by Randolph T. Holhut
American Reporter Correspondent
May 19, 2005
COMPANIES REPLACE PENSIONS WITH BROKEN PROMISES AND LIES
DUMMERSTON, Vt. -- It wasn't that long ago that the American workplace operated under a simple compact - in exchange for offering your employer 20 or 30 years of your labor, your employer would pay you a living wage and give you a pension when you retired.
Combined with Social Security and Medicare, this meant that old age was no longer a time to be feared. You could live out your final decades in a certain amount of dignity, knowing that you had a enough money to live on and health insurance to cover you when you got sick.
This system, sadly, doesn't exist anymore for most Americans. The new model of retirement looks a lot like what recently happened at Polaroid.
Unable to adapt to digital imaging and the decline of its instant photography business, Polaroid filed for bankruptcy in 2001. Just before it went bankrupt, the company canceled lifetime health care and insurance benefits for its retirees.
A group of retirees sued Polaroid to force the company to honor its commitments. They were, for the most part, unsuccessful.
In April, the remains of Polaroid were sold for $426 million. Polaroid chairman Jacques Nasser (if the name sounds familiar, he was at the helm of Ford during the spate of fatal accidents involving the Explorer SUV in 2000 that ended up costing the carmaker millions in lawsuits and lost sales) will receive $12.8 million for his shares in the company. CEO J. Michael Pocock will get $8.5 million.
And 6,000 Polaroid retirees will get $47 each.
That's not a typo. People who worked 20, 30 even 40 years for Polaroid are getting $47 as their "reward" for devoting their lives to a company that kicked them to the curb at the earliest opportunity while handsomely rewarding the people at the top.
Promises made to workers no longer need to be kept, not if they cut into the fat cats' profits. And the same bankruptcy laws that were recently changed to make it harder for the average person to walk away from debts are allowing corporations to terminate their workers' hard-earned health care and retirement benefits.
United Airlines is in the process of dumping $5 billion in pension obligations onto the Pension Benefit Guaranty Corp., a federal agency that insures private pensions if companies go bankrupt. Unfortunately, the PBGC faces a deficit of $30 billion and will not be able to handle the flood of companies that will rush to follow United's lead.
As for United's 120,000 current, former and retired employees, who just saw their pensions disappear, they now apparently have no way to fight this decision. Maybe, if they're lucky, they'll get a $47 check like the Polaroid engineers.
For all the talk about retirement planning, the reality is that only about half of Americans work for companies offering some sort of retirement plan. Of that number, 80 percent have what's known as defined-contribution plans - the 401(k) system where you are expected to plan and save for your retirement. If you don't earn enough money, or if you get sick or have some other financial crisis in the present that prevents you from saving for the future, that's your problem, not your employer's.
Only 20 percent of workers who have retirement plans have defined-benefit plans - a pension that the company funds and that promises to pay you a monthly check when you retire. Of those remaining defined-benefit plans, 75 percent of them are underfunded.
Do the math and you can see what is happening. Fewer people get pensions. Those who now have them stand a good chance of losing them, as companies seek to escape from the promises they once made. Workers are now expected to save for their retirements, but most Americans are in low-wage jobs and are deeply in debt. And the one thing that keeps most retirees from living on Alpo - Social Security - is about to be radically changed so even that guarantee of a stable retirement income can no longer be counted on.
In other words, the social contract is being rewritten and can be summed up thusly: "You're on your own, pal." If you're among the fortunate few who have money and have invested wisely over the years, you'll be fine.
Everyone else is screwed.
You can't expect to maintain a functioning democracy for long if this is the guiding philosophy. But in the era of President Georhe W. Bush, promises don't have to be kept, commitments can be broken at will and money talks so loudly that it drowns out every other voice of reason and sanity.
Randolph T. Holhut has been a journalist in New England for more than 20 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.