Scrooged Again: Lumps of Retirement Coal from America's Employers

Winter started early this year, with snow slicing down "like needles" across much of the country. But the unkindest cut this winter is coming from big U.S. employers that have decided they just won't fund employees' 401(k) plans to save costs.

The New York Times ran this story in Column One yesterday. I only wish America's preachers had picked it up for their Sunday sermons, because the mounting retirement crisis is as much about disordered morality as it is about disordered economics (not that economics and morality can ever be separated).

Allow me to quote a couple of choice lines from the Times piece, by Mary Williams Walsh and Tara Siegel Bernard:

To many retirement policy specialists, the lost contributions are one more sign of America's failure as a society to face up to the graying of the population and the profound economic forces it will unleash. Traditional pensions are disappearing, and Washington has yet to ensure that Social Security will remain solvent as baby boomers retire and more workers are needed to support each retiree.

They in turn cite Theresa Ghilarducci, New School economist, who frames the issue this way: "We have had a 30-year experiment with requiring workers to be more responsible for saving and investing for their retirement. It has been a grand experiment, and it has failed."

There's just one thing wrong with Ghilarducci's take, which is that we never, in any way, required workers to be more responsible for their own retirement. What "we" did, more precisely, was offer the mild suggestion that workers salt something away, while in the meantime cutting the ground out from under them by abandoning defined pension plans and by raiding the Social Security trust fund repeatedly. And while also sending workers the much louder message that living is all about spending, not saving.

We could contrast our utter carelessness in this regard with the German way, in which an already-strong national savings ethic is reinforced, not mocked, by government actions.

This goes to the morality part. If, say, during these past thirty years of not-so-grand experimentation, everyone had been getting ahead in roughly equal proportion -- with the wealthy prospering but with workers also prospering -- then possibly the U.S. "you're on your own" approach could be judged to be ethically neutral at worst. But of course wealth and incomes have not been advancing in anything remotely like equal proportion. The already-wealthy grew fantastically more wealthy, the middlers' share declined slightly, and the workers' share of wealth and income clearly fell behind in ways that the country has yet to face squarely.

So now to say to the mass of workers whose household incomes fall below $50K that on top of seeing what they already had in their retirement kitty depleted by the market meltdown, they won't see any new employee contributions is more than hard cheese. It's a real lump of coal, and it's utterly indefensible from an ethical standpoint.

Especially so when we take a peek under the TARP, and the AP did yesterday, to find that the stockings of the some 600 top bankers bailed out with our tax dollars have been very well stuffed indeed. HuffPo already bannered this story, featuring the special blessings showered upon Merrill's John Thain, so I needn't repeat any of it. But it is stomach-turning to see how the looting continues and how all the fulminating of Barney Frank and others won't make the slightest difference.

Neither Congress nor the TARP's architect, Hank Paulson, made a serious effort to limit executive compensation at participating banks. No limits were put on salaries and bonuses "unless they had the effect of encouraging excessive risk to the institution," according to the AP.

So it's "Ho, Ho, Ho!" for the bankers and other assorted thieves this Christmas -- and it's "Woe, Woe, Woe!" for the poor working stiffs.

Remember when the Mitch McConnell types would wag their fingers and purse their lips to warn us all against "waging class warfare" if we had the nerve to question disparities like this? I dare them to try it now. The idea that we should continue to show proper reverence and due deference to the deregulated wealth machine is quite risible now.

The reckoning has arrived, and my own holiday prayer is that the real wealth producers in this country will finally get sufficiently riled up to rise up against the peculators who have picked their pockets in the course of a not-so-grand experiment in social atomization.

Comments

[americaforme]

Retirement isn't all that is lost, it's culture, and in a big way. The loss of money means the loss of the "Arts". Without the arts a society hasn't a chance of grouth in maturity. Today we have a youth that is preocupied with tech. they wander around lamelessly with a stick in one ear, sad. Gone will be all the good books,music, treasures of dance, creativity will be challanged for the search for daily bread. The middle class wont have time for liesure, they will be busy keeping the wolf at bay. For a time China provided the junk and stuff, now the moneys gone. The gap between rich and poor will resemble Dicken's time, a sad tale indeed.

[Trebor1]

All these Yuppies loved those 401(k)s when they were going up, up , up. It was okay when the blue-collar guys and girls were down-sized. We were cavalierly told to "retrain" and to "go back to college," as if this was a realistic option for most 40 year olds with 3 kids.

Then, these Yups opened their 401 (k) statements during the first week of October and saw it wasn't just steelworkers, autoworkers and laborers who were going to have to work till they died. Now these white collars are crying all kinds of crocodile tears. I'll tell them like they told me -- RETRAIN AND GO BACK TO COLLEGE.

And Reverend, when this was happening to the working class (for the last 25 years) I didn't hear too many of the Ministers raising their voices in protest. I read on the Huffington Post that churches are facing foreclosure in record numbers. I say "Good Riddance" to these "Christians."

[conhays]

I keep waiting to hear the screaming voices of hard working US citizens in the streets.
I stifle this feeling of anger and frustration as I watch banks and financial institutions pilfer our earnings. Is this the Bush Presidency's last gesture in their screw the masses campaign of the last 8 years??
Where are you working America?
Workers asked to take unpaid holidays, 401k's and retirement programs cut. Layoffs but CEO rewards and year end bonuses?

If Americans decided to withdraw their money from banks accounts and pay cash for everything-forgo the credit card crooks, bank fees, -if we all took one day and no one bought one item from any big business-we would have the collective power to bring the attention back to where it belongs-
Us-the working Americans who are foolishly standing by while our legislators do nothing but give our hard earned dollars to rich corporations.
Don't tell me we need to shore it all up-IT ISN"T WORKING-not for us working stiffs.
When WILL we stand up and be heard? When the last home is foreclosed? When you are back to accepting nonliving wages("be thankful you have a job").
I hope, hope, hope, we can see how we are all in this together and let go of the hatefulness that seems to emanate from our collectively aggrieved citizens . It only divides and diverts us.

[schatsie]

By Cutting the 401Ks, they are maximizing their own positions with the Board and it is justification for an even higher compensation package down the road.. At my company, they have taken away the 2 weeks of sick pay or a 4% wage cut (2% for each week)

You are so correct, loved the article.. After all, we have been told for the last how many years to manage our 401ks and the returns would exceed those of the Treasury Bonds, what a joke that is... Even the best and brightest were snookered by Madoff, so how can we expect to even see a reasonable rate of return... ANY APPRECIATION is going to the BIG BOYS on WALL STREET who are receiving preferential tax rates (or IRS Secret Letters) while the rest of us are coughing up our fair share EACH AND EVERY WEEK.

This is killing the work ethic in this country, it has become a country for CEOs and Lottery Winners..and Lottery Winners pay more taxes than the CEOs ever will.