Over 34 million people—12 percent of the population—are 65 years old or older in the United States. Sixty-five has been seen for decades as the normal retirement age.
Right now, most of these people are receiving Social Security and other retirement benefits. This time is popularly
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But the trend of cutting retirement benefits for current and future retirees is taking the tarnish off that image. With each passing year, fewer workers are able to sit back and enjoy the fruits of a lifetime of labor.
Instead, an increasing number of elderly people are forced to work into their late 60s and beyond. According to U.S. Department of Labor statistics, there was a 10 percent increase in the number of retirees in the workforce from 1994 to 2005.
Why can’t people retire? And once they do, why are retired workers forced to get jobs?
Karl Marx pointed out in his classic work “Capital” that, “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery … at the opposite pole.” In other words, the rich get richer and the poor get poorer.
It is the drive of the ruling capitalist class for ever greater profit that shapes all social and economic policy in the United States.
Since the early 1970s, the quality and security of U.S. workers’ jobs have steadily eroded. Deregulation of industry, sweeping privatization of public-sector jobs, social spending cuts, reactionary labor laws and free-trade deals have all meant a steady decline for workers’ standard of living. A primary cause has been the weakening of the unions in the face of an anti-worker offensive by the corporate bosses. This, however, can be reversed.
The fact that the labor movement has been pushed onto the defensive without an effective fightback strategy has affected all workers, including those who are not in unions. The employers have become emboldened and are savagely attacking core benefits, resulting in workers toiling longer and harder for less.
One casualty has been the severe reduction or elimination of money paid into workers’ private pension plans.
What is a pension?
Pensions are deferred wages that an employer holds while the workers toil in the factory, office or shop—also known as defined benefit pension plans. Money to fund pensions comes out of the employees’ regular paychecks—it is a percentage of the workers’ wages. The company then invests the money into the stock market or in other ways throughout the time the employees work there.
Upon retirement, workers get paid a portion of the deferred wages each month until they die. Pensions supply much-needed retirement income for workers.
For a generation of baby boomers in the post-World War II period, or at least those who held stable jobs in large corporations, pensions and Social Security were what you planned to live on once you retired at age 65. These benefits were virtually guaranteed from age 65 until death. This was the case for industrial and many office workers, regardless of the financial position of the company.
The pension benefit, like many others, was won by workers’ struggles throughout the 1930s and 40s. In that period, workers also won the legal right to organize unions. These rights were part of a social contract with workers that was imposed on the bosses by the growth of the U.S. labor movement. The corporations were afraid to frontally attack the labor movement by destroying pensions and other benefits.
The small “safety net” provided by pensions helped ensure the livelihood of retirees and their families. But, ultimately, the capitalists wanted to take back what they had been forced to give. After all, paying workers after they stop working does not increase profits.
The corporate bosses launched an all-out assault on pensions in the early 1980s during the Reagan administration’s first term. The attack resulted in the elimination of pensions as a typical benefit, except where unions have won and maintained guaranteed pensions.
In 1983, 83 percent of workers who had retirement plans had pensions. By 2004, only 37 percent had them.
Even if workers have pensions, the capitalists routinely default on them. Major corporations, particularly in the airline, steel and other industries, have completely defaulted on their pension plans. The practice of diverting money from pension funds to cover lavish executive salaries and other expenses, and then going bankrupt, has become commonplace for big business.
The federal Pension Benefit Guarantee Corporation, established three decades ago as a backup for employer pension funds that went bankrupt, currently owes more than it has in assets. The PBGC posted a deficit of $18.1 billion in 2006.
Gambling to live
Now that most workers do not have pensions to fall back on, workers rely on Social Security and a number of private schemes for retirement income.
There are 401k plans—called defined contribution plans. Employee 401k contributions are automatically deducted from workers’ paychecks each pay period. The money is invested by the employee in a variety of funds. Some employers “match” employee contributions, but most do not.
With a 401k, employees are never certain what their retirement income will be, if anything. The employers guarantee nothing and often lock employees into company stock that can become worthless. This is what happened at Enron. The bosses left thousands of workers with no retirement benefits at all.
Other workers have to rely on stock-option plans that are subject to the manipulations of investment firms.
These plans force workers to risk losing their retirement funds. Their lives are left up to capitalist “market forces” and
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Corporations are making more profits in other ways, too. They are shifting the costs of medical care onto the backs of the working class by either dropping or severely limiting coverage for retired workers.
With an economy that has the capacity to produce goods and services estimated at $13.3 trillion in 2006, there is no reason why retired workers have to make these terrible choices. The immediate problem is that the U.S. labor movement is on the defensive and the potential power of the U.S. workers is severely hampered by a union leadership that is trained in class-collaborationist politics rather than organizing a country-wide fightback movement.
Without a class-struggle program, the norm of capitalism—maximizing corporate profits—leaves the workers susceptible to more and more givebacks.
The long-term problem is capitalism itself.
Reorganizing society
If the hundreds of billions in profits made each year by the Fortune 500 corporations were used to meet the collective needs of the working class, then retirement would look very different.
The elderly, who have spent their lives working and producing for society, would not be forgotten by society. Inhumane and neglectful treatment of retired people would stop.
These are not abstract ideas.
Socialist Cuba currently provides housing, a pension and medical care to every single retiree in the country. This is in a poor country that was ravaged by colonialism and underdevelopment and is today economically blockaded by the United States. Just a few years ago, while U.S. corporations were slashing pensions, the Cuban government raised the pensions of all retired workers.
In Cuba, like the United States, the working class produces all wealth. The difference is that the Cuban economy is organized to ensure the social well-being of the working class—the vast majority of society.
The assault on U.S. workers by the capitalist class is very real. Some of the most affected now and in the future will be retirees, facing greater poverty, unaffordable health care, a higher retirement age and longer workdays and workweeks.
It will take a fight by workers of all ages to reverse the pauperization of retired workers. Such a struggle would benefit everyone.
The working class has the power not only to win back guaranteed pensions and lower the cost of medical care, but also to eliminate the capitalist class, which is the source of all poverty and exploitation.
Workers in Cuba and many other countries have done it; workers in the United States can do it too.
