After 23 years as a flight attendant at US Airways, Bill Pratt thought he could count on the company’s promise of a guaranteed pension when he retired. Now, even after US Airways obtained its third pay cut in as many years from the flight attendants, the corporation filed for bankruptcy and in January won the right to eliminate future payments to employees’ pension plan.
“How can a man who’s already taken a $1,200 cut in his monthly pension take a gamble on the stock market?” Pratt asks. “The stock market is a risky business,” he says, “and if you’re talking about a working man supporting a family, we can’t risk our dollars.”
Pratt has learned firsthand that despite a company’s pension promises to its workers, “nothing is written in stone.”
“That’s why it so important not to gamble with Social Security. The federal government needs to keep its promise and give us all the dollars we put into the program.”
As an insurance program, Social Security provides a guaranteed income each year for more than 47 million retirees, family members of workers who died and people with disabilities. Social Security beneficiaries earned their benefits by paying into the system throughout their time at work.
As an African American, Pratt also does not appreciate Bush promoting much-disputed statistics to tell African American men that the current Social Security program shortchanges them—and the only way they can make up the difference is to invest their money in private accounts.
“Bush is shameless. If he cares about us, there are a whole lot of things he can do—like putting programs in the community that will be more aggressive in training out-of-work African American men and helping them get family-sustaining jobs.”
For Joan King, Social Security Privatization Would Mean Less Health Care
After 35 years in the classroom, Joan King, a retired schoolteacher in Orlando, Fla., today relies on Social Security. She says retirees like her would find it hard to get by if President George W. Bush privatizes Social Security. Workers would see a 40 percent benefit cut—even if they didn’t choose to have a private account.
“I’d be sacrificing for sure,” says King, who was a member of the Orange County Classroom Teachers Association, Orlando’s joint affiliate of AFT and the National Education Association. “I postpone getting some medication now, so I’d have to take a hard look at medical costs. “It’s not a luxury, it’s something you have to do.”
King and her husband both get pensions, but they say Social Security is a crucial part of retirement security. “When you retire, Social Security is part of your three-legged stool,” says King, referring to employer-provided pensions and personal savings as the two other legs. “It’s a safety net.” In the private sector, employers are cutting back on pensions. In 1978, there were 128,401 guaranteed (defined benefit) pension plans in the private sector, according to the Employee Benefit Research Institute. Today, there are only 26,000. Meanwhile, governors and state legislatures are mimicking Bush’s privatization schemes and trying to phase out pensions for public-sector workers.
While King appreciates the safety net Social Security provides for retirees, she also knows firsthand that Social Security is a comprehensive family insurance program. In 1944, when she was 12 years old, King’s father died suddenly, leaving behind a wife and five small children. Survivor benefits from Social Security made up the bulk of the family’s income.
Fully 16 percent of people receiving Social Security are survivors of family breadwinners who have died. So far, President George W. Bush has not addressed how his plans to privatize Social Security would replace the benefits to surviving spouses and children of workers who die.
“Social Security is an insurance policy for your family,” says King. “There is no doubt in my mind that Social Security was a lifesaver.”
With Bush attacking Social Security, King is working to mobilize the state and local chapters of her retiree organizations to save the nation’s most important family insurance program. “We’re talking to our families and to our senators and representatives,” she says. “We’re telling people to call today,” says King. “Don’t wait.”
When President George W. Bush talks about privatizing Social Security, he doesn’t say what would happen to workers who become disabled and their families. A Government Accountability Office report shows most privatization plans would mean a benefit cut for workers with disabilities.
His pension under siege, Jim Willhight fears Bush’s plans for Social Security
Jim Willhight knows firsthand financial guarantees are rare—his former employer, United Airlines, is threatening his pension and retiree health coverage, and the company stock he bought is virtually worthless. “The only thing that’s been guaranteed is Social Security, and no one should go messing with that,” he says.
As an insurance program, Social Security provides a guaranteed income each year for more than 47 million retirees, family members of workers who died and people with disabilities. But President George W. Bush is seeking to privatize Social Security, which would force drastic cuts in retirement benefits for America’s workers—whether or not they choose to take part in the scheme.
A member of Machinists Local 1351, Seattle-area resident Willhight retired in April 2003 after working on the ramps 41 years for United Airlines. United, which had declared bankruptcy in December 2002, persuaded 500 Machinists to retiree that spring by saying it had no intention of reducing benefits for retirees.
But a year ago, the airline insisted it hadn’t promised anything and started charging retirees for their health coverage. Now, United subtracts $373 monthly from his pension benefit for health insurance covering Willhight and his wife, Betty.
And the airline has indicated repeatedly it wants to terminate the ramp workers’ pension plan altogether. That can only happen if a federal bankruptcy judge and the federal Pension Benefit Guaranty Corp. (PBGC) agree that United’s financial survival depends on stopping it. If they do, the PBGC would reduce Willhight’s monthly pension benefit even more. “I’m worried sick about it,” he says.
Willhight is so concerned about the possibility of losing his health coverage he has been looking for a job that offers it. “And it’s not easy for someone of 60 to go out and find a job,” he says.
Given all his troubling uncertainty, Willhight wants the Bush administration to leave Social Security alone. “A bird in hand is worth all these grand promises and grand plans,” he says. “We know how the stock market has hurt so many people, and now Bush wants to tie a good portion of our future on some grand plan. He lacks credibility.”
What Happens to Workers with Disabilities if Social Security Is Privatized
Sharon Utterback is among the more than 6 million people who receive Social Security disability benefits, fully 16.5 percent of all people who get Social Security.
Utterback was born with spina bifida, a condition in which the bones of the spine do not form properly around the spinal cord. Despite this obstacle, she worked for many years at various jobs, such as a medical laboratory assistant and an electronics technician, all while paying into the Social Security system.
A few years ago, while she worked for the American Red Cross in Portland, Ore., Utterback’s condition worsened. Lifting trays of donated blood caused her to experience severe back pain. Her employers transferred Utterback to a job in the donation area, but her back problems meant she couldn’t help donors if they fainted while giving blood. She realized she was too disabled to work. The Social Security Administration (SSA) agreed, and Utterback began receiving benefits from Social Security’s disability insurance fund in January 2005.
"I’d have difficulty paying the bills without Social Security," says Utterback.
While most people think of Social Security as a retirement program, it’s really a comprehensive family insurance program. A 20-year-old worker has a three-in-10 chance of becoming disabled and unable to work for some period before reaching retirement, according to the SSA. The average age of disability insurance beneficiaries has fallen from 57 in 1960 to 51 today. Without Social Security’s disability insurance, 55 percent of families with a worker with a disability would have incomes below the poverty line. But President Bush is seeking to privatize Social Security, which would force drastic cuts in retirement benefits for America's workers—whether or not they choose to take part in the scheme.
"I’m scared of privatization," says Utterback. "What’s going to happen to these people?"
Utterback’s husband, Constantino Santiago, a member of Laborers Local 296, works repairing ships. His union contract means he gets good wages and benefits. But, like many other construction jobs, the amount of work he gets varies from month to month. If Santiago doesn’t receive enough work to fill a minimum number of hours in a given month, he has to pay the family’s health insurance out of his own pocket. So Utterback’s income from Social Security is a crucial safety net.
Social Security helps pay for rent, food and doctor bills, says Santiago. Without it, "How would we live? " he wonders.
Garett Lanzy's Experience Shows the Dangers of Social Security Privatization
Garett Lanzy, a 42-year-old software engineer with IBM, knows from personal experience that Social Security privatization is risky. In fact, says Lanzy, President George W. Bush’s plans to privatize Social Security resemble the change his employer made to his pension plan, shifting it from a guaranteed (defined-benefit) program to one that makes his retirement security dependent upon the stock market.
Three years ago, IBM switched from a defined-benefit pension plan to a cash-balance plan. Under the defined-benefit plan, a specific monthly retirement benefit is guaranteed. But under a cash-balance plan, which begins with a lump sum deposited in a worker’s account, the monthly benefit depends on how well that lump sum does in the stock market.
Using historical market averages, Lanzy estimated that being moved from a traditional, defined-benefit pension to a cash-balance plan would cut his retirement benefits by more than 20 percent.
It also meant that IBM, which previously had taken the loss on any pension fund
investments for its employees, was passing the risk to Lanzy by investing his cash balance in the stock market. “If the market is doing poorly at the time I need to retire,” he says. “I could lose a lot of my retirement funds. I sure don’t want to have to take the same risks with my Social Security benefits.”
Privatizing Social Security by putting workers’ retirement dollars in personal accounts invested in the stock market is very similar to cash-balance pension schemes, and Lanzy, who lives in Woodbury, Minn., considers such dependence on the stock market a prescription for disaster.
“In about 20 years, when we’re going to have all these baby boomers well into retirement and trying to get their money out of the market, if there isn’t an equivalent number of people trying to put their money into the market, it will crash,” he says. “With Social Security privatization, we’re setting up that problem to be even larger because more people will be trying to pull out of the market just as it needs them to prop it up.”
A member of Alliance@IBM, Communications Workers of America Local 1701, Lanzy frequently talks with his younger co-workers about Social Security. “I’ve got one guy on my team who’s in his late 20s and has been a staunch Republican all his life and now he’s joined the alliance and is starting to look at things a little differently,” Lanzy says. “But he’s still buying the line that Social Security is going to be bankrupt and he won’t get anything out of it. I explain to him there are easy ways to fix it.”
“We’ve gotten to the point where there is essentially no safety net for a lot of people,” Lanzy continues. “I don’t think it’s viable to have a society where some people have a huge amount and others have nothing. The social implications of not having safety nets in this country are too frightening for me to consider.”
Ashley Proctor: Young Workers Shouldn't Believe the Lies About Privatization
“I don’t like the idea of taking money that is supposed to be guaranteed to us and gambling it in the stock market,” she says. “The people on Wall Street have a lot to gain from it. If I worked on Wall Street, I’d be for privatization, too. It’s obvious who’s for it and why.”
Proctor, who is earning her master’s degree in social work at Washington University in St. Louis, says her experience as a social work student demonstrates how Social Security can be a virtual lifeline for people. She recalls one impoverished family in which the father was retired but supported three children—and his Social Security retirement benefit covered their basic needs.
“Social Security can be the difference between life and death,” she says. “Why would you want to gamble with it?”
And Proctor isn’t falling for privatization advocates’ scare tactics. With some minor changes, she believes Social Security can still provide retirement security when her generation retires. “The privatizers are saying it can’t be fixed, but that’s not true. Raising the $90,000 salary cap on payroll deductions or not making Bush’s millionaire tax cuts permanent are both good options.”
Proctor finds many people her age either don’t understand the extent of the Bush administration’s Social Security privatization proposal or simply don’t care because retirement seems so far off. Others are scared after repeatedly hearing Social Security won’t be there for them.
“To people my own age, I say, ‘Don’t believe the lies about privatization and Social Security being bankrupt. It’s you and me who would be most affected by privatization because when we retire or become sick or disabled, Social Security might not be there for us, and that’s why we have to care about this issue.’”
