Should-Read: Peter Whoriskey: ‘I hope I can quit working in a few years’: A preview of the U.S. without pensions

Should-Read: How the Reagan Democrats (and non-rich Baby Boomer Reagan Republicans) hosed themselves—and their peers. There is an alternative America that went for a much larger Social Security system rather than the mirage of 401(k)s, and in which organizations like Mitt Romney’s Bain Capital were not enabled and encouraged to exploit the gap between cash flow and control rights to expropriate the pension fund: Peter Whoriskey: ‘I hope I can quit working in a few years’: A preview of the U.S. without pensions: “Tom Coomer, 79… used to work at the McDonnell Douglas plant in Tulsa before it closed in 1994…

…He and many of his co-workers could never replace their lost pension benefits…. [He] has retired twice: once when he was 65, and then several years ago. Each time he realized that with just a Social Security check, “You can hardly make it these days.” So here he is at 79, working full-time at Walmart. During each eight-hour shift, he stands at the store entrance greeting customers, telling a joke and fetching a “buggy.” Or he is stationed at the exit, checking receipts and the shoppers that trip the theft alarm. “As long as I sit down for about 10 minutes every hour or two, I’m fine,” he said during a break. Diagnosed with spinal stenosis in his back, he recently forwarded a doctor’s note to managers. “They got me a stool.”…

McDonnell Douglas… the company pension… in 1994… the company closed the plant…. For many of them, even as they reach beyond 70, real retirement is elusive. Although they worked for decades at McDonnell Douglas, many of the septuagenarians are still working, some full-time…. The notion of pensions—and the idea that companies should set aside money for retirees—didn’t last long…. Corporate America changed: Union membership waned…. In place of pensions, companies and investment advisers urge employees to open retirement accounts…. Almost half of U.S. families have no such retirement account…. Of those who do have retirement accounts, moreover, their savings are far too scant to support a typical retirement. The median account, among workers at the median income level, is about $25,000….

“One day in December ’93 they came on the loudspeaker and said, ‘Attention, employees,’ Coomer recalled. “We were going to close. We were stunned. Just ran around like a bunch of chickens.”… In 2001, a federal judge agreed McDonnell Douglas had illegally considered the pensions in its decision to close the plant… found McDonnell Douglas… had offered misleading testimony… a “corporate culture of mendacity.” Employees eventually won settlements—about $30,000 was typical…. The benefits of three years of employment… far less than the loss in pension and retiree health benefits….

Of those interviewed, all found work of one kind or another. Yet all but a handful said their new wages were only about half of what they had been making. Typically, their pay dropped in half, from about $20 per hour to $10 per hour. The pay cut was tough, and it made saving for retirement close to impossible…. A few said, though, they work because they detest idleness, and persist in jobs that would seem to require remarkable endurance. Combs, for example, works the graveyard shift, beginning each workday at 1:30 a.m. His days off are Thursday and Sunday. He worked 25 years at McDonnell Douglas, and more than 20 loading trucks. He shrugs off the difficulty. “I don’t want to sit around and play checkers and get fat,” Combs says. “I used to pick cotton in 90-degree heat. This is easy”…

AUTHORS:

Brad DeLong
Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch