Since 1947, the amount of goods and services we produce per hour of labor has risen by nearly 300 percent. If the average wage had continued to rise along with productivity as it did after WW2, real wages today (after inflation) would be twice as high! In 1970, the top 100 average corporate executive earned $45 for every $1 earned by the average worker. By 2006 it had jumped to $1,723 to $1. Why are we told we must tighten our belts?
The bashing of public employee salaries, pensions and collective bargaining rights shows no signs of slowing down. Michigan appears poised to be the 24th state in the Nation to pass so-called “right-to-work" legislation, which would limit the ability of unions to collect fees from members. CNN's description says that Right To Work laws allow workers to “opt out of union membership and dues.” This is completely false. No worker in the United States can be required to join a union, nor can a worker be coerced into joining a union. When unions bargaining collectively – a hospital or a warehouse or whatever the union must represent all workers in the unit equally, regardless of whether or not they choose to join the union. This, again, is the law – they can't negotiate wages or benefits or anything else for their members alone. Workers who choose not to join the union get the same deal as those who do. It costs the union money to represent their workers. And a union contract with employers can require all workers in the unit to pay for their fair share of the direct cost of their representation. This is where the misinformation takes place. The difference between “union dues” and the fair share of the cost of representation is that a fair share costs less than union dues. Right To Work states deny workers contracts with fair share provisions. It allows workers who choose not to join the union to take advantage of the union's representation without contributing to the costs. And that effectively defunds the union. And that hurts workers everywhere, whether they work in an organized shop or not. And that lowers wages and benefits.
Pensions are important because they provide a major source of income for retired workers. Occupational pension plans are something employees previously negotiated, in exchange for a portion of their salary. Workers pensions are simply 'deferred wages'.
Headlines about public sector pensions seem to have been appearing on a daily basis ever since the credit crunch started to bite. As the Public Accounts Committee observed: "Officials appeared to define affordability on the basis of public perception rather than judgement on the cost in relation to either GDP or total public spending." In other words, the public have been misled and ministers are determined to keep misleading them. Employers and the government plan to get employees to work longer and pay more is a political choice, not an economic necessity. Strip away the rhetoric ("unaffordable", "untenable") and the truth is that governments are forcing workers to take another pay cut, forcing them to pick up the tab for a crisis that we did not cause. The public might be swayed by the propaganda but the facts are on the side of the unions. Opponents of public employee pensions have skillfully portrayed pension liabilities as a bill that is due today. If homeowners had to pay the full cost of their home at the time of purchase, 99 percent of us would be renting. But homeowners don't have to pay for the homes all at once, so it's very misleading to portray pension funds in that light because pensions are paid to retirees over many decades. If you estimate the costs of all public sector pensions for decades into the future and then present it as a bill that has to be paid immediately, then you end up with a frighteningly big number. But these figures do not mean very much. Because pensions are not paid out all at once - they're paid out over decades as more money comes into the plan.
There's an oft-repeated myth that claims the defined benefit pension plans available to most public employees are going bankrupt. Most of the funds in pension plans are not even provided by taxpayers -- most pension assets are contributed by employees or earned on investments. Already public sector workers have faced a triple crunch - higher contributions, a tougher inflation index and lower benefits (decision to uprate benefits in line with CPI, rather than the RPI, has already reduced the value of some pensions by 15 per cent).
Over time earnings tend to go up more than prices so this will tend to reduce the net cost of pensions. But there can be sharp variations from year to year. For example, variations can occur when pay in the public sector has been capped or frozen by politicians and then catches up later to respond to recruitment and retention problems caused by the freeze.
In 2008, for example, the increase in the cost of benefits was determined largely by the 2.3% increase in the cost of living (CPI), as of September 2007. But the increase in contribution income was largely determined by the size of pay increases in the public sector during 2008, which were capped at 1.5%. So when politicians freeze public sector pay below inflation it has the odd effect of appearing to make pensions more expensive, even though those extra costs are more than met by reduced expenditure on the wider wage bill (a similar effect occurs through voluntary redundacy/retirement, extra pensions paid out for longer but no wage bill for the period )
Where pensions are underfunded, it's overwhelmingly because of the recession and because states took "pension holidays," which means politicians declined to make their state or locality's annual contribution -- breaking a promise to the public servants of that state and in a bad faith effort as the fiscal stewards of taxpayer dollars. Had they simply honored their commitments when times were good, virtually no state pension system would have unfunded pension liabilities that raise concerns. It allows them to shift blame to workers.
The real retirement crisis is not in the public sector. It is in the private sector. Since pensions are now virtually non-existent in the private sector, and because the recession decimated the nest eggs of everyone with money in the stock market, opponents of defined benefit pensions have gained traction with this argument by creating and fostering pension envy. Inadequate pension provision in the private sector is a reason to reduce pension provision in the public sector. But this is an argument for improving provision in the private sector, not for driving it down in the public sector. The employers seek a race to the bottom. Indeed, many pensionless private sector workers depend on their partner's public sector pension to ensure a basic standard of living in old age. The story that isn't told is that the pensions public employees receive, in most cases, are the only source of income those workers receive in retirement since most are not allowed to collect many Social Security benefits. Private sector employees have indeed been hit hard by employers' retreat from good pensions. But this does not justify punishing public sector workers. Two wrongs do not make a right. Employers demands that we shut down those benefits to the public sector work-force so workers won't demand them in the private sector.
However it is not just the public sector workforce that the ruling class are coming after. We all face working longer before being entitled to a pension from the government. Raising the retirement age is a benefit cut, since workers would have to pay more in to get the same level of benefits. In the UK the age of retirement be 66 by 2016, 67 by 2028 and climb to up to 68 by 2046 and the USA it will be 67. Greek citizens would have to pay into the pensions system for 40 years instead of the current 35 before they could draw the benefit. Spain is taking a little more time to introduce increases to the retirement age, in steps, from 65 to 67. In the future, employees would also have to work for 37 years instead of the current 35 before they could collect a pension. France is boosting its retirement age from 60 to 62. The country's new retirement age will take full effect by 2018. In 2007, the German government voted to gradually raise the nation's retirement age from 64 to 67 by 2029. In total 14 countries are planning to increase their retirement ages to between 67 and 69 by 2050
Increases in life expectancies are mostly due to increased survival during childhood. Once they make it to age 65, American workers born in 1999 have less than 5 years more life expectancy than those born a century earlier.
In addition people may be living longer but numerous studies have documented that increases in life expectancy in retirement have been in favor of the richer sections of the population. In the U.S. compared to new male retirees in 1982, today’s higher income male retirees can expect to live an additional five years, but lower income men are living just 1.1 years more in retirement. Surely an argument to permit the poor to retire earlier! Often older workers can’t work longer, even if they want to. Raising the retirement age will place a greater burden on older workers in physically demanding or difficult occupations, like nurses, auto workers and teachers, who may not be able to continue to work in their jobs into their mid-to-late 60s or beyond. Workers can plan for a longer career, but they can only achieve it if they are healthy and in nonphysically demanding jobs, which we know is not the case for many workers.
The rich not only buy politicians but they also need to try and buy our minds. That's why they pay the press and academics and the think-tanks to distribute misleading information on economics. It’s easy to play on people’s fears and prejudices and to point fingers at certain groups to divert attention away from capitalism's failures. Its the unions...its the immigrants...its the lazy. Capitalism's paid apologists just can’t fail, no matter how ludicrous they are. Try to falsify them as you may, and they will just brush aside your evidence as Marxist dogma. Circular arguments and twisted logic are the order of the day. It's all just another hoax to fool the workers
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