Associated Press reports that two Americans are somehow still receiving Civil War veterans’ benefits. For those of us not currently reaping Civil War benefits, a little background: the Union Army pension originally covered those injured in battle, and in the late 1800s the program expanded to include veterans who became disabled off the battlefield as well. 62, as well as their widows and children, could claim payments. Even more interestingly, the pension provided a natural economic experiment: only some adults received payments, and their behavior could be compared with those, such howard lindzon bitcoin news Confederate soldiers, who didn’t.
My former MIT colleague Dora L. 1900, workers were vastly more likely to retire if they had the extra income boost of a Union pension. The idea that people would retire if they could afford it may not seem extraordinary now, but in the years leading up to 1900, our modern concept of retirement wasn’t fully formed. Many delayed this step for as long as possible, in part because they would have no choice but to move in with their kids or extended family once their cash flow dried up. But around the turn of the century, retirement began to change. Today, they each draw 876 dollars per year from federal coffers.
It’s a price I’m happy we’re paying, if only to serve as a reminder that the way we live our lives is more malleable than we think. As with many concepts that we now take for granted as a reality seemingly dictated by the laws of physics, the idea of retirement is a social construction that is subject to change. A combination of factors now challenge today’s notion of retirement. American workers are experiencing as they look forward—with ever increasing trepidation—to a retirement without sufficient money to see them through. According to the data, American workers have very good reason to be afraid. In 2008, that number was 49 percent.
What’s more, it’s getting worse every year. In 2009, 75 percent of the nation’s working class had managed to put something away for retirement, even if the amount was insufficient to take care of them in a time of increasing prices and rising life expectancy. Today—just four years later—that number has fallen to just 66 percent of workers who have been able to set something aside for their sunset years. These dramatic numbers should come as a surprise to nobody as the statistics have long made clear how badly worker income has stagnated in America since the 70’s. As workers have increasingly struggled to pay their current bills, due to employee earnings remaining static at a time where the high end of the income scale rose to unprecedented heights, it has become all the more difficult for these people to set aside money for their retirement.
The years from the end of World War II into the 1970s were ones of substantial economic growth and broadly shared prosperity. Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s. The income gap between those high up the income ladder and those in the middle and lower rungs — while substantial — did not change much during this period. Beginning in the 1970s, economic growth slowed and the income gap widened. Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly. As for the availability of the retirement plans that were once provided in return for years of service to one’s employer, the ERBI study notes that, in 1979, twenty-eight percent of American workers were the beneficiaries of defined benefit programs which guaranteed them an income from the day they retired until the day they died. Today, that number is just 3 percent.
And then there is the decline of the private sector union movement that, in 1970, saw membership peak at 17 million Americans holding union cards. Today that number is just 7. As all of these worker punishing factors began at roughly the same time as millions of Americans who are now reaching the age of retirement would have begun saving for their non-working years, should anyone be surprised that the average American is now facing a longer retirement without anywhere enough money to pay for it? Still, what continues to amaze are the many Americans who will find themselves facing true economic disaster as they enter retirement and yet have, these many years, supported the policies of politicians that cheered the income inequality that has created this crisis as somehow being the true expression of American style capitalism. Worse still, these are the very politicians who now seek to cut social security benefits—already insufficient to cover the true costs of retirement—and Medicare. Soon, millions of Americans will more fully understand the dreadful price to be paid for having backed the wrong horse as the country is left to deal with a serious senior crisis brought on by two generations of employers unwilling to properly compensate workers for their contributions and public policies that rewarded this greed. One of the greatest tragedies a decent society can experience is the abandonment of its elderly.
We have set the stage for that tragedy to play out in America through policies that have denied millions the opportunity to properly save for their retirement. The question is, what will we do now? Unfortunately, nothing is being done to address America’s new pension poverty. However, I’m no doom and gloom cynic, far from it. I’m bullish on America, think it will continue to lead the the world in the coming decades, but bitter partisan politics threaten to crack the foundations of its democracy and if politicians don’t come together to hammer out bipartisan solutions, they will jeopardize the country’s long-lasting economic prosperity. And a weak America isn’t in anyone’s best interests. Interesting discussion but some statements are factually wrong and totally biased.