What this twitterer said is something I'm suddenly hearing a lot, so I'm assuming it's the next new reason why everyone should hate unions. Frank Luntz really ought to consider doing some deeper research before going in this direction. This particular tweet was sent in response to the following question asked by another twitterer and passed along by me:
When did it become OK to hate teachers& firefighters &cops? When did this happen? Did CEO's rush into WTC as it collapsed?
Think about that answer. The answer is that hating is bad, but 80% of private workers don't have pensions, and resent union members who do.
Rhetorical question: Wouldn't it be better to join a union and strengthen it so more workers have pensions, rather than the other way around? Part of the reason union pension funds are struggling in the private sector is the drop in covered employees, which can be attributed directly to the demonization of unions and efforts to break them. But only a part is attributable to that.
The much larger reason for union pensions' underfunding -- public AND private -- relates to Wall Street. Look at reductions in 401k balances from 2007 to 2008. The very same reductions happened to pension trust funds which are required by law to invest in cash, stocks, bonds and certain real estate investments. Only in their case, they were hit twice. Once by the market crash and then by layoffs which took even more employees out of the contribution mix and increased the demand for early retirement benefits.
Because of laws passed in the Reagan/Bush I era, and then amplified by the Bush II era, accounting for liabilities on pension balance sheets falls to the very worst-case scenario. Add to that the lag between stock recoveries and how assets and liabilities of pensions are reported, and you have a ripe scenario for crisis creation where none really exists.
But I digress. Back to the question of jealousy over public pensions. Private-sector workers should understand that it wasn't always this way.
In 1980, two out of three American workers were in defined benefit pension plans with guaranteed lifetime benefits. Now it’s one in five and falling. I know, personally. When plants closed in Chicago, I used to file suits to get pieces of pensions for the older workers. But now in the current collapse, there are no bits and pieces to get.
There are two reasons for the statistic in bold. First, 401k plans were substituted for defined benefit plans as a way to shift risk from employers to workers. It worked really well, too. (Again, compare your 2007 401k to your 2008). Of course, the problem with 401k plans for employees also presents their attraction to employers. All risk shifts to the employee, along with responsibility for investment decisions. Employees are not all financial wizards. If they were, we wouldn't have all those investment managers on Wall Street making a bloody fortune. Still, 401k plans were a sweet deal for employers because they moved retirement benefits off the books (no liabilities), they were cheaper than defined benefit plans, employers could stop making any contribution to them at any time, and they were portable for employees who didn't stay with the company.
To be fair, it wasn't all employers' fault 401k plans took hold. Employees like seeing balances on their statements rather than a monthly benefit. In a day and age of instant gratification, it's a lot nicer to see that ending balance than a promised benefit in another 30 years or so, despite the fact that the benefit is worth a whole lot more than the balance is. As long as employers were willing to pony up some kind of a matching contribution, it was like investing with a guaranteed return on their contributions. Sort of.
Except for this: For the past 25 years, over half of private-sector workers have not been covered by any kind of pension plan, 401k or otherwise. (Center for Retirement Research, March 2009 - PDF)
Over the past 25 years, the pension landscape has remained remarkably unchanged in one respect. Less than half of private sector workers – at any moment in time – are participating in any form of employer- sponsored plan (see Figure 1). Since median job tenure for those 25 years and older is only 5 years, many workers will move in and out of coverage.4 As a result, more than half of the workforce will end up with some pension accumulations at retirement, but many will find it difficult to ensure continuous cover-age.
Compound that with the fact that many large employers suspended their matching contribution and have not yet resumed, and you can see why private-sector workers might be envious of those who work for unions and do receive the right to a guaranteed pension over time.
What's that you say? Those workers can have IRAs to save for retirement? Sure they can, and they can make a whopping $2,000/year contribution ($4,000 for married couples). But they don't. From the Employee Benefits Research Institute:
IRA owners were more likely to be male, especially those having a rollover or a SEP/SIMPLE IRA. Among all IRA participants in the database, nearly one-half (48.3 percent) were ages 45–64. Only 16.7 percent of those owning a traditional IRA were under age 45, compared with 46.5 percent for those with a Roth, 30.4 percent for rollovers, and 34.8 percent for those with a SEP or SIMPLE.
All of this is to affirm the original respondent's statement: Most private sector workers do not enjoy the right to a pension benefit in addition to Social Security. This is a problem that should unite people, not cause them to divide. A fact: Union members have better, more secure health and pension benefits than non-union members, whether in the private or public sector.
Wisconsin, Ohio, Indiana, and other states' decisions to attack public sector workers with regard to pensions is part of the larger effort to make the last bar on the chart below even higher. This was through 2004.
Here is the question each and every one of us who is not a zillionaire should be asking: How can we solve the problem of diminishing pension coverage for workers?