(Source: Column by James P. Hoffa, General President, International Brotherhood of Teamsters, published in the Detroit News and at Teamster.org on November 13, 2013)
WASHINGTON, D.C. — A secure retirement used to be seen as a right for all hard-working Michiganders. Whether you were a city government employee in Detroit or a private sector worker in Pontiac, if you put in the time and did your job well, you would be rewarded with a nest egg for your golden years that would allow you live comfortably.
Increasingly, however, that is not the case. The pension system is teetering, 401(k)’s have fluctuated wildly and Social Security is under attack by some in Congress. Workers, not surprisingly, are uneasy and not confident that they will have the means to retire. People are working longer than ever and younger workers expect to do so even more.
While there are real reasons for concern, some of this fear is so unnecessary. Republicans on Capitol Hill, for example, have no reason to try to rein in Social Security spending by reducing how the annual cost of living increase is calculated. The program’s immediate future is in good shape. And most importantly, any savings through lower payments to older Americans who need it has no effect on the federal deficit since Social Security funding is separate from the rest of the budget.
The Congressional Budget Office reported that if Congress were to move forward with the new way of indexing Social Security increases, known as “chained CPI,” benefits would be about $30 a month lower on average by 2023 than they would be under current law. That’s a two percent reduction in average benefits. And for no reason except to hurt senior citizens!
Meanwhile, other workers’ retirement is being threatened in different ways. In Detroit, more than 21,000 local government retirees are currently awaiting a decision by a U.S. bankruptcy court on whether to allow the city to wash its hands of billions of dollars of debt, including its pension plan. Kevyn Orr, Detroit’s appointed emergency manager, would like to slash benefits for thousands of retired workers who played by the rules and merely want what they were promised.
That can’t be allowed to happen, and the Teamsters are pleased to see Mayor-elect Mike Duggan believes so as well. He firmly declared during an interview after his election last week that the city’s pension system should be protected and noted that out of Detroit’s $12 billion of debt, only $2 billion is related to retiree pensions.
The incoming mayor should be given a chance to lead on this issue. The citizens of Detroit have spoken and they want Mayor-elect Duggan to be able to put in place policies that will strengthen pension security and improve the city. But that can only happen if Orr and Gov. Rick Snyder allow him to do so. The Teamsters urge both Orr and Gov. Snyder to give the new mayor the authority to do his job and help save workers’ pensions.
Cobbling together funds for retirement is a complicated and often stressful juggling act. Social Security is a part of the equation, but it doesn’t supply enough income to provide economic security alone. And 401(k)s, while helpful, are risky. Ensuring that workers who earned pensions will be able to tap into them is essential to improving workforce confidence that the system can work for them.