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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.