The attack on Social Security – a major threat in its own right – is actually the centerpiece of a broad-based assault on all retirement security and the pensions of American workers. As private sector workers have seen their employers blow off their pension obligations, the pensions of public workers and public school employees in many states are increasingly at risk.

In Pennsylvania, for instance, teachers and public workers last fall managed to beat back an attempt in the state legislature to switch the pensions for future hires from “defined benefit” to “defined contribution” plans, which would have thrown their pension savings on the stock market to sink or swim. And that was before the Republicans took control of the lower house and the election of a conservative Republican governor who signed a “no new tax” pledge during the campaign. With the changes in the state capitol and the state looking at a reported $4 billion budget hole, a renewal of the attack could come at any time. Next door in New Jersey, one of Governor Christie’s favorite targets is his state’s public pensions. A year ago he said, “Make no mistake about it, pensions and benefits are the major driver of our spending increases at all levels of government … we cannot …fund a system that is out of control….”
 
So, what is really going on with this broad attack on Americans’ retirement security? A couple of points need to be made up front in this discussion. First, the attack on pensions is a part of the general threat to the livelihoods and the unions of public sector workers, both and active and retired. Note, for instance, New Jersey Governor Christie’s lumping “pensions and benefits” together as the main culprit in state and local government spending. (Here Christie at least does us the favor of putting active and retired workers in the same boat. On the other hand, a favorite tactic of politicians is to pit active workers and retirees against each other as if they are in competition for a finite and limited pot of money.) Second, when officials discuss the “pension crisis,” they pretend that they can predict fiscal and economic conditions decades into the future. This allows them to transform a possible worst case scenario at some far-off point into an immediate crisis.
 
One has to wonder about the truth of this doomsday outlook. According to the Pew Center on the States, for instance, states aim to “save enough to pay 80 percent or more of their pension bill. Pew found that overall, states had set aside enough to pay 84 percent (in other words above the target) of the bill but 21 states were below the 80 percent target.” How much below? Out of the 50, only seven states are currently setting aside less than 75 percent of the recommended level. Talk about a contrived crisis.
 
With this background in mind, an interesting article by economist James K. Galbraith caught my attention. The article, entitled “Actually the Retirement Age is Too High” makes a case for reversing the wide spread trend of calling for workers to retire later than they already do and to spend more of their “golden years’ on the job. Galbraith argues that “productivity gains … mean that we can and do enjoy far more farm and factory goods than our forebears … only a small fraction of today’s workers make things.” He says that, given our current level of unemployment, young workers should get “first crack” at the available jobs and that “older people who would like to retire and would do so it they could afford it should get some help. The right step is to reduce, not increase, the full benefits retirement age.” He suggests dropping the age at which workers become eligible for full Social Security to 62 (for a three year trial period to begin with). With a full pension and medical care, retirees “will be happier. Young people who need work will be happier. And there will also be more jobs. With pension security, older people will consume services until the end of their lives.” (There is research to support Galbraith’s proposal. A study by the National Institute on Retirement Security [NIRS] entitled “Pensionomics” is available on line at nirsonline.org.)
 
Galbraith’s article is brief and he does not pursue the implications of his proposal or state what seems to be his logical conclusion. If it is true that our society has reached the point where “a small fraction of today’s workers” can produce enough goods for everyone, then now would seem to be just the right time to undertake a massive effort to do two things: 1) ensure that the wealth produced is fairly distributed and 2) train and educate the additional doctors, nurses, teachers, technicians, scientists, writers and others so sorely needed to make all of our people, young and old, “happier.”

Photo courtesy AFL-CIO