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December 06, 2005

The Attack on Pensions

Verizon announced that all of its non-union employees were losing their guaranteed pensions in favor of 401(k) individual accounts. The plan also cuts off all retiree health benefits for all workers hired in the future or currently with less than fifteen years at the company.

Two comments-- one, this is what it means to have a union. They can't impose this change but will have to ask permission at the next bargaining session. Just remember, there was only one group of workers at Enron, the Sheet Metals Workers union folks, who didn't lose their pensions to the company's manipulation of the stock price, since they had their own plan with guaranteed benefits.

The broader point is that the problems of Wal-Mart at other low-wage, low-benefit companies are going to cost the taxpayers and society far more than you can calculate:

When Sears froze its pension plan last January, it said it had to do so because it was competing with other large retailers, like Wal-Mart, that did not offer pensions to workers.
Since many of the costs will be dumped onto the future when retirees and others find they can't cover their pension and health costs due to various crises. These companies are just dumping many of these costs onto the public, since most of our welfare state has depended on the assumption that most workers were covered by company health and pension systems, so the government would have to pick up the costs of only a small portion of retiree costs.

That's rapidly changing and the political and budgetary costs are going to radically change. Some may celebrate it as a chance to create more universal systems of coverage, but it's just as likely that these costs will squeeze out funding for many other programs effecting the most vulnerable in our society. Just look at the House GOP-- willing to vote for a prescription drug benefit for most retirees, yet slashing food stamps and other benefits for the poorest Americans.

Forget social security-- the real crisis of American's retirement future is happening in corporate America as future benefits are being slashed by the day.

Posted by Nathan at December 6, 2005 07:27 AM