Today’s headlines proclaim that the Medicare prescription drug benefit may cost the federal government $720 billion or more over the next decade, considerably higher than the $400 billion initially advertised in 2003. Republicans are squirming over the president’s proposed $2.57-trillion budget plan. And the administration’s intentions to overhaul Social Security have proven resoundingly unpopular.
Big numbers. Big headlines. Big potential impacts in coming days and months and years.
Far more difficult to report, however, are the painful transitions going on right now among real people, who have been profoundly affected by subtle, incremental policy decisions by private industry, encouraged by government. Yet these stories are the context in which the ongoing debate concerning the role of government and the concept of an “ownership society” takes place.
Today, New York Times reporters Eduardo Porter and Mary Williams Walsh write about a growing segment of the American workforce: Older people who cannot afford to retire.
As numerous companies across the country withdraw retiree medical and dental benefits while others switch to less generous retirement plans, many aging workers who had expected to ease comfortably out of the labor force in their 50’s and early 60’s are discovering that they do not have the financial resources to support themselves in retirement. As a result, a lot more of them are returning to work.
Since the mid-1990s, older people have become the fastest-growing portion of the work force. The Labor Department projects that workers over 55 will make up 19.1 percent of the labor force by 2012, up from 14.3 percent in 2002.
Meantime, traditional defined-benefit pension plans are being dismantled or eliminated, leaving many retirees with dramatically reduced checks, write Porter and Walsh.
Even more critical has been the collapse of company-paid health insurance for retirees, prodding growing numbers of workers to hang on to some job, almost any job, to keep their health coverage until Medicare kicks in at 65.
In 1988, two-thirds of all large employers offered health benefits to retirees; last year only about one-third did. And employers who offer coverage are forcing workers to shoulder more of the cost.
One particularly vivid trainwreck, with bodies strewn all over the economic landscape: Lucent Technologies, which has only 20,000 active workers left in the U.S. — 20,000 workers who must generate the business needed to help support nearly 120,000 retirees, whose health care last year cost $775,000, an amount equal to 70 percent of Lucent’s net profit. Porter and Walsh track down one Joe Janson, who retired from an $83,000 job at Lucent to a $35,000 pension — and is now out looking for work, in order to pay for the health insurance Lucent cut last year. (Janson has suffered a double whammy because, over the years, he invested most of his retirement savings in Lucent stock. Shares he bought at $80 now trade at less than $4.)
That’s an extreme horror story, but lesser ones are playing out all over the country, and the effect of all this, write Porter and Walsh, is that the typical household headed by a 47- to 64-year-old is poorer today, in constant dollars, than a similar household was in 1983.
This is an economic story that had to be assembled by hand. No big news conference. No pre-packaged research report. Just two reporters analyzing numbers, tracking trends, consulting experts — and talking to those who are caught up in an economy they never envisioned.
That’s just plain good journalism.
–Susan Q. Stranahan
Susan Q. Stranahan wrote for CJR.