After Pensions
What about me? [djp72 (djp photography)/Flickr]
[Aired Monday, January 9]
To Listen: Get Adobe Flash Player, or download an mp3 at the bottom of the post.
IBM announced on Thursday that it’s joining the ranks of Sears, Hewlett-Packard, and Verizon by freezing its pension plans. It wasn’t particularly surprising news; new employees were already being offered only 401(k)s, and traditional pension plans have recently been slashed or discontinued all over the country. In fact, plenty of American companies have gone further: Huffy Bicycles, Polaroid, Bethlehem Steel, and United Airlines, among many others, have basically defaulted on their pension plans and passed the bills on to the Pension Benefit Guarantee Corporation, the government’s insurer. And the P.B.G.C. fears that this is just the tip of the iceberg. What happens when Detroit comes calling?
And this is just the corporate pension promises. When you add in the public pension plan deficits, pension funds are in the red by an impossible-to-fathom three quarters of a trillion dollars. And even that number could be higher: it’s dependent on dangerously optimistic forecasts.
So the age of pensions is over. Private corporations are phasing them out, and public municipalities, even as they promise ever larger benefits, are running dry. But what replaces them? Will our savings suffice? (Will yours?) Can a “responsibility society” afford a safety net — a net strong enough to hold the weight of an aging American, or tens of millions of them — in this globalised century?
Robert Reich
-
U.S. Secretary of Labor, 1993-1997
Professor of Public Policy, U.C. Berkeley
Author, Reason:Why Liberals Will Win the Battle for America and The Work of Nations, among many others
Jonathan Tasini
-
Blogger, Working Life
President, Economic Future Group
Lead plaintiff, Tasini vs. New York Times
Janet Krueger
- Former IBM employee and pension advocate
Michael Smyer
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Co-director of the Center on Aging and Work/Workplace Flexibility at Boston College
Dean, Graduate School of Arts & Sciences, Boston College
Professor of Psychology
- Web Features
- IBMers on Losing Pensions
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January 8th, 2006 at 10:42 pm
Great topic!
I know that many other countries that offer expansive pension plans — like Australia — are trying to phase in 401(k) type programs, which are commonly called superannuation because their pension programs will not survive much longer. This is a global phenomenon. In fact, helping people live after retirement is becoming a larger issue as populations age. Here in the USA we are concerned about the looming retirement boom of the baby boomers, and we are not alone. Western Europe is a well cited example as those countries are having a hard time funding their generous social welfare programs with aging and dwindling populations.
While this is happening, I am growing more concerned about how Corporate America is dumping its obligations on the PBGC because many of their employees have expected pensions for DECADES. I don’t have a problem with firms offering newer, younger workers only 401(k) type programs since they will have time to build a nest egg for retirement. However, it is unfair for those who are retired or near retirement to all of the sudden to loose their pensions. That is just wrong and irresponsible on Corporate America’s part.
By the way, with a book like Reason:Why Liberals Will Win the Battle for America, Robert Reich probably will have a balanced view about this topic. Since he is the only guest (as of now (ie the Wonkette show)), this show will have a very neutral tone…
January 8th, 2006 at 10:51 pm
Great–people who already are retiring to straitened circumstances, having had their financial futures compromised by criminals who pretend to be free-marketeers, but don’t honor contractual obligations, are now going to somehow have to fund their own and others’ pensions through additional taxes on their dwindling incomes. These big thieves, part of the axis of the lobbyist/legislature/corporate-industrial complex, are giving captalism yet more of a bad name by begging for corporate welfare instead of making it or not in a mythically free marketplace. It’s socialism for corporations–again and again–like the S&L bailout by taxpayers in the late ’80′s (also more Bush Dynasty shenanigans). What’ll be next–welfare for Halliburton when the new Iraq sues it for non-fulfilment of contract in rebuilding what was bombed? Sheesh. Vote for Nader or Libertarian, or better yet, not at all. Make the bastards pay!!!
January 9th, 2006 at 1:40 am
A litte yellow bird,
Is the “lobbyist/legislature/corporate-industrial complex” part of the Axis of Evil? I’m sure that Dubya would say, “Naw.”
January 9th, 2006 at 5:58 am
“anhhung18901″: Darn right he wouldn’t–he and his family’s dynasty is a prime beneficiary of crony-capitalism.
January 9th, 2006 at 4:05 pm
Right on, li’l Y bird – vote with your dollars via boycotts and not at all for the two dens of theives, Right and Left. Nader is the only one throwing his hat into the ring for several decades who has proposed a straight deal for the American people instead of trying to screw them for selfesh purposes. Too bad he’d be ineffective in office because all the good old den boys in D.C. would stonewall him.
Cheers.
January 9th, 2006 at 4:48 pm
Hey guys – thanks to those who have weighed in so far. Here are some questions we have that we’d love you to answer, from a more personal standpoint.
What are your plans for own retirement? Do you have a pension, or a 401K, or a gambling habbit?
Do you expect a company or employer to take care of you, or do you expect to take care of yourself?
If you do have a pension and you lost it, what would that do to you and your family?
thanks.
r
January 9th, 2006 at 4:51 pm
The company I work for is joining the trend to eliminate pensions and replacing them with 401K plans. As long as companies do this fairly and contribute a reasonable percentage of employees pay to the 401K plan, I have no problem with this.
Pensions are deferred compensation where the employee receives payment at retirement some 30 years later. The proiblem with this is that if the company runs into finacial problems or has made bad assumptions about the costs of the pension plan, then they may be unable to honor those payments at retirement and instead default on those pensions. Then the government, meaning the taxpayers, are expected to pick up the pension payments thru the PBGC.
You just need to look at the problems companies are having with pensions lately to see the problem. Delphi is just the latest example.
With a 401K plan, the money that is intended for retirement becomes the employee’s money at the time of payment and the employee has control over the money. The company no longer has the opportunity to abuse the pension money or to lose it thru mismanagment.
401K plans are an idea whose time has come.
January 9th, 2006 at 5:38 pm
My plans for retirement? Don’t have a pension or $401,000 but if I did I would not complain about it. Sheesh. Companies want to give that much money to workers and all they want to do is wine about it. But I do play the Lotto every week and trying to get in on that Regus Feelbin show.
I don’t expect a company or employer to take care of employees. Employees should expect to take care of themselves and quit waiting for welfare. All those lazy sobs need to get up off their fat lazy rumps and quit waiting for handouts.
January 9th, 2006 at 5:55 pm
“Bobbi”: Are you a humorist, or just utterly clueless? It’s hard to believe you’re not kidding… Please respond before I mistakenly tear your fantasy a new, um, I mean, put a chink in your ivory hovel and let a shaft of truth in. If you’re kidding, you’re awfully funny–like the joke about a “401K” being 401 grand… that’s sharp (if it’s a joke)! Who are you, really… Emily Litella? (“What’s all this about ordinary workers being handed $401,000? Oh. Nevermind!)
January 9th, 2006 at 5:58 pm
Robin– In response to your request, I expect the greatest upheaval yet in human history to make these questions beside the point. The whole fake economy is going to implode and when it does, the titans of industry will seem puny indeed.
January 9th, 2006 at 6:04 pm
For Bobbi, perhaps, but for anyone who wants to make $401k in a 401 (k):
http://en.wikipedia.org/wiki/401_%28K%29
January 9th, 2006 at 6:18 pm
“jc”: I wish I COULD protest with my dollars–but I use Verizon DSL, and half the others too. I don’t want Nader either–he’d still be too much gummint, but he’d die in a small-plane crash if he ever got in, anyway. The black-box voting hoohah is a firewall to any alternative, anyway.
January 9th, 2006 at 6:25 pm
“Bobbi”: Please respond. I want to love you. I want to know you. Tell me you really are a smart, funny chick, not another straw on the camel’s back–not another brick in the wall, not another example of the terrible democratizing effect of ever cheaper entrepreneurial largesse toward humanity, such as easily affordable computers and internet access. Tell me that “Shriber” is wrong about the WWW being a “dangerous idea” at the “Edge.com” thread here at ROS. Please hurry–it hurts! The waiting! Come on, baby! Come on!!
January 9th, 2006 at 6:26 pm
Comment Deleted by OS Staff
January 9th, 2006 at 6:31 pm
I ain’t sayin’ nothin’ else ’til Coach Greeley or his lieutenants respond…
January 9th, 2006 at 6:36 pm
I’m a 26 Year IBMer who just lost 500k + in the new pension plan. For those of us who do not have 30 years by 2008, we can lose 25-50% of our pensions. I know of many collegues who stayed with IBM during the tech boom of the 90s for the “security” of the medical and pension benefits. I wonder if they would have kept these employees given the current announcement and the medical and benefit take-aways of the last few years. Demographics haven’t changed….when these commitments were made, the money goes to escrow. IBM raided the “overfunded” pension plan in the 90s as the market ran up and reflected it as profits.
However one spins it…the corporation can’t save $3B unless a few employees contribute greatly out of their pockets. In the information age, a company is now judged by the value of it’s intellectual assets. How much “asset security” do you think they have given this latest move?
January 9th, 2006 at 6:44 pm
Meagan, how in the heck could a 26 year old lose that much money in a new pension fund? If you lost $500K, how much did you have to start with?
January 9th, 2006 at 6:46 pm
“meagain1457″: My sympathies. At least you’re still awfully young, and tech-educated and savvy. But it’s terrible that so many corporations are playing accounting games, like improper listing of liabilities in the assets column. Good luck!
January 9th, 2006 at 6:48 pm
Shoot. I thought it was safe to come out agian, Mommy…
January 9th, 2006 at 7:17 pm
Sorry, I know the show’s on but we can’t hear it out here in WA until later tonight.
If it’s not too late, can anyone ask whether the corporations slashing pensions are also slashing executive salaries and bonuses?
And if they aren’t, can we in good conscience shoot ‘em when the Revolution finally comes?
January 9th, 2006 at 7:23 pm
“Nikos”: HA HA HA! Oh, that’s GOOD! Of COURSE the chiefs are suffering right along with their beloved minions! Ahahaha! Oh, it hurts…
January 9th, 2006 at 7:25 pm
This isn’t a new pension fund….it is the old pension fund. I don’t know about you but until the new calculator comes out I’m not sure how much I lose exactly. I will be 51 with 27 years in 2008. Most of my pension is earned in the last 5 years. I also forfeit raises of 2-4% each year for the last 3-5 years. Right now, it looks like the fund freezes at around $3500/mo below what my max was were I to retire with 32 years and age 55. 30 years at 42kper year….would be…?
January 9th, 2006 at 7:27 pm
“Nikos”: BTW, the show’s not on for over half an hour yet here in The Hub. You can’t listen online? What the dilly? (P.S.– Thanks for the tech help. The check is in the PayPal.)
January 9th, 2006 at 7:28 pm
“meagain1457″: Oops! Sorry to misunderstand.
January 9th, 2006 at 7:30 pm
Boy, IBM shoulda kept ol’ Bill Gates on the payroll, ne c’set pas?
January 9th, 2006 at 7:34 pm
ALYB!
Good grief, boy!
You may be my pal, but hey, tone down the dumb-guy talk!
This is coming from Nikos, mind you: one who cares, not a belligerent jerk.
I mean, I laughed at your 6:25 post, but sheesh! And you had the NERVE to chastise my guy-bashing jest on X-mas Eve?!
HA!
(I’d LOVE to know how Bobbi responded.)
January 9th, 2006 at 7:35 pm
Hunh? I don’t get you, bud…
January 9th, 2006 at 7:38 pm
Robin,
“Retired” when my group’s function was transferred to Toronto, CANADA. People were slowly forced out. My wife and I have always had 401k’s and max’d IRAs. Chuck Schwab owes us a lot. We trust no one. Paranoia paid off:
CASE#1: Cincinnati bank used to have 10 year tenure on their pension, then close it after 9 1/2 years, taking back matching funds. Congress changed this.
CASE#2: Cleveland Oil company used to “punish” “BAD” employees by firing them then forcing them to take their pension lump sum and pay IRS 99%. Congress changed this one too.
CASE#3: Cleveland companies used to put all employees pension funds in the company stock. Board of Directors were charged with money laundering. Bank was sold to another, which was sold to another etc. No one got anything back.
This has been going on for many, many years.
The ONLY thing to do is save your money, probably in a 401k away from prying eyes and laugh all the way to the bank when they start playing games.
Yes, I cashed out my pension fund when they dumped me. Yes I bought Oil Stocks and Mutual Funds. Yes I was damn lucky; but YES I expected them to be leud and crude. They never disappoint me.
January 9th, 2006 at 7:38 pm
“Nikos”: You lost me.Whaddaya talkin’ about?
January 9th, 2006 at 7:42 pm
ALYB: I live on the gorgeous and sparsely inhabited Olympic Peninsula. Which means no broadband, no DSL. We got phones, but the connection speed is half that of phone-lines in normal America. Which means that often the internet stream is punctuated by painfully long gaps while the phone-line-feed rebuffers. By the time the ROS voices resume scritching from my speakers, I’ve forgotten half of what they were discussing.
It’s much less frustrating to wait until the KUOW 9PM PST broadcast.
Sigh.
January 9th, 2006 at 7:43 pm
Come on Meagan, make up your mind. One minute your 26 years old, the next minute you’re 51 years old. One minute you’ve lost $500K, the next minute you don’t know how much you’ve lost. Did you have a box lunch today or what?
January 9th, 2006 at 7:44 pm
“Nikos”: AHA!
January 9th, 2006 at 7:45 pm
ALYB: never mind. I’ll explain it when Brendan opens the tangent thread. Or, barring that, when this thread is about to disappear into the archives.
Suffice it to say that I thought your 6:25 post amusing but…uh…somewhat reckless. How’s that?
January 9th, 2006 at 7:47 pm
Gotcha.
January 9th, 2006 at 7:52 pm
26 year ibmer NOT 26 year old IBMer…. 500k is an estimate….don’t know EXACTLY how much I lost….or, given the trend, will lose in the future
January 9th, 2006 at 7:52 pm
“Nikos”: We are failing to communicate. BTW, “Bobbi” (who is a guy, I realize) did not respond to me, but simply said something immensely provocative to certain groups of people. It was exceptional only in its banality.
January 9th, 2006 at 7:54 pm
“Me Again”: You actually type very youthfully, though. Your pixels are VERY well-preserved. Hyuk yuk.
January 9th, 2006 at 7:56 pm
Speaking of banality, and having recently missed an evening with Wonkette, We seem to be having lots of banal intercourse tonight. Is the moon in the sign of Klutz tonight, or what?
January 9th, 2006 at 7:58 pm
ALYB: I belatedly figured it out too. Bobbi seems a bit…hmm…rude?
Well, enough of that.
Did anyone perchance ask about executive salaries and bonuses?
January 9th, 2006 at 8:08 pm
IBM, with their previous “cash balance” conversion, and this new announcement, have basically stolen my family’s future…I was promised when hired in 1977, and for decades after that, that my continuing loyalty and commitment to the company would be rewarded with (while not a lavish lifestyle by any means) a secure income for our future. This has been pulled out from under us, without so much as an apology. IBM is now just like any other 2nd rate, underhanded corporation in the world today…willing to take any steps to grab as much cash for their top 20 executives and board of directors, at the expense of their employees. Not much different than Enron, United Airlines, WorldCom, or any number of “business leaders” these days. Meanwhile, you’ll notice that none of the top execs at IBM have said they’re giving up a dime of their income or retirement to deal with the “new realities” of the supposed “global marketplace”. No, it’s only the rank and file who are expected to hand over everything they’ve worked their whole lives for. And make no mistake, this is not the end…we are all sure that IBM’s ultimate goal is to provide NOTHING in the future. They will amend and amend this until they contribute absolutely nothing to our retirement or other benefits. I would venture they will even attempt to “buy out” current retirees with a lump sum at some point, to avoid those payments as well. Of course, what IBM management seems to completely overlook (as does the management of every other company that’s outsourcing jobs, and reducing pay and benefits), is that in the near future, there will not be nearly as many paying consumers to buy ANY of their products or services…everytime IBM surpluses a job or reduces a retirement, that’s one more person who can’t, and won’t, afford a new IBM computer in the future. Not too mention, that same person won’t have the money to spend on a United Airlines ticket, or ATT products, etc. And every employee in those companies who has been surplused or lost income, won’t be able to afford products from all the other companies either. All these idiotic and greedy management personell are creating a downward spiral that will ultimately hurt them all. Of course, the current management is only concerned with their OWN lifestyle, and I’m sure are certain they will be long gone themselves before the companies finally implode. But it’s a very sad state of affairs for the US that all of the supposed “leaders” in our business world are able to proceed with what should be near-criminal theivery and do so with impunity. Those few continue to get richer to the tunes of millions of dollars a year, while working people are now looking forward to not being able to ever retire, and to be working for miniscule amounts of money for the rest of their lives just to survive. So to Sam Palmisano and IBM in general, I say with hearfelt sympathy, kiss my ass.
January 9th, 2006 at 8:17 pm
The Wonderful Wizard of OS (Christopher Lydon) asks if IBM’s mishegas is actionable, and of course it could be if there’s acontractual obligation that was entered into lawfully.
January 9th, 2006 at 8:21 pm
ERISA = Employee Retirement Income Security Act…
January 9th, 2006 at 8:27 pm
Does not! It stands for “Eviscerated-Responsibility Insurance, Saving A***oles”.
January 9th, 2006 at 8:30 pm
“Executive Responsibilty Insurance Since Abdication”, I meant to say…
January 9th, 2006 at 8:32 pm
The Public sector is checking out, the private sector is checking out.
The Republicans have won. It’s the sink or swim America of their dreams!
January 9th, 2006 at 8:32 pm
No, wait! “Excess Redistribution of International Socialist Aristocrats”
January 9th, 2006 at 8:34 pm
“elroustom”: The Dems and GOP are equally up in it, my friend. It’s the international oligarchy that is steering this.
January 9th, 2006 at 8:38 pm
Professor Reich says that boomers haven’t saved because of their expectations. I would say that the big companies created these expectations with their rich compensation packages; they should pay their obligations, if there are any, contractually speaking. I’m repeating myself.
January 9th, 2006 at 8:47 pm
I too glibly said “Republican” – while our government has checked out on us – it’s been at least the spoken party line of the Rs.
To the program host and guests: the poor have very strong extended family ties – they’ve never had the pensions to begin with. This change is going to affect the middle, pushing it down. Will it take hurting the middle to make the government to start paying attention? Will this be a good thing (if not painful)?
January 9th, 2006 at 10:00 pm
On behalf of the virtue called Tellin’ It Like It Is, and in an effort to improve the ROS repartee — not to mention an effort to encourage more great posts from those who don’t clog the place like me — Morbius is due a profound and melacholy Thank You for his/her 8:08PM word-brick.
Great Post.
A certain nominee for an end-of-year ROS ‘best post’ award, IMHO.
(Say, Morbius, if you work for IBM, maybe you can visit the conversation on the ‘New Site’ thread [easily found on the ROS home page] and help ALYB solve his space and line-break problem?)
January 9th, 2006 at 10:08 pm
“Nikos”: Is THAT what the “Break” key is for? What do you do, hit the space bar ’til the words reach the next line in the little Open Source blog’s word corral, and then punch the “Break” key? And what is “Pause” on the same button? (I understand that you depress the “Shift” key to use the key for different functions…
January 9th, 2006 at 10:15 pm
Type atcha tomorrow–I’m getting Schiavo-brain.
January 9th, 2006 at 10:30 pm
To all the jerks here who complained about me and my comments and questioned my womanhood, my husband Steve would like to say to you: “uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm.”
I only have one more thing to say to you jerks: Next time remember to take your daily dose of ritalin before you sign on here.
Bobbi Dooley, President of the Western Estates Homeowner’s Association in West Hills
January 9th, 2006 at 10:36 pm
Jonathan Tasini argued on the show that the world labor market has caused a race to the bottom when it comes to wages and standard of living. Workers in the developing world (Latin America, China, India, etc.) want what we have – cars, iPods, large houses, expensive wine, toys, and so on. The basis of economics is that people want to maximize what they can get (money and utility). Arguing that humans in other countries want to live off of subsistence wages and standard of living is not sound or logical. Granted, we can gain utility from things other than money, but wealth is strongly tied to buying other goods or leisure.
January 9th, 2006 at 10:50 pm
“Bobbi”: Give it up, kid–you’re wearin’ it out, and it wasn’t much to begin with. But, hey–you tried, and that counts for a lot. When you grow up, you’ll understand. BTW, where IS “West Hills”–do you live in any state other than Catatonia? (Watch he/she say, “Where’s Catatonia”…) I googled “West Hills”, searched your name; then your name and West Hills together; then Western Estates Homeowner’s Assoc.; and all of it together. Nothing! Is West Hills part of Hobbit Estates, Middle Earth, or what? BTW, it does not surprise me that your beard, er, I mean husband, only communicates in monosyllabic grunts.
January 9th, 2006 at 11:08 pm
“Bobbi”: BTW, I don’t believe you have only one more thing to say to us jerks. I believe that fifteen minutes after you’re dead, your jaw will continue to twitch out inanities and barely-formed ideas worthy of George Orwell’s “duckspeak” from “1984″. Oh, sorry–I should have realized you find literature offensive. You couldn’t possibly be the president of anything, other than maybe the Appalachian Yenta Society in West Foot-Hills, or wherever you said you were spawned. The fact that you don’t know how funny you are makes me pity you. You had some of us entertained for awhile back there because what you said was so over-the-top stupid that we thought you must just be a wiseacre at first. Even the host of the show, when he first came on, was snickering about how “401(k)” didn’t mean $401,000. We thought you had to be joking. You don’t get it, do you? You really weren’t joking, hunh? How DO you get through this life? There really IS a god, and platoons of guardian angels too–there must be.
January 9th, 2006 at 11:22 pm
One last thing (REALLY!) for my ol’ gal-pal “Bobbi” Doozy: You say that your (alleged) husband, Steve Doozy, would LIKE to say, “uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm, uh hmmm.â€? When you say he would LIKE to, do you mean he can’t even say THAT? Or that he’s not around now? Or that he is afraid of that new-fangled COM-pyooter y’all are writing on without a pencil? Or what? And how do we know he DIDN’T say that–or type it? Isn’t it true, Mrs. Doozy, that on the night of October 14th you did knowingly and willfully light the fuse in the basement of your home at 123 West Hovels Estates and then go shopping? Wasn’t it always your intent to collect your husband’s insurance money? Wasn’t it, Mrs. Doozy?
January 9th, 2006 at 11:49 pm
To all Open Source bloggers: I just confirmed that “Bobbi Dooley” is a character from the Phil Hendrie radio show, which I am very happy to be reminded of–it’s pretty f@#$in’ funny. here’s a WIKI page http://www.wikiverse.org/phil-hendrie explaining the comedian–not moron–who buzzed around us like a psychotic mosquito tonight–and at the end, completely fooled me. Bravo, whoever you really are, mystery blogger! It is good to fall a fool to a good prankster! Thank you!! -ALYB
January 10th, 2006 at 12:30 am
Hey ALYB:
I’m glad I happened to check my e-mail before I posted this, and saw your latest post. It made me tone down my chastising. (Coach Brendan isn’t the only one who wields the whistle here.) I’m glad that your googling finally got you on the right track. But the main point is that it’s always bad news to engage with trolls — even super-secret-double-agent-fake-radio-character ones. All it ever accomplishes is encouraging the trolls themselves… and discouraging everybody else. Or at least discouraging everyone else from posting about the matter at hand.
Okay, sermon over. Time to go back to sitting on my retirement account nest egg in the frozen Antarctic wasteland.
Oh, Nikos: I like your idea about “best post” awards. And Morbius is certainly a great nomination.
January 10th, 2006 at 7:38 am
I tried to dial into the 1-877-673-6767 number starting at 6:55 PM but got nothing but a recording from Christopher Lydon saying that the show was not live. I tried every few minutes until 8 PM with the same result. Was this because so many people were already in that newcomers were excluded?
Is there some place I can go to hear a recording of the show? I regret not being able to hear it live but have read that the show was very well attended and lively.
Philby III
January 10th, 2006 at 8:14 am
David– Sorry, and thanks. Are you really a typing penguin? How about a stupid animal tricks show?–you know, for summer, when the problems of the world seem less pressing.
January 10th, 2006 at 10:18 am
I thought it would take me quite ahile to get through all these posts, but it went amazingly quickly… entertaining in places.
I listened to another great show last night, great guests– especially Robert Reich and Janet Krueger. When I looked at the topic and the news stories the first thing I thought of is this is one more notch in the story about the rich getting richer and the poor getting poorer.
Workers of the world unite!
I think employees need to wake up from their peaceful slumber and to be demand more cash from the get-go, now especially, nothing deferred, to compensate for the loss of benefits. They need to be made whole from the beginning onward if they are to be weaned, to grow up, so to speak. And they need to become more savvy about saving and investing.
Someow those unable to deal with this level of complexity need honest help as well.
Morbius has it all right. Corporations are shooting themselves in the foot. It’s like they, the executives, don’t know whose shoulders, whose sweat, whose creativity, they are standing on and reaping from.
The sooner workers wake up to this the better. it’s the same old story: Sixteen Tons.
January 10th, 2006 at 12:25 pm
To Philby – the mp3 of last night’s show is now posted on the site. So you should be able to hear the show now.
As far as calling in…we do have a voice mail message that calls are directed to if you call that number any other time than during the show. I’m surprised to hear that you got the message during the show though, since we were receiving calls last night. My guess is that you would get a busy signal if you called and all the lines were busy, but i suppose that’s the most likely explanation. Sorry you had trouble getting through.
January 10th, 2006 at 1:30 pm
Philby:
We actually had a minor problem last night and our phones weren’t working for the first 20 minutes, so if you called then you would have gotten the “we’re not live” message.” I’m not sure why you got that later in the hour, since our lines were up and working. The mysteries of the phone. The blog’s always open!
January 10th, 2006 at 2:36 pm
Responding to Robert Reich’s comments on After Pensions:
In IBM’s case, their stated motivation for freezing their employee pension plan was that they could not be competitive in the market with companies that did not have pension plan obligations. Robert echoed this motivation in general as a reason for US corporations moving away from defined benefit pensions – that the move was to reduce or get rid of costs.
Where this may be true of some corporations, this is certainly not the case for IBM. In fact, quite the reverse is true.
The IBM plan, comprised of a fund totaling some 48 billion dollars, is over-funded, and has been so quite frequently in past decades. Which means the fund has more than the necessary funds to meet the costs associated with the pension obligations. Unlike other corporations that are suffering due to having to make up for pension fund shortfalls, IBM has made a habit of occasionally pulling off funds from the pension bucket to report as revenue in quarterly reports. This is entirely legal, and I will leave the argument as to if this *should* be legal to someone else.
But the point is that in IBM’s case, the pension fund excesses have functioned frequently as a magic hat from which the corporation can produce profits on the quarterly statement in an otherwise lackluster quarter. The pension fund is not a cost center as the statements would lead you to believe, but a profit center, which can be periodically used to bolster profits when needed.
In this sense, the existence of the pension fund does not make the company financials more volatile, another statement of motivation for the change, but can in fact level out the company financials and in fact make them more stable from quarter to quarter.
The company has done this many times, to the tune of billions – yes billions – of dollars, according to people who know a lot more about it than I do. Accounting and reporting of such disbursements are somtimes quite confusing, possibly deliberately so. New standards coming from the FASB will require the pension plans and the accounting of their funds to be on the company’s balance sheets, and will be required to be included in the company’s bottom line. This, I believe, is where the volatility will occur – not currently, but after the pension fund financials are exposed to the full light of public scrutiny.
So, IMHO, the stated reasons for IBM’s freezing of the pension plan – to cut costs and to make the company financials less volatile – are red herrings. I submit instead that it is quite tempting for executive management to find ways to take part or all of that 48 billion dollar bucket of money, in any way possible, before they are required to publish pension fund particulars as a part of their bottom line according to the new FASB accounting rules.
The announcement states that they expect to save three billion over the next ten years. That has to come from somewhere, and where it is coming from is the pension obligations for current workers. In short, it will come out of my pocket when I retire. Interesting that there was no change to the executive pension fund, which is handled separately. Apparently the market pressures are not so severe that they should impact their expected retirements, too.
January 11th, 2006 at 9:18 am
I think it is highly irresponsible to paint the “stock market” with a broad brush and characterize it as a casino, populated by a stock set of villanous characters like Bernie Ebbers and Ken Lay, greedy Wall St. bankers, mutual fund swindlers, hedge fund honchos, and the like with policing by a complicit Bush administration. Take a deep breath and a step back and give yourself a moment to think about what it really is: an imperfect (but like Winston Churchill’s well-worn maxim about democracy, better than most of the alternatives) mechanism to allocate scarce capital to enterprises capable of putting it to best use. Capital is the engine of the enterprises that we all work for — it builds the factories and the offices, it turns on the lights, it pays the marketing budget, and it supports employee wages and benefits. The stock market gives you and anyone else the opportunity to provide capital to enterprises that you feel will put it to best use. Think Starbucks is going to sell coffee to every Chinaman in 10 years? Invest in them. Someone else probably disagrees with your analysis — they sold you the shares. But you made the decision. Can’t decide? Buy an broadly diversified basket of stocks that broadly represent the economic activity of the US — its called the S&P 500, or better yet the Russell 5000. Over the long run, if you are a retiree you are counting on the growth of the economy — the government won’t be able to pay your pension either if the economy isn’t growing. You can buy index funds that do just that and charge minimal annual management fees. If well educated, well informed, independent thinking individuals like Jonathan Tasini can’t figure out something as simple as that, and would prefer to have a bureaucrat in Washington determine where his capital (any everyone else’s) should be allocated (that model is called socialism), then we’ve got a very serious problem. Ultimately we need policy makers that clear the field of distractions (i.e. mandate 401k commitments, match them with gov’t and corporate contributions, prohibit investment in company stock, etc.) and make intelligible choices available to those that require them. But let’s not bin the stock market or we’ll end up with an ever worse pension problem than we apparently already have.
January 11th, 2006 at 11:10 am
Robin, a few messages ago asked if we expect a company or employer to “look after us”. Sorry there my little masked go4, but it is that way of thinking that has helped embolden the holders of capital. I though in a welfare society that workers were owed a decent living after retirement in exchange for their contributions from their paycheck and in exchange for giving their life-blood to the coorporation. This is suppose to be a fair exchange and not a handout from some benevolent father.
It seems to me that the 401(k) system is intent on turning all workers into petit bourgeois that will have them manage their own investment portfolios. If they place their money in different mutual funds, this pits workers against workers since it now is in their interest to see companies they have invested in reduce labour costs to jack up the stock price.
January 11th, 2006 at 4:49 pm
To Robin and David who responded to my comment about not being able to dial into the show live. Thanks for the explanations. I know that I tried almost continuously to dial in from 6:55 PM through about 7:40 PM, then again at about 7:55 PM, all with the same results.
I have since listened to the entire show via the mp3 file. It was very interesting to me to listen to all of the dialog. I would personally like to see the event repeated with a different set of players to hear other view points. I believe that with some advance notice, we could get hundreds of IBMers to dial in.
Philby III
January 12th, 2006 at 3:17 am
What about our retirement? I have a little in PERS of CA and STRS of CA. When I say a little, I mean, a little. My husband and I have a SEP IRA, which we weren’t able to contribute to last year because of an unexpected 50% reduction in income. It isn’t as much as it should be at our ages. My husband is a self-employeed consultant. He likes his work, its flexible and not too taxing. ( Not having enough is pretty stressful though ) I don’t see any retirement in the future. We have four kids, 8,6,4,2; my husband is 51 and I’m 48. The plan is to put as much into SEP IRA, get everything paid off and live cheaply.