Jul 21, 2002
Starting last fall, a number of major companies collapsed, either partially or completely, including Enron, Global Crossing, Lucent Technologies, Bethlehem Steel, Adelphia and WorldCom. Not only were there an untold number of layoffs, but the employees saw their retirement savings go down the drain.
The symbol of this collapse was Enron. Executives had "encouraged" employees to fill their 401(k) accounts with company stock by offering a company match in corporate stock. Then, during a key period of the company's rapid collapse, Enron executives prevented the employees from selling that stock, although the corporate honchos were selling their stock and stock options at tremendous profit. As a result, 20,000 employees lost over one billion dollars in retirement savings. This same scenario was repeated in one fashion or another at company after company. At WorldCom, employees lost somewhat more, over 1.1 billion dollars.
While these spectacular collapses drew particular attention, the fact is that the whole private pension system is on shaky ground today. The collapsing stock markets have pointed up the inadequacy of 401(k) and similar plans. But the recent admission by Bethlehem Steel that its traditional plan was underfunded to the tune of five billion dollars and by GM that its fund was short nine billion shows that there is a more widespread problem. Beyond that, an increasing number of corporations are dropping health care for retirees or even their whole pension plan.
Today, over 70 million workers are not covered by any private pension plan at all. And this figure is rapidly increasing. Most of these workers but not all are covered by Social Security, but the benefits that Social Security will pay out when they retire are relatively small covering between 26 and 42% of what workers were earning in their best-paying years. For workers who did not put in at least 35 years of work, or didn't have top income all 35 years, the pay-out can be very small.
Private pensions, all types rolled together, cover only 45% of the workforce. And this figure greatly misstates the problem, since only a small minority of the workforce, less than 20%, are still covered by the old-fashioned pension plans, the so-called defined benefit plans, which, in principle, paid out a certain level of "defined" benefits for the life of the retiree, and in many cases for the surviving spouse. Over the last two decades, the proportion of the workforce that is still covered by this kind of plan has rapidly declined, a process which continues to this day.
The rest are covered by the famous 401(k) plans, along with similar plans involving profit sharing or employee stock ownership (ESOP). These plans, known as "defined contribution" plans, appeared on the scene only over the last 20 years, but they have quickly pushed aside the traditional plans. In general, much less money is put into them under the pretext that the stock market will make up the difference. In fact, the stock market never does make up the difference, even in its best years, but, as we've seen lately, it can also make most of the money in a worker's 401(k) account evaporate. The only thing that is defined is the "contribution" the employee decides to pay in. The pension someone is to get is not guaranteed at all. Nor are company contributions.
The working class has been grappling for a way to gain a decent retirement for a long time. In the nineteenth century, most workers' pay was so low that they couldn't accumulate the savings needed to cover them when they couldn't work because of age or illness or disability. Thus, most workers continued to work until they died, regardless of age or illness; their other options were to live with their children, or on charity doled out by the churches or in a county poorhouse. As a later song of the workers' movement was to say, they were "too old to work, too young to die."
Coming into the 20th century, some of the big monopolies, railroads, steel, banking and food processing began to offer small pensions to their workforce. But they connected these pensions to a mandatory retirement age. In other words, pensions were first conceived of as a way for companies to get rid of higher seniority workers, who often were paid a little more than younger workers, while they were often considered to be less productive. At the same time, workers in some trades most notably, the construction trades, the printing trades and the railroads began, usually through their unions, to set up mutual aid insurance funds into which workers contributed, both directly and through their union dues. At the beginning, these funds paid out disability benefits as well as burial benefits and a stipend to widows; later on, the plans were extended to offer a small pension. By 1930, 20% of all union members had pensions through such plans, but the percentage of workers in unions was relatively small, essentially only the skilled workers.
The rise of the great working class movement during the depression of the 1930s transformed this situation. The unskilled workers in the mass production industries, to whom the bourgeoisie had historically denied unions, began to carry out a mass fight for union recognition. In 1934, the working class carried out several large general strikes in Toledo, Minneapolis and San Francisco, as well as a nationwide general strike of the textile industry. Those strikes extended so widely because the militants leading them made every effort to bring in other workers, reinforcing the struggle. And the workers' mobilization pushed out from the first victories to touch larger and larger parts of the working class. In the ferment of this movement, all sorts of demands touching on the terrible impoverishment and destitution of the laboring people came to the fore.
In 1935, keeping one eye on a movement that was growing stronger, Roosevelt rushed to push through the Social Security Act. With Social Security, the government stepped in with a promise to at least partially alleviate some of the worst ills of the society. For working class youth, the Social Security Act banned the scourge of child labor. For the elderly, it set up a universal pension fund. For the unemployed, it set up unemployment insurance. And for the very poor, it set up social welfare, which was meant to replace the inadequate hodge-podge of private charities, local and state funded relief or even poor houses.
Certainly, retirement and other benefits were at first very small, and they did not include medical care. But the Social Security Act granted benefits socially, across the board, and not in the arbitrary fashion that welfare-style programs had been administered before. This was a significant step, one which could have been built on by the working class, which was still strongly mobilized, pushing to address its problems collectively.
The workers' movement was able to impose unions in large-scale industry on the bourgeoisie through mass strikes, sit-downs and plant occupations but at the cost of a new bureaucratic apparatus which the corporations and the government helped impose on the unions. Instead of building one big union the CIO that had been the demand of many workers who fought the bureaucracy divided the workers, structuring the unions by industry and by company. Over time, the collective bargaining procedure, with all its bureaucratic trappings including the contract, grievance procedure, etc. was substituted for the workers' own activity, their struggles and organization.
This institutionalized relationship between the bureaucratic apparatuses and the bourgeoisie had to be imposed on the working class. During World War II, it was imposed through a no-strike pledge that most union officials and all the top ones agreed to. After the war, it was imposed through purges of the radicals and communists who had led the major struggles of the 1930s. The government also enacted new repressive laws, including the Taft- Hartley Act in 1947, through which the government declared that communists could not be elected to head unions, regardless of what the workers wanted; and it set big limits on what workers could do in strikes. If workers obeyed the laws, they were effectively deprived of the activities which had formed and strengthened their movement.
At the beginning, this did not prevent workers from fighting. The years 1946 and 1949 saw more strikes and more days lost because of strikes than even in the 1930s. But those fights had a very different character than the ones of the 1930s. They were much more fragmented and corporatist (company by company), and therefore more easily controlled by the ruling class. In many cases, strikes were very long, indicating the combativity and determination of the workers, but also indicating that the bourgeoisie believed it could play a waiting game with workers on strike, without risking a social explosion. The working class was actually already in retreat.
The system of private pensions was established in this context.
The first union to win private pensions was the United Mine Workers (UMW) in 1946, right after the war. The UMW played a significant role during the war and the early post-war years. It controlled a key industry upon which most production depended, but even more important was the fact that its combative workforce had forged a history of challenging the coal companies and even the government by going out on massive strikes, despite the war, and the no-strike pledge, court injunctions and threats to draft strikers.
In 1946, the mine owners rejected the union proposal for a health and pension plan, and the UMW went on strike. When the strike began to choke industrial production, Truman invoked the War Powers Labor Disputes Act, seizing the nation's coal mines and ordering the miners back to work. But he did not break the miners' resolve. Instead, one week later, the government relented. Acting for the mine owners, Secretary of the Interior J.A. Krug signed a contract with the UMW to provide a five cent per ton royalty for the UMW Welfare and Retirement fund.
The union had earlier set up this general welfare program with its own dues. In addition to pensions, it included benefits for disaster, medical care, death, disability and survivor annuity insurance. With the addition of funding from the mine owners, the fund began to pay a flat $100 per month pension; when added to the $50 Social Security benefit, it represented a decent retirement allowance for that time. To qualify, workers had to have 20 years seniority and have reached age 62. In fact, it took another four years and a few more strikes before the funding and the arrangements for benefits payments were completely worked out.
The new welfare fund that included retirement pensions certainly represented a gain. But the miners, their families and the whole population of the region paid a heavy price. In exchange for pensions and welfare for current miners, the UMW bureaucracy headed by John L. Lewis agreed to allow the coal companies to drastically reduce the workforce through attrition. Those miners who retired were most often not replaced, contributing to the growth of long-term unemployment, poverty and hardship in the mining regions. It also led to the shrinking of the mighty mine workers' union.
Most important, the decision to fight for pensions only for the miners marked a step backward from the principle of a retirement system for everyone who works, Social Security. Not only was the miners' pension not simply an exception it turned out to be the rule, even if subsequent pensions in other work places were funded in a different fashion.
Instead of fighting to extend Social Security to other workers and to improve its benefits so that workers actually could retire, the push of the union movement, with a great deal of encouragement from some companies, moved to channel the fight for pensions only within the framework of each particular company, demanding a "second pension" to supplement Social Security. In 1946, Ford first began to discuss the possibility of a pension plan with the UAW. It wrote thus to the UAW leadership: "Before we could entertain any thought of an Employee Retirement Plan, we had to answer two basic questions. The first was the question of company security. If the company's ability to go on as a profitable progressive institution would be threatened, it was obvious that such a program could not be considered." In that same year, Reuther, newly elected UAW president, agreed to include in a contract he negotiated with Ford the following joint company-union statement: "The primary objective of the Company in entering into this Agreement is the promotion of orderly and peaceful relations with its employees and the attaining of efficient and uninterrupted operations in its plants." He was to follow this up in subsequent contracts with the so-called "company security" clause, through which the union openly accorded the company the right to discipline workers who took part in wildcat strikes.
This so-called "company security" clause was to provoke heated debate and opposition at the next several UAW conventions, which voted that it must be removed from any contract in which it appeared. There was also opposition over the idea of company pensions, with a significant number of the delegates pushing for the union to fight to improve Social Security, rather than include a "second pension" in contracts. In 1947, Ford proposed to the UAW to include a pension, one that required workers' contributions. Workers voted three to one against that offer, voting instead for a contract which raised wages, but carried no pension.
On the question of Social Security, the CIO did nothing. Nor was much headway made on the question of a "second pension," even though union officials continued to broach the issue in contract negotiations. In 1949, the pension issue was pushed to the front of negotiations in a variety of companies and industries. With company executives regularly denouncing pensions as a "revolutionary doctrine" and a "socialistic measure," and with some unions preparing for a strike on the issue, Truman intervened to prevent a strike in steel by appointing a Steel Industry Board to look into the question. The board's report included a recommendation for a pension paid by company contributions, justified by the declaration that "human machines, like the inanimate machines, have a definite rate of depreciation." A perfect example of capitalist logic, but the steel companies weren't impressed not when it required them to come up with some money. They insisted that any pension plan should be "voluntary" so that workers who didn't want to save for their retirement would not be "forced" to do it . And, moving up to their soapbox, they declared: "No one unwilling to contribute towards his own old age requirement has the moral right to demand that others make that provision for him." Isn't it amazing that those who profit from working people to death are the ones who claim to stand for "morality"!
It was left to auto, and once again to Ford, to strike the deal. In effect, Ford offered the UAW the steel board's pension proposal; in exchange, Ford demanded from the union a longer contract term (two and a half years instead of one year), a 2-year wage freeze and a five and a half year pension freeze. To qualify for a pension, auto workers had to have 30 years of service and be over age 65. For that, they received only $100 per month, including Social Security. The company agreed to be wholly responsible for funding the plan. As for the "company security" clause, the name itself was removed from the contract, but not its provisions. Reuther accepted gladly, including what was implicated by the "company security" clause: that the union was responsible for preventing its members from striking.
There was a great deal of opposition to this contract even though Reuther was by then more fully ensconced at the head of the union and in the midst of purging most of the militants who had led the strikes of the 1930s. After a vicious campaign of red-baiting his opponents, Reuther did succeed in ramming the contract through, but only by a narrow margin.
Still, it was the Ford pension that then set the pattern for the rest of the unionized workforce in heavy industry. Company after company quickly signed on, including in the steel industry. Many companies that were not unionized soon followed. In the 1950s, skilled trades in the smaller shops represented by the AFL also slowly won pensions. Coverage by the "second pension" (or what came to be called "private pensions") rose rapidly, jumping from 19% of the workforce in 1945 to 40% in 1960.
From the standpoint of the company and the union bureaucracy, it was what the latter-day proponents of company-union partnerships call a "win-win" situation. The company got what it wanted: a paternalistic set-up which tied workers to the company as the years went along, reinforced by the willingness of the bureaucracy to impose respect for the no-strike pledges contained in all these contracts. As for the union bureaucracy, not only had it cemented its position as a necessary intermediary between the company and the workers, it could also, for a period of time, justify itself to workers by pointing to the pensions and other gains.
As for the workers, whatever gains they got were more than offset by the agreement to hold the workers' struggles in check. Ford, through speed-up, more than made up for whatever pension moneys it paid out. More importantly, the fact that these pensions were not universal meant, in effect, that more than half the workforce would never get such a pension, and this created a huge division inside the workforce that the capitalists were later to make good use of including to eat away at the pensions of the auto workers.
The retirement plans that the "private sector" had agreed to provide to its workforce (with, by the way, substantial subsidies from the government in the form of tax incentives) came to be known as "defined benefit" plans. They differed somewhat from company to company and industry to industry. But the common denominator was that the expected pay-out was defined by union contract, or by company promises in non-union workplaces, while the funding and management of the pension fund was left up to the company.
In a few cases, unions such as the Mineworkers or the Teamsters and some of the skilled trades continued to control their own welfare and pension funds, with the companies putting in fixed payments. But more commonly, these funds were in the hands of the companies.
The difficulty with all of the company controlled plans was that the only workers to gain full benefits were the ones who put in 30 (or 35 or even 40) years of service at the same company, continuing to work at least up until the official retirement age, often set at the Social Security age of 65. Pensions were hardly ever "portable," that is, workers could not transfer pension credits they earned from one company to another. (With the union-controlled plans, they sometimes had this possibility, albeit in limited fashion.) Workers who worked at a number of jobs during their lifetime which is the normal state of affairs got a greatly reduced pension. They had to work long enough at each place to be "vested" five years, if not more which would allow them to get a very tiny pension from that company when they reached 65. But if someone worked, for example, at four different companies for ten years each, the total they would get from their four "vested" pensions did not begin to match the amount they would have gotten from one full pension at one company.
Pension benefits are a regressive form of compensation, that is, slanted against the working class in general, and against the most oppressed part of the working class in particular. The part of the workforce which went from job to job received drastically reduced or no retirement benefits, even if people worked their whole life. Those who worked in smaller places often received nothing at all. Women, who usually drop out of the workforce for some time during child-bearing years, often don't accumulate the time needed for a full pension. People who have several serious illnesses don't get the time they need. Thus, while half the workforce might be enrolled in a private pension plan, that's not to say that nearly half the workforce would have a full pension when they retired.
On top of that, the record of what happened to the retirement funds proved that pension benefits which seemed to be "defined," that is, guaranteed, often were not. Companies simply declared during a contract negotiation that they weren't going to continue the pension plan leaving in mid-stream workers who hadn't yet retired, having not yet enough credits for a full pension, yet with no way subsequently to earn them. Other companies didn't put in the necessary funds or conversely, raided the funds and used them for other purposes. A significant number of workers made it to the retirement age, having accumulating the necessary years of service, only to discover there were no benefits or much reduced benefits when it came time to draw their pension. The fund was empty. This happened commonly at smaller shops, which were often much more transitory or more vulnerable to the ups and downs of the market.
Some the biggest companies also raided their pension funds. In 1964, the automaker Studebaker went bankrupt, having first drained the pension fund, leaving high and dry the workers who expected a pension. A few, very high seniority workers got their pensions, a few more got partial pensions, but the majority got nothing.
By the early 1960s, the long-drawn-out process of individual groups of workers, organized by individual unions, winning pensions one group at a time had run up against the limits of the way industry was organized and the inability of the unions themselves to bring in new members or extend their organizing. The percentage of workers covered by one of the private pension plans stagnated at something under 50%.
In the late 1960s and early 1970s, the government instituted a rash of new social programs, many of which directly impacted retired people. This change was pushed forward, not by the management-union collective bargaining process, but by the massive mobilization of the black population which stretched from the 1950s up to the early 1970s. The virtual lack of a pension was a pressing problem for black workers, who were the most oppressed sector of the workforce, often excluded from the bigger union workplaces, relegated to the worst paying jobs with few or no benefits. Even when they managed to make it into the bigger workplaces, black workers were often "last hired, first fired," as the saying goes, without accumulating enough time to qualify for a pension.
When the urban rebellions swept the cities in the 1960s, the government rushed to come up with a whole host of social programs (food stamps, welfare, housing, job corps, extended unemployment, etc.) that promised to relieve some of the worst forms of poverty. The federal government also added or improved programs dealing with retirement. In two of the most significant, the government finally agreed in 1965 to provide medical coverage (Medicare and Medicaid) for people drawing Social Security, and for the poor. Disability coverage was also greatly improved. In 1972, an annual cost of living increase was added to Social Security, which instituted a limited protection against the worst ravages of inflation.
The government also passed a sweeping reform of the private pension system, the Employment Retirement Income Security Act (ERISA) in 1974. With this legislation, the government pledged to eliminate some of the grossest corporate practices in regards to pensions. It set minimum standards for pension benefits, such as how much time workers would have to work at a company before they could draw at least something from the plan. ERISA also set standards of how companies should run their pension funds. And under ERISA, the Pension Benefit Guaranty Corporation, a government-run insurance system, was set up so that in the event that a pension fund did go bankrupt, the government would step in and pay the benefits.
Of course, these measures were, at best, limited and incomplete. Workers found that when their company's pension plan did go broke and was taken over by the pension guaranty board, the benefits they got were often much lower than those specified by the original pension plan.
Nonetheless, the government had significantly extended the social gains first won in the 1930s, even throwing in some additional protections for private pensions. As in the 1930s, it had taken a vast social movement to force through these changes.
In the mid-1970s, in the wake of the black movement, the UAW set the pattern for a final breakthrough in the traditional pension programs: 30 and out. Workers no longer had to wait for the official retirement age of 65 or 62 to receive a full pension, so long as they put in their 30 years at the company. While this allowed a few workers to retire at a more reasonable age, it did not change the basic problem, which was that few workers would ever qualify. In auto, for example, only a tiny proportion of the number of people who are hired into one company ever finish in that same company. In any case, this was the last real improvement and by contrast to earlier ones, it did not extend nearly so widely to other parts of the working class.
With the social movement of the black population in retreat, the capitalist class started on a new offensive against the working class. The groundwork for this new corporate offensive was set by the economic crisis, the recession of 1973-74 and then the deeper recessions of the late 1970s and early 1980s. The capitalists used the growing weight of ever more plant closings and rising unemployment to either demand and get concessions from their unionized workers, or simply to impose wage and benefit reductions on non-unionized workers. The companies and the union bureaucracies presented the workers with a false choice: either accept wage and benefit cuts or lose the job entirely, that is, lose the possibility to retire on the pensions that workers had been working toward, among other things.
The workers were to discover that the concessions that were supposed to "save jobs" and save their pensions led to the opposite result. Despite workers' concessions, companies continuously downsized and outsourced work and turned to temporary or contract labor. The ranks of workers with benefits shrank. The ranks of workers without benefits grew.
By the mid-1980s, when corporate profits began to recover, there were some strikes to resist the continued drive for concessions. But while the fights were sometimes tough and very long, they were also very divided and limited. At most, they were rear-guard actions that only succeeded in slowing down the extent and pace of the concession drive. During many of these strikes, the bosses brought in scabs, that is, the desperate part of the workforce that the unions had not bothered to organize.
The companies have been able to play on the divisions inside the workforce. By not proposing to fight for universal benefits in fact, at times working to hold back that fight the union apparatuses long ago gave the corporations a weapon to turn against the workers, to attack those who have benefits.
In the 1980s, a new form of "pension" showed up on the scene: the famous 401(k) plan, which is named after Section 401(k), added to the Internal Revenue Code in 1978. This section originally was written as a way to give a tax break to executives who put part of their income, often matched in part by the company, into a kind of savings account managed by their own company. Effectively, it allowed a company to double the compensation of its executives, moreover, in a way that protected them from income taxes. It was nothing but a tax shelter for those with very high incomes. At the same time, the companies themselves derived certain tax breaks from this provision when they contributed stock into the account, they got a tax credit for it as though it were an expense, even though they hadn't spent any money, only stock.
These plans were extended to lower level management and to company professionals, once again as a way to let them shelter income. But some companies soon began to push to offer a 401(k) to their ordinary workers. It cost the company little or nothing, since the workers made the basic contribution and much of what the company put in could come from their own stock. But it gave a small sop to the unions for all the concessions they had accepted during the 1980s. In 1982, a number of companies set up the Employers Council on Flexible Compensation to help companies start or extend 401(k)-style plans. By 1984, new legislation and court rulings finally opened the way for these plans to be offered widely to employees other than those in the higher-paid ranks. At that point, there were only 7.5 million employees (mostly executives, management, professionals, etc.) enrolled in 401(k) plans. The numbers then jumped to 19.5 million in 1990, to 30.8 million in 1996, and to 42.1 million in 2000.
Companies introduced these plans in many ways. At the beginning, the plans were often presented as supplements to the regular, ongoing "defined benefit" plans. Almost immediately, companies used the new 401(k) as the excuse to neglect or reduce their defined benefit plans. Later on, companies began introducing a two-tier pension system. New hires were offered only 401(k) plans, while established workers retained their defined benefit plans. Companies then took the final step: terminating their traditional plans, leaving the workforce with no other choice than the 401(k) plan. In 1988, about 50% of workers had a defined benefit plan as their primary pension plan, and less than 30% had a 401(k)-style plan. In five years, the percentages had nearly reversed. Today, 401(k)-style plans dominate the pension field.
As the plans were extended beyond the ranks of management, the government set low limits on how much a worker could contribute and therefore how much a company could match. Thus, under the guise of setting tax- code regulations, the government in reality was protecting the companies in advance from workers' demands for higher company contributions.
The 401(k) push corresponded to the take off of the stock market after the 1987 mini-crash. For more than a decade, 401(k) accounts, invested in the stock market, seemed to expand almost exponentially. But the fall of the stock market over the last couple of years exposed disadvantages. When stocks fell, not only did workers risk losing their gains in the markets, but losing their principal as well. The brokerage houses that managed the 401(k) accounts charged high fees and commissions that sometimes ate away 20 or 30% of the principal in 20 years. The fact that companies contributed their own stock also worked against the workers. Among other things, when companies offered their own stock as a match for the 401(k) account, they stipulated that workers could not sell the stock until they reached a certain age, usually either 50 or 55 years old. All of this turned the 401(k) plans into time bombs, waiting for the stock market bubble to burst.
Pension funds are usually controlled and run by the companies themselves to their own big advantage. In 1960, roughly 10% of all financial assets lay in pension funds; by the late 1990s, that figure had reached 24%.
In the 1980s, when the stock market began to take off, the value of pension fund holdings began to increase very quickly, and the managers of the pension funds declared that they were running not just surpluses, but "excess" surpluses which the corporations pocketed, without even a thought of increasing pension benefits or setting a lower retirement age. Between 1980 and 1990, companies took over 20 billion dollars out of regular pension funds, using a variety of subterfuges.
In 1993, Congress passed a law making this practice illegal at least on the surface. Nonetheless, companies were able to continue tapping this vast reservoir of capital to help finance mergers and acquisitions or to defend themselves from takeovers. In the 1990s, Enron tapped pension fund money to help finance its now infamous special off-the-balance-sheet partnerships that were used to hide both profits and losses.
Companies even used these funds to cook their books, using so-called "aggressive accounting" methods to make it seem like the "excess" surplus in the pension funds were a part of their profits. At the peak of this practice, in 2000, more than 300 companies claimed 238 billion dollars in profits from pension fund "excess" surpluses. These reports were an important tool to justify ever higher share prices, along with ever more "generous" forms of executive compensation such as stock options.
In any case, many corporations made no new payments into their pension plans. The rise in the stock market made it look like their holdings covered the costs of paying for benefits and then some.
But the stock market decline, which began two and a half years ago, has thrown the pension funds into a potential crisis. In that time, corporate pension funds have lost almost 20% of their holdings, close to one trillion dollars. GM recently reported that its pension fund is underfunded by 9 billion dollars, and this deficit could balloon to 20 billion by the year 2004, when GM is next legally required to put more money in the fund. Ford, whose fund was running a surplus of 600 million dollars at the end of 2001, just six months later appears to be underfunded by 3.2 billion dollars. Many other companies' pension funds could very well be in worse shape.
And what will the companies do about such "shortfalls," especially if the economy continues to go downhill? Bethlehem Steel has laid out the bosses' plan. It is right now demanding that the United Steelworkers (USWA) reopen the contract and accept major concessions in wages, benefits and work rules. And it is threatening that if it doesn't receive those concessions, it will either cut health benefits entirely for retirees or transform the defined benefit pension plan for retirees into a 401(k) plan, with the blessings of the Pension Guaranty Board.
It's a replay of the concession demands made 20 years ago, when companies pretended that the only way to save jobs and therefore pensions was for workers to give up concessions on everything else. It was a rotten idea then it's worse today.
Even with the scale of pension-fund problems over the last several years, there is still a push coming from financial interests to "privatize" Social Security, that is, to turn it into one big 401(k) plan. If they were to state the problem more directly, they would admit that the financial markets are in bad shape and looking for a new source of capital to touch. And Social Security, with its trillion dollar surplus, is one of the last virgin territories that the financial markets do not already control. For over a decade, politicians have been talking about the supposed deficit which will occur in Social Security in 35 years or so, telling us that Social Security needs to be put into the very same hands which have already turned the private pension system into a roaring disaster. They have no shame!
Quite obviously, what should NOT be done is to take Social Security, the only socialized pension fund and the only one that has managed to stay in relatively reasonable shape, and give it over to the crooks who have already made off with private pensions.
Rather, the workers' problem is to find the way to fight to expand Social Security. There is no reason that Social Security should provide only just enough for workers to stay alive after they retire. Workers who have contributed to society through their labor should have a comfortable and totally secure life after they retire. But just as did the original creation of Social Security in the 1930s, and the expansion of social benefits in the 1960s and '70s, this will require a new social movement, a new mobilization of all the popular layers of society to enforce it.