Crossposted from Working America's Main Street blog.
In The Great Risk Shift, Jacob Hacker lays out the deterioration of retirement benefits:
Twenty-five years ago, 83 percent of medium and large firms offered traditional "defined-benefit" pensions that provided a predetermined monthly benefit for the remainder of a worker's life. Today, the share is below a third....Between 1989 and 1998 - a decade in which 401(k) coverage exploded and the stock market boomed - the share of families whose pension savings allowed them to replace at least half of their prior income in retirement actually declined, as old-style guaranteed pensions rapidly became a thing of the past....
Now, 401(k)’s are being chipped away.
About a quarter of companies have either suspended their 401(k) plan match or are considering doing so because of the economic downturn, according to a recent survey by CFO Research Services and Charles Schwab. The list of companies that have suspended matches includes Hewlett-Packard, Sears Holdings, Starbucks and Eastman Kodak.
"Nearly half" of "large companies" that have diminished their workers’ retirement security by reducing or suspending 401(k) contributions say they’ll return them within a year. "Only" 5% say they won’t return 401(k) matching at all. And some companies that do reinstate matching contributions will change them.
So...large companies? Defined how, and accounting for what percentage of workers affected? Is it "only" 5% if you’re one of the workers to see your chance at a comfortable retirement diminished? And we can totally rely on the companies that change how they contribute to 401(k)’s to change it in ways that benefit their workers, right?
Oh, yeah. Another thing. What’s going to happen to the retirement funds of these companies’ CEOs?
Hacker’s "great risk shift" argument remains a crucial one for understanding what’s happening to workers in this country. Bit by bit, the building blocks of the middle class have been chipped away. In good times, workers are told they don’t need defined benefit pensions because their 401(k) will give them ownership in a stock market that will rise forever. In recessions, they’re told that they can’t have employer matching in their 401(k) because, well, they just can’t. And after the recession, eh, we’ll see what they get back.
And Hacker’s fundamental principle is a powerful moral argument:
If you work hard and do right by your families, you shouldn't live in constant fear of economic loss.
That’s why we fight.