who would be stupid enough to buy these insecurities? Oh, we forgot, the bubble blowers among the global over-rich. You might say, at least GM is trying, but this amounts to trying via pyramid scheme.]
6/18/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Company shares help to fund pensions when cash is short
...Several large companies, faced with shortfalls in their defined-benefit pensions, have made contributions in the form of stock, either to supplement, or even in lieu of, cash payments.
[But it could be just funny money.]
..."I think this intermingling of company stock and retirement plans is a terrible idea," said Alicia Munnell, who has studied corporate retirement plans extensively as a professor of management sciences ["sciences"???] at Boston College's Carroll School of Management in Chestnut Hill, Mass. "The people who put together ERISA thought it was a terrible idea too."
- GM Corp., for instance, earlier this year contributed 149.2m shares of its common stock, valued at the time at $1.24B, to several of its pensions....
- IBM Corp. last last year contributed 25m shares of its common stock, then worth about $1.86B, to its US plan.... At the same time, the Armonk NY company put $2.1B in cash into the plan.
- And Navistar International Corp., Warrenville IL, last year sold approximately 7.8m shares of its own stock to its three US defined-benefit plans.
[Sounds pretty self-dealing.]
It plans to put the $175m in cash back into the pension plans at a later date.
[Or maybe double dealing.]
..\..The Employee Retirement Income Security Act [ERISA] of 1974 limits the amount of employer stock that can be added to a defined-benefit plan to 10% of assets at the time of the contribution....
- [well, maybe this one's really good news -]
GE labor pact sweetens pensions - Proposed accord provides significant retiree gains, expands early retirement, by Kathryn Kranhold, WSJ, B4.
[ohoh, that expansion of early retirement flashes a little red light]
...The contract...provides a number of new benefits to the Fairfield CT company's 24,400 unionized workers that would cost the company an estimated $1.68B over the 4-year life of the agreement, compared with $1.2B for its previous 3-year contract....
[No big diff. 1.2/3= $0.4B per year. 1.68/4= $0.42 per year. Diff = .42-.4=.02B= $20m/yr = 20000000/24400= $820/person. Sorta like Dubya's first taxcut. And who knows what could slip, twixt cup... and lip?]
6/14/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Pensions fall - not CEO's bonus, by Jesse Drucker & Theo Francis, WSJ, C1.
Corporations have been feeling the pinch as ailing pension plans cut into their profits. But several large firms are making sure that one item doesn't suffer: the bonuses paid out to top executives.
[In fact, why don't we ever see a story that starts -]
Corporations have been feeling the pinch as bonuses paid out to top executives cut into their profits.
[Back to progress-blocking reality -]
For much of the past decade, pensions helped fatten the bottom line at many companies thanks to an accounting quirk, indirectly boosting executive bonuses and incentive compensation, which are typically tied to a company's financial performance.
[So basically, CEOs have been saying, "Heads we win, tails you lose."]
Now that the up-and-down stock market has made many pension plans a drag, not a boost, on [corporate] earnings, some companies including GE, Delta and Verizon have started removing pension effects from their executive compensation formulas. In some instances, companies [such as AK Steel Holding] are dressing the maneuvers up as corporate-governance reform....
[It would be fine if once separated, we could guarantee that pension finances would stay separated from from general corporate finances, but when not even the federal government is keeping them separated....]
6/13/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Some doubts about drug aid, pointer blurb (to B1), NYT, A12.
The prescription drug plan approved by...Senate [Finance] Committee appears to be more political than economical, experts said.
[And the indicated article -]
Some doubts about logic of Senate plan for drug aid, by Daniel Altman, NYT, B1.
- Medicare advantages argued, pointer summary (to A12), NYT, A2.
Members of Congress said that a bill to add prescription drug benefits to Medicare would give employers a powerful incentive to curtail the drug coverage that they now provide to retired workers.
[And the indicated article -]
Some senators fear employers will drop retirees' drug plans, by Robert Fear, NYT, A12.
6/02/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Future retirees may pay for 20% of health-care program's cost, Dow Jones via WSJ, B5.
Whirlpool Corp. intends to change its retiree healthcare plan, requiring future retirees to pay for 20% of the program's cost. The Benton Harbor MI home-appliance maker said the move will result in a Q2 gain of 19 cents a share,
[thus benefiting relatively few, mainly wealthy stockholders at the expense of relatively many, mainly not wealthy employees alias consumers, and reinforcing the downward spiral of Whirlpool's and general consumer markets]
which will be [only partially] offset by a charge of 14-17 cents a share from a 2001 recall of some microwave oven-hood combination products. The new plan will become effective in Jan/04. Current Whirlpool employees will be able to choose from 2 new healthcare plans that require contributions but offer more comprehensive coverage, or they can use a plan similar to the original program. In the original healthcare program, Whirlpool paid for 100% of the plan.
5/26/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Inco Ltd. - Strike at Ontario plant halts nickel production as talks fail, Dow Jones via WSJ, C11.
...in Sudbury, Ont.[and] workers set up picket lines blocking access to the huge mining facilities that produce about 9% of the world's nickel.... Last-minute talks to avert a strike failed Friday, with both sides saying their disagreement over the biggest issue of pensions was too wide to salvage a deal....
Canada: Cost of a mine strike, Bloomberg via 6/05/2003 NYT, W1.
Inco Ltd., one of the world's biggest nickel producers, said profit would be reduced $20m for each month that a strike continues at its operations in Ontario.
[Wouldn't it be easier to just put those millions into pensions and grandfather in any changes?]
Inco shut its Sudbury-area operations Sunday after 3,200 production and maintenance workers out over pensions....
5/20/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- [it goes on -]
Workers march through Paris to protest pension 'reform' [our quotes] - Unions plan to follow up a protest with more strikes, by Craig Smith, NYT, A3.
...Yesterday [5/25] in Paris, hundreds of thousands of French workers marched to protest against government plans to overhaul pensions.... [photo caption]
5/19/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- 'Reforming' pension law [our quotes], letter to editor by Pres. Ron Gettelfinger of UAW in Detroit, NYT, A30.
You report that our union supports changes in pension accounting standards as a tradeoff "for higher wages" (Business Day, May 6). That is not the case. The United Auto Workers [UAW] bargains...for all of our members. We don't pit active workers against retired workers.
[But it seems the UAW does support these nickel&diming changes anyway, since Ron goes on to try to rationalize them -]
The legislation you describe will not reduce benefits for any individual worker.
[But what about workers collectively then, Ron?]
The issue is how much money must be set aside for defined benefit pension plans, which require employers to make set payments to retirees throughout their lifetimes.
[Why is that an issue all of a sudden? We have a system that has worked for decades. If it works, why fix it? The answer is that the national underlying labor surplus has increased tremendously since sporadic company, industry, state and regional workweek reduction (1776-1937) and regular nationwide workweek reduction (1938-1940) was discontinued, thanks to union distractibility. The result is that labor power has correspondingly decreased, and employers are correspondingly encroaching on labor's share of the profits, never mind the damage to the consumer base and employers' markets.]
Many employers have shifted financial risk to workers with individual savings plans that offer no income guarantees. Such plans are inferior to defined plans.
[So you might expect that defined plans would require a lot more of a money cushion, eh Ron? Executives certainly expect a lot more of a money cushion - see the Delta bullet in the article below. And yet you move right on in the next sentence (what did they pay you, Ron?) to support employers' pennypinching -]
The UAW supports pension reform [he does not even put the euphemism "reform" in quotes, after depositivizing it to "changes" in his first sentence above] to account for the difference in life expectancy between blue-collar and white-collar workers. Present law allows employers to recognize that women live longer than men; we see no reason additional demographic data should not be added to the factors necessary to develop an actuarially sound pension plan.
[With this kind of "soundness," who needs additional risk? Many CEOs have tens, even hundreds, of millions of dollars' cushion. What's the matter with employees having the same security? It could be capped at a certain totally ready-for-anything level and the excess used to reduce required employer contributions via a yearly adjustment. But talking about anything for ordinary employees in a age of a vast surplus of human labor hours, daily deepened by inpouring automation and robotization, without an active nationwide worksharing program via workweek reduction (eg: the Timesizing program) is whistling in the wind. Quit wasting your time on losing battles that you then have to spindoctor, Ron, and get back ON ISSUE = flexible adjustment of the workweek vs. unemployment, comprehensively defined, as your predecessor 40 years ago, Walter Reuther, outlined - at the UAW Convention in Atlantic City in 1964. Until you do that, you're just overhead, or worse.]
- [here's a happier story -]
Retirees score hits battling executive perks, by Kelly Greene[!] & Nicole Harris, WSJ, B1.
Corporate retirees have long battled against cutbacks in their own health benefits and pension plans. But lately, some are setting their sights on bigger targets: pay and benefits of top executives.
[Hey, they're getting a little more strategic. Now they need to ask, (A) why have top execs been getting away with so much more of this grabbing in the last few decades? and (B) what can we do about it? (A= general labor surplus, high under-employment and hidden unemployment, and low labor leverage/bargaining power) (B= fight like hell for workweek reduction in every possible venue and form and squeeze out the vanishing human employment onto many more people until you reduce the labor surplus, including all the under- and hidden un-employment, get a lot closer to full employment, and restore&enhance labor power)]
Increasingly...retirees' actions - and anger - appear to be fueled by a perception that top executives are protecting their own pay and benefits while asking others to sacrifice....
- At Delta Air Lines in Atlanta, a group of 30 retired executives led an attempt early this year to rescind a series of trusts that protect the pensions of current Delta executives; the protest failed but sparked other changes welcomed by the retirees.
- At Verizon Communications Inc., retirees won a recent battle to require shareholder approval for executive-severance agreements.
- And at Lucent Technologies Inc., retirees are considering filing shareholders resolutions that would clamp down on executive pay packages. ...Ken Raschke, a former Lucent plant manager...helped organize about 4,000 retirees....
[This is the Chesterton trap - the naive assumption that no one will want more than his share and everyone will know what the top share of sustainable range will be (in Timesizing's reallocation of shares-per-person of natural market-demanded human employment, the top of the range is dynamically set by the problem at the bottom of the range, ie: the comprehensively defined unemployment rate). Lincoln Electric of Cleveland has done well with the motto, "Everyone sacrifices together, starting at the top."]
The recent battles also help explain why retiree groups are increasingly effective: Their ranks often included former managers with time on their hands, close friends still working for the company and the ability to decipher complex securities filings....
5/14/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- [some good news for a change -]
Bush abandons his retirement-savings proposal, by John McKinnon, WSJ, A2.
...The pResident's proposal called for switching Americans from the dizzying array of tax-advantaged plans to a simplified system consisting of two basic vehicles: lifetime savings accounts and retirement savings accounts.
[And which of those two would be the latest euphemism for "privatizing (and looting) social security"?]
...Some economists say the proposal would have put the U.S. well down the road toward taxing individuals' consumption instead of income, a basic turnabout in the tax system....
[Just what we need in a recession - less consumption! The Bush team of economy-busters rolls on.]
5/12/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Huge strike by public workers paralyzes France - Trains and other services are halted in a protest against pension 'reform' [our quotes], by Elaine Sciolino, NYT, A3.
PARIS -...Today, workers throughout the public sector heeded their unions' call to walk off the job to protest the center-right government's plan to overhaul the country's expensive and generous pension system.... Labeled Black Tuesday by the news media here, the daylong shutdown, together with demonstrations in about 100 cities and town across France, was described in an editorial in Le Monde as the biggest labor rebellion since 3-week strikes over pension reform in 1995. Those walkouts so damaged the [center-right] government of Prime Minister Alain Juppé that it lost a general election 2 years later.
[...lost the election to PM Lionel Jospin, who jumped the workweek down 4 hours (from 39 to 35 hrs/wk) and thereby drew the unemployment (UE) rate down 4% (from 12.6% to 8.7%) - but again permanently froze it at that level (though it was a lower level) when the UE rate clearly signaled the need for further work-spreading and -sharing, by further downward adjustment of the workweek. That's why the Timesizing program gets away from any specific recommended workweek. As Walter Reuther put it, it's got to be "flexible adjustment of the workweek" from here on, as waves of worksaving technology pour into the economy.]
About 850,000 people marched against the pension 'reform' plan across the country today, the Minstry of the Interior said. Union officials put the figure at more than one million....
...There is no issue that more deeply divides workers and governments throughout Europe than the right to a generous government-guaranteed pension and even early retirement. Confronted with the demographic reality of retirees who are living longer and the prospect of waves of baby-boom retirees, the governments of France, Germany and Austria are finding it necessary to forge strategies to scale back treasured social benefits like pensions. In Austria today, as many as 100,000 school-teachers joined a nationwide strike to protest planned cuts in pension benefits. At the Place de la Republique...in Paris...among the chants were, "Retirement yes, but before death!" and "Raffarin - geriatric minister!" a reference to Prime Minister Jean-Pierre Raffarin....
[Basically, conventional kludgy end-of-life retirement is unsustainable, and is therefore history in the ecological age. The economies that resume sustainability most quickly will spread "retirement" throughout life via shorter and shorter workweeks and longer and longer weekends (via, naturally, timesizing). This will enable the medically supported trend to greater and greater longevity to continue unconfined. The idea of overworking people and making them build up a head of steamy resentment that says that at some arbitrary age, everyone else must support them forever, is just nuts. Not to mention wasteful of the most experienced and sometimes the wisest people in our socioieconomies. The big irony here, of course, is that France is leading the world with the lowest nationwide workweek (35 hrs) but still doesn't realize that this direction holds the key to all its major economic dislocations (& ours!). All we humans have is one another, and we can manufacture all kinds of problems for ourselves - right out of thin air - by a backward technology of sharing. Indeed, a good case can be made for the idea that every great advance in human history (and prehistory!) was some form of sharing technology. We do a first cut at making this case in our Football of Time.]
5/09/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Life support - A retired steelworker struggles with a health-insurance crisis - The ailing industry breaks promises of the past to stay afloat today..., by Robert Matthews, WSJ, front page.
...40,000 LTV retirees and dependents [are even] without health insurance. A far larger population - more than 200,000 retired workers and dependents, at roughly a dozen steel companies - likely will be stripped of their healthcare benefits as well, as their former employers reorganize or liquidate in bankruptcy.
[Note that thanks to the flexibility of timesizing, Nucor Steel is nowhere near bankruptcy and is not mentioned in this article at all.]
If a company goes out of business and sells its assets to another, neither is obligated to pick up the tab for former workers. That leaves retirees in a no man's land. ...Thousands of [retired steelworkers] are caught in the middle of political, economic, global and demographic forces.
[That all boil down to one thing. After 150 years of workweek reductions, we more widely substituted downsizing for timesizing in response to worksaving innovations and so the workweek has stuck at the pre-technological level of 40 hours a week for the last 63 years. By itself, apart from any population factors (immigrants, women entering workforce, imports, births), the downsizing response to technology has turned labor into a surplus commodity and stripped employees of the leverage they need to get enough of a share of the national income to maintain the consumer base and keep the economy out of recession.]
Foreign competition, the rise of non-unionized minimills - which recycle steel into new products - a worldwide steel glut and skyrocketing healthcare costs have "forced" [our quotes] steelmakers to make drastic cost cuts [except in executive pay?]. Retirees are a ripe target, in part because there are so many of them.
[Thus bursting the American dream for ordinary Americans and turning the American pension plan into "dying on the job" or "dialing 800-KEVORKIAN."]
At the integrated companies that manufacture steel from raw materials, the 600,000 retirees and dependents far outnumber the 80-90,000 current workers and their dependents.
[No big deal if each current worker was really getting paid commensurate with his/her technologically multiplied productivity, but since they never insisted on cutting their hours commensurate with the output leaps, they've now got "a worldwide steel glut" and a worldwide labor glut, low wages and grotesquely highly paid steel executives, who frankly don't spend anywhere near the same proportion of their income as ordinary employees.]
Just before Bethlehem Steel's assets were sold to International Steel Group earlier this year, it had 95,000 retirees. At LTV, the ratio was one active employee for every seven retirees, before its assets were sold to International Steel Group..\.. Thus, steel retirees and their families are already living the worst-case scenario that some others may eventually face....
[Basically, that all others will eventually face - except the gated - and increasingly higher-walled - communities.]
Retirees in the 55-65 age range...are especially vulnerable because they may be too young or too well off to be eligible for government-backed healthcare plans and often too old to find another job with benefits....
[So basically, we are witnessing the complete unravelling of the American Dream. It's turned into "suing the deep pocket" or "hitting the lottery." Enjoy your last few years of chest thumping, America.]
5/06/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- France seeks pension 'reform' [our quotes], confronting unions - By 2020, one French worker could be financing one pensioner, by Elaine Sciolino, NYT, A3.
[By 2020, all over the world, it'll be one worker and 10,000 robots, so... no problem.]
Prime Minister Jean-Pierre Raffarin pushing his pension "reform" plan on television. It seeks to bring public sector workers, who make up more than a fourth of France's workforce, in line with private sector employees. [photo caption]
PARIS...- France's social safety net is less safe than ever these days.
By far the most explosive domestic issue in the country is reform of the expensive and generous pension system, a "pay-as-you-go" setup in which today's workers pay for the retirement of the previous generation.
[Sounds VERY familiar.]
But confronted with the demographic reality of retirees who are living longer and the prospect of waves of baby-boom retirees, the center-right government has decided to confront the unions and try to push through painful "reforms" in the public sector by the summer.
[And of course, we forget all about the armies of automata and robots that are pumping out dozens of times more productivity per human worker. If we remember too much, we might start wondering why we're still working the same or longer workweeks for the same or lower buying power, instead of dozens of times more pay proportional to our extra productivity. (Hint: our corporate chieftains have responded to technology by downsizing, not timesizing.) "But soft...," how in the world is Raffarin going to sell this slap in the face to the Populance of France? Oh about how giving 'em the ol' "It's so old-fashioned" scam, just like our credit-card companies shafted us with bankruptcy "reform" in America ("Such an OLD bankruptcy law!"), and our banks, brokerages and insurers shafted us with banking "reform" ("Such a 1930s-era banking law!") -]
Full-page ads in the country's major newspapers on Wednesday carried an unusual, emotional open letter by PM Jean-Pierre Raffarin to working men and women. "Conceived more than 50 years ago, our retirement system no longer corresponds to the current and future demographic reality," he wrote.
The statistics [carefully not mentioning the leaps of technology] are daunting. Mr. Raffarin said that in 1960, four workers financed each pensioner, compared with two in 2000 and one by 2020. The burden on each worker has therefore grown. Unless there are radical changes, he added, pensions will shrink by 50% in 20 years and the entire retirement system "will be doomed."
[Well, clearly the changes that should happen is that the workweek should go down as far below the current 35-hr/wk level as it takes to employ the 9% still unemployed by the official rate, and when that happens, market forces responding to a non-surplus of labor - at last - will flexibly and gradually centrifuge and activate the economy's spending power, raising wages to match productivity.]
Later on Wednesday, Pres. Jacques Chirac presented a draft "reform" plan to the cabinet. It will be presented in a final form later this month and then sent to the National Assembly for debate in June.
[And if they pass this, it will again weaken the $$centrifuge, the consumer base and domestic demand, and the French economy. At a time when they need to go for a more of their first ideal, égalité - because it's soooo good for business, they'll be dishing themselves more inégalité, bringing down the economy, and making everyone poorer, including the wealthy, not to mention less secure.]
Under the plan,
[Bottom line: so far this is looking like a mixture of "reform" in the sense of government interference in the free market and real reform, in the sense of aligning the public and private sectors. More anon.]
- France aims to bring public sector workers - more than 25% of the French workforce - in line with the private sector by 2008. That would force public sector workers to contribute to the state pension system for 40 years, up from 37&189; years now.
[Is that all? This change would be good, as far as it goes, but there should be no worklife limit on social security (SS) contributions. Whether -
is stupid. The French model, roughly, is to start working when you're 25 and quit when you're 65 in the private sector, or in the public sector, to start when you're 27½ (because you 'need' more education in the oh-so-special civil service??) and quit when you're 65. Any arbitrary retirement age is bad in the ecological age of sustainability, especially if we want human beings to live longer and longer in better and better shape. And while any inequity between the public and private sectors is classist and artificially divisive - especially when you're coddling the public sector, because whatever you coddle you get more of, and more public sector means more taxes, of which the French already have too many - people should contribute for as long as they're working and on as much as they earn. And if there's a surplus, reduce the tax for all, instead of taking it completely off those who can most easily afford to pay it and loading it on the young - that's agist. So right now the French SS tax is agist and classist and they want to stop that? Good!]
- our American cap on the amount of income that is subject to tax (our SS tax is not only a regressive flat tax but it is capped around $62.5K/yr - in short, those who can most easily afford to pay a lot are designed not to - how dumb is that?!), or...
- or the French cap on the number of years that pay is subject to SS tax (in short, older, higher-paid employees who can most easily afford to pay are designed not to - how dumb is that?!)
- By 2020, the payment period would be increased to 42 years.
[Also a step in the right direction, because, as we said, the payment period should cover the entire working life of all employees and if that provides a surplus, then adjust the tax downwards for all.]
- Government support for early retirement, a clever way to hide unemployment, will be phased out.
[Also a positive step, because, as we said, retirement (ie: worklife controls) is not conducive to ecological sustainability and long life. If that provides a surplus, cut the tax for all, and if it provides too many employees at the current level of the workweek, CUT THE WORKWEEK FOR ALL - since work in general, and the workweek in particular, equates to a general economic tax on life. Wow, why haven't we said that before, to break through employer shortsighted resistance to workweek reduction?! But again, once you completely get rid of slavery in the sense of involuntary unpaid work (and let's not kid ourselves that we've completely got rid of slavery until we get rid of the salary concept in the sense of "exempt from overtime compensation"!), then as in Timesizing Phase Two and Phase Three, you only need to stop with a workweek cap those who are only doing it for the money, because only they are "working" in the strictest sense. Those who voluntarily do an activity for nothing are volunteers giving time charity, rather than money charity. But it has to really be voluntary, no game-playing. We don't want to stop "the little toymaker, who never worked a day in his life" because he LOVES it so much. He has deflationary incentive, while those who just work for money only have inflationary incentive. Our inflation rate is the measure of our overbalanced dependence on inflationary, quantitative money motives in our economy. (Although as yet our deflation rate, if any, is not the measure of our deflationary, qualitative motives such as loving our work, our co-workers, our work space, or whatever. Rather it is the measure of our overbalanced concentration of national spending power - due to underbalanced worksharing due to overlong workweeks - and consequently underbalanced consumption.) And God knows we don't want to continue inflating our inflation rate by continuing our overbalanced dependence on the money motive, dba Mammon, for everything. Now that we've clarified these concepts, we repeat, work is a tax on life. Therefore, to style yourself a "conservative" and be in favor of a tax on life is to lie. Free time is the most basic freedom, providing "space" for all the other freedoms, e.g., the "Four Freedoms" = freedom of speech and religion and freedom from want and fear, lack of the latter two being felt more when you're not working and therefore, the realization of the latter two freedoms being enjoyed most when you're not working. Therefore, to style yourself as loving freedom, or liberty, while showing indifference, or hostility, to free time, is to lie.]
- Tax incentives will be introduced to attract workers to company-based savings programs like those in the U.S.
[This is bad. Why? Let's be honest. Government meddling in savings, except to cover a felt need to support the truly disabled, whether from disease or age, is an interference in the free market, and an unfair subsidy to a single industry, the financial industry. So we're coming out against 401Ks and all their complicated brethren here. Get the financial industry OUT of picking our pockets, one way or another, via taxes! For Wall Street to pose as anti-government and pro-free market while supporting 401Ks and privatization of Social Security or "individual private savings plans" or whatever their current euphemism is for that, is a complete lie and a huge hypocrisy. It's once again, "I'm against government spending except when they're spending on me" and "I'm against gov't subsidies except when they're subsidizing me." And since it's the financial industry, the rich folks, that all this hypocrisy subsidizes, you're subsidizing recession by encouraging further concentration and sluggish circulation of the national income rather than further centrifugation and dynamization of the national income.]
- and workers will be allowed to get a pension "bonus" if they work beyond 40 years. Currently, public sector workers like elementary school teachers, nurses and policemen are allowed to retire at full pension at 55; some civil servants can even retire at 50....
[As we implied, retirement should never be a matter of arbitrary age and agism but a matter of disability, if any. But if they're going to align the costs of the public and private sectors, they must also align the benefits, i.e., the pay levels, if the public sector is getting paid less. Well this has been very educational, for us as well as for you if you're still following this. But we do have to cut it short and get on with our great website host shift tonite.]
5/01/2003 eroding retirement, as documented in the Wall Street Journal (WSJ) & NY Times -
- Pensions bill cuts amounts put aside for union workers, by Mary Walsh, NYT, front page.
A bill in the House of Representatives would allow businesses with union workers to reduce their company pension obligations by billions of dollars, because statistics show that most blue-collar workers do not live as long as other Americans.
[Huh? This is gettin weird.]
The provision, which has gone largely unnoticed in a broad pension bill, is being supported by the United Auto Workers and manufacturing companies whose pension funds now have assets far short of what they are projected to need under previous assumptions about worker longevity....
[Wouldn't you rather have a union that tried to find out why you didn't live as long as other Americans and change that, rather than just lined up with CEOs and supported it? Whose side is the UAW on these days anyway?]
But...Edwin Hustead, chairman..\.. of a panel that developed the actuarial data on which the new provision is based...said in an interview he was concerned that the data were being used in an improper way. White-collar workers are shown by statistics to live longer, he said, but the bill would not require companies to factor that into their pension calculations. If it were included, unionized companies with largely white-collar workers would have to set aside more to fulfull their promises to retirees in the future.
In addition, Mr. Hustead said workers' pay had been shown to be a more powerful predictor of life expenctancy than whether a worker was blue collar or white collar, but the bill did not recognize that higher-paid workers live longer and therefore require longer pension payouts. Many auto workers and airline pilots are classified as blue collar in the bill, because they are covered by collective bargaining agreements, even though they are highly paid....
[The Republican war on the middle and lower income brackets = the markets for the productivity they expect their own investments to be safe in - opens yet another battlefront. And another group from the middle and lower brackets, the UAW, joins them against its own interests. Unbelievable. It's all part of the labor cluelessness that attended their half-hearted fight against FDR's blocking their best power lever, the 30-hour workweek, in 1933.]
- Airlines seek right to put off catch-up pension contributions, by Ellen Schultz & Theo Francis, WSJ, A3.
The financially struggling airline industry is quietly seeking legislation that will allow commercial airlines to put off making any catch-up contributions to their underfunded pension plans for almost 5 years....
- The shattered 401K dream, pointer blurb (to D1), WSJ, front page.
Some employers have cut or suspended contributions to retirement accounts,
[and, 'speak of the devil', check out the story below!]
while holders have raided them for cash, invested disastrously or simply opted out. The results could darken retirement for millions.
[and the indicated article -]
Why even a rally won't save you - Host of deep problems raises doubts about role of 401Ks; Time to turn over the reins?, by Ruth Simon, WSJ, D1.
...The result is that the 401k is looking increasingly like a tattered promise, and there is growing concern that millions of Americans won't have enough for retirement.... For many workers, the 401k and Social Security are all that stands between them and a bleak retirement.
[And that's a blindered assessment. For most workers, only Social Security stands between them and a bleak retirement.]
The 401k was created two decades ago as a way to let employees save for retirement while deferring taxes. The effect has been to turn employees into their own pension managers.... A 401k works well for the "15-20% of the population that has the knowhow and desire" to take control of their retirement savings, says Brigitte Madrian, an assoc. prof. of economics at the UChic's Grad School of Business. "But they don't work well for the majority of the population."
[But the Republicans still want to privatize Social Security, despite the erratic stock market and the dysfunctionality of self-management for the majority of Americans? Short-term capitalism strikes again! (Click here for long-term capitalism.)]
One response gaining momentum is to reverse a basic principle of 401Ks and take saving and investment decisions out of employees' hands.
[But that's what Social Security does, so why not just beef that up?!]
In March, Fidelity Investments introduced a new service [in other words, an old service provided by Soc Sec] that lets workers turn over management of their accounts to a professional for an extra fee....
[Reduplicative makework alert!]
- Employer groups ask Congress to decrease pension liabilities, by Theo Francis & Ellen Schultz, WSJ, A4.
Employer groups lobbied Congress to allow them to make pensions appear better-funded without contributing more money, saying many companies can't afford to make enough contributions under the old rules....
[Not when they're been totally shaken down by their CEOs. The sleaze goes on....]
Tens of billions of dollars in pension liabilities would vanish under the provision, already proposed as part of broad legislation changing pension rules. It would let employers use a higher discount rate to determine the contributions they must make to their pension plans, freeing up money for other investments. Opponents say such a move would put employees' pensions at higher risk.
In a hearing before the House Ways and Means Committee panel, employer groups [e.g., the American Benefits Council, an employer trade group] testified that the 30-year Treasury bond rate, now used to measure their pension obligations, needs to be replaced....
[Always the same argument. "It's outdated." - But the economy WORKED back then. It isn't working now. Back then, these "outdated" elements centrifuged spending power out to the people who actually had time and need to spend it. The velocity of circulation boogeyed. Today the velocity of circulation relative to our volume of money is "from poverty." It's all concentrated in the top income brackets where people have no time or need to activate it by spending it. The top brackets have consolidated sooo much of the spending power of the nation in their own relatively few hands that they're actually suctioning the markets away from their own investments. So there are no safe investments because there are no strong markets. We go from investment bubble to investment bubble - from prison building to dot-coms to real estate to war....]
...Said Steven Kandarian, exec. director of the Pension Benefit Guaranty Corp., a quasipublic pension insurer, in testimony, "This proposal would allow [pension-]plan funding to fall below the already low levels permitted under current law."...
[And he should know. He's been picking up the pieces of all the underfunded company pension plans. This is the problem with labor surplus - employers get softer and softer, more and more spoiled. They want more and more, they whine more and more. They've forgotten what real management is. They just want tax breaks and write-offs and the whole pie, markets be damned. Then they turn around and act surprised when their own markets are weak. Whence the labor surplus? Decades of work-saving automation nad robotization without decades of workweek reduction. You want to know what is reallyl outdated and destructively so? Our 63-year-old forty-hour workweek, that's what. And we don't enforce that! Result? A stagnating concentration of skills and employment and wages and incomes. And more and more consumers lost to forced part-time, early retirement, unemployment, welfare, disability, homelessness, prison, and suicide.]
For earlier retirement stories, click on the desired date -April, 2003.
June, 2002 & previous.
For more details, see our laypersons' guide Timesizing, Not Downsizing, which is available online from *Amazon.com and at bookstores in Harvard and Porter Squares, Cambridge, Mass.
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