The Republicans seem hell-bent on a national plan to end collective bargaining, to shift away from pensions to 401Ks (even more so), and to kill mandated employer-provided health care. Specifically, regarding retirement, using the poor economy (as they've used in all of their "crisis" talk) as their springboard, we are told that pensions are antiquated and bankrupting states.
John Schmid, of The Journal Sentinel, gives the pension-killing details in Scott Walker's budget bill which helps move Wisconsin toward more 401Ks and less defined-benefit plans (pensions). The article is laden with dubious assertions and less-than credible quotations. But there are a few nuggets that can be extracted by discerning readers which reveal the stupidity of moving towards 401Ks and the falsity of the "crisis" argument.
One sentence gets to the heart of things, "But the recession and the ensuing government budget crisis have created upheaval of the sort that often leads to dramatic policy changes." This is a sweeping generalization and not really true. But it also get shows that Republicans have twisted a down economy into a "crisis" and are using it to push their ideological policies. We're in a recession. One would expect stocks, pensions, jobs, etc. to be down during such. As the economy recovers, so will retirement plans and stocks. To stretch this into a "pensions and collective bargaining caused this" mantra is demonstrably false.
I've have written previous posts explaining the mistake of moving toward defined contribution rather the defined benefit retirement plans. "The 401K originally came about as a 1978 congressional provision intended to offer tax breaks on deferred income; which tends to benefit wealthy individuals." So, not only was this originally initiated to primarily benefit wealthy people, 401Ks are especially volatile and subject to the business cycle. And, if you happen to want to retire during an economic downturn, think again. This also keeps more people in the labor pool, opening up less jobs, driving down wages, and increasing unemployment. But the Wall Street-types make fees off managing 401K accounts (lots of money), so Republicans - and their corporate masters - are happy, and not all that concerned with the stability of your retirement.
As Dallas Salisbury (of the Employee Benefit Research Institute) is quoted in Schmid's article,"If the market goes down, that's your problem. If it goes up you win. If it's enough to retire on, fine. If not, keep working." This is just what someone who has showed up to work everyday, been a loyal worker for 25 or 30 years, wants to hear right at the time they're ready to retire. This isn't a retirement plan, it's a game of craps.
We used to be in this together. We wanted to find ways to raise all boats. If one worker, or a group of workers, gained a right or benefit, we tried to expand this to all workers. Instead, led by Republicans, we are in a race to the bottom. Workers are forced to bicker amongst themselves and rally against other workers who have better benefits. If I can't have a pension, neither can you. If I can't make a living wage, neither can you. As Jonathan Cohn asked, "To what extent is the problem that retirement benefits for everybody else have become to stingy?"
As the National Association of State Retirement Administrators states, "The retirement security of working Americans presently appears shaky outside the public sector." Republicans want everyone's retirement to be shaky, rather than improving the stability - with pensions - of retirement for Americans.
This is yet another detail and example of why the fight occurring in Wisconsin, and many other states, right now is so important to the future of America and American workers.
Kevin Hall, at McClatchy, in an excellent article, details the absurdity and outright lies in the Republicans' assault on pension plans.
- The short answer is that there's simply no evidence that state pensions are the current burden to public finances that their critics claim.
- Pension contributions from state and local employers aren't blowing up budgets. They amount to just 2.9 percent of state spending, on average, according to the National Association of State Retirement Administrators. The Center for Retirement Research at Boston College puts the figure a bit higher at 3.8 percent.
- The nonpartisan Employee Benefit Research Institute estimates that retirement funding for private employers amounts to about 3.5 percent of employee compensation.
- In 1980, 84 percent of workers at medium and large companies in the U.S. had a defined-benefit plan like those still predominate in the public sector. By last year, just 30 percent of workers in these larger companies were covered under such plans.
- Two out of every three public-sector workers aren't union members.
- Wisconsin's public-sector pension plan still has enough assets today to cover more than 18 years of benefits.
- Since September 2008_ when state and local government employees numbered 19,385,000 and the economic crisis turned severe — the governments' payrolls shrunk by 407,000, to 18,978,000 this January, according to Bureau of Labor Statistics data. When calculating from December 2007 _ the month that the National Bureau of Economic Research determined was the start of the Great Recession _ state and local government employment has fallen by 703,000 jobs amid a downturn that cost the nation more than 8 million jobs overall.
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