Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘401(k)’

This week in the war on workers: Republicans take aim at retirement savings program

Monday, February 27th, 2017

The United States is heading for a major retirement crisis, with the shift from pensions to 401(k)s leaving at least half of households in danger of running short of money in retirement. There are a lot of possible solutions to that, and one of them doesn’t even involve employers paying their workers more:

What if people who wait tables, wash cars, take care of children, or perform other low-wage jobs for small businesses—which often don’t offer 401(k) savings plans—could have money taken out of every paycheck and deposited into a low-cost retirement savings account operated through the state government? Five states have enacted plans that are making this possible, and 28 states are at various stages of considering such plans. If all of these states did enact these laws, 63 million people could have access to retirement savings options.

This was the goal of the Obama administration, which put in place regulations to help states that wanted to provide retirement savings options. Though some states had set out on this path before, this new policy that made it easier and safer for states to offer these plans, paved the way for this positive development in the states. This was great news for millions of workers! Make it easy for people whose employers don’t offer retirement savings option to do the responsible thing: put away money every month toward their retirement in a way that limits the amount of their savings that is lost to fees and commissions. It helps people prepare for their old age. It chips away at a looming retirement crisis. What’s not to like?

You know where this is going, right? Of course you do. Republicans don’t like it because of this part: “in a way that limits the amount of their savings that is lost to fees and commissions.” Those fees and commissions don’t vanish into thin air, they go into the bank accounts of rich people. Plus, letting workers save their own money toward retirement creates a little extra work for employers, and there are a lot of crappy bosses out there who’d rather not bother, even if it means their workers will suffer in retirement. So the regulation helping states offer this retirement option is one more regulation being slashed by congressional Republicans.

This article originally appeared at DailyKOS.com on February 25, 2017. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.

No Justice, No Peeps! Workers Walk Off the Job At Pennsylvania Peeps Factory

Wednesday, September 28th, 2016

Mario VasquezWorkers employed by candy manufacturer, Just Born Quality Confections, in Bethlehem, Pennsylvania, are on strike over the company’s pension plan proposal. The strike, workers allege, hits the company—which makes Peeps, as well as Mike and Ike and Hot Tamales candies—just as next year’s Easter orders are meant to be made.

“This is my livelihood,” says Alex Fattore, a mechanic who has been at Just Born since 1980. “We make Easter happen. I want to go back in there and make Easter happen.”

Roughly 400 workers walked off the job September 7, drawing a hard line against the company’s attempt to switch new hires to a 401(k), instead of the multiemployer pension plan that workers are presently a part of. They are represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) Union Local 6.

The company claims that it’s concerned about the pension plan’s long-term viability. The plan reported assets of $5 billion and liabilities of $8 billion, and projected insolvency within 14 years, according to the company. The union, however, counters that the company is not allowed to put pension details on the negotiating table, per pension fund rules. The company is pushing its plan as a part of collective bargaining negotiations for an agreement that expired in June.

“The company is growing,” says chief shop steward Keith Turner, a machinist with 21 years of Just Born experience, alluding to its claims of double-digit growth. “It’s kind of ironic that they would turn around now and tell us that they can’t afford anything.”

Workers additionally claim that if the move to a 401(k) plan for new hires were to go into effect, it would only further weaken the multiemployer pension fund, forcing the fund’s trustees to reduce retiree benefits.

Just Born did not respond to a request to comment, but it released a statement that read, in part: “Our proposal—to have existing associates remain in the current pension plan and to have future hires participate in a 401(k) plan—provides a respectful path that honors our current associates’ existing benefits, and provides a sustainable retirement benefit for our future hires.”

“It’s the equivalent of—let’s say you signed a 30-year mortgage, and after 20 years you decide, you know I don’t want to pay this part of it anymore so I’m just not going to—and you just can’t do that,” Turner tells In These Times.

The Pennsylvania AFL-CIO has called for a boycott of Just Born products.

While this is the first strike at a Just Born facility in decades, this is not the first time the company has attempted to impose a change in pension plans, according to union officials. Last year, the company implemented a final contract including the same 401(k) plan proposed at the Bethlehem plant, after declaring an impasse in its contract negotiations with the roughly 35 workers at its Goldenberg’s Peanut Chews factory in Philadelphia. BCTGM challenged the change with the National Labor Relations Board but was denied, leading the union to take the matter to federal court in a case that is still pending, a year and a half later.

“We’ll say, a few years from now, if we didn’t stand up and stand our ground—that we had the opportunity to stand our ground with this company and say we aren’t going to take this,” Fattore tells In These Times. “We’re going to stand our ground and we’re going to fight (for) what’s right.”

Since workers voted to strike, they have tried to keep up morale. An unfair labor practice charge was filed by Local 6 after allegedly discovering that an individual affiliated with Just Born contacted striking workers, posing as a union official, telling them to return to work. The complaint, filed with the National Labor Relations Board, is pending.

Another, more public, company action that is causing substantial worry among striking Just Born workers is the hiring of replacement workers at the facility, with about 175 reportedly attending a job fair and another 600 applying for jobs online. As of press time, both sides have agreed to come back to the bargaining table alongside a federal mediator this week.

“We pretty well know from people inside, and from what we can see on the outside, that they haven’t made a Peep yet,” says Turner. “The longer that this goes on, the more squeezed that they are for their Peep production. We’re hoping that a little bit of hunger from us, and a little bit of hunger from them, makes something happen.”

This blog originally appeared at inthesetimes.com on September 27, 2016. Reprinted with permission.

Mario Vasquez is a writer from southern California. He is a regular contributor to Working In These Times. Follow him on Twitter @mario_vsqz or email him atmario.vasquez.espinoza@gmail.com.

401(k) Retirement Plans Amplify Income Inequality and Racial Disparities

Thursday, March 3rd, 2016

Isaiah J. Poole

It’s bad enough that the move toward individual retirement plans has been a massive failure when it comes to providing average working Americans retirement security. But now there’s research that shows that our dependence on individual retirement plans adds fuel to the fire of racial and class inequities in ways that the pension plans that used to be common did not.

The Economic Policy Institute presented that research Thursday in its “State of American Retirement” report. The report underscores the need to keep up the fight for strengthening Social Security and increasing its benefits, rather than cutting them.

“We’re moving toward a retirement system that magnifies inequality,” said Monique Morrissey, the EPI economist who wrote the report. That happened, she said, as the percentage of workers who received a pension (a “defined benefit plan”) declined from 35 percent of private-sector workers in the early 1990s to less than 20 percent today. (In the early 1980s, the percentage of private-sector workers in large companies that had a pension exceeded 80 percent.)

Pension plans were surprisingly egalitarian, Morrissey said, in the sense that once you got a job with a pension, what you received in retirement was affected only by your wages and years with the company. With “defined contribution plans” – like 401(k)s and individual retirement accounts (IRAs) – differences widen by race and class.

According to the report, among the people in the top 20 percent of income, nine out of 10 have retirement account savings; among those in the bottom 20 percent, it’s worse than totally flipped; fewer than one in 10 have any retirement account at all. The workers at the top fifth of the income scale accounted for 63 percent of total income, but have 74 percent of the total stashed in personal retirement accounts.

Only 41 percent of black families and 26 percent of Hispanic families had retirement account savings in 2013; 61 percent of white households do. The average retirement account among African-American and Hispanic workers contains about $22,000; for whites, the average account contains $73,000. On top of that, research shows that African Americans are disproportionately in jobs where retirement plans are simply not offered. “401(k)s have really been a disaster for African Americans,” Morrissey said.

In fact, for all ordinary workers, “401(k)s were never designed to be a primary retirement plan,” Morrissey said. Yet they filled that role at the same time President Ronald Reagan and Congress cut a deal to improve the solvency of Social Security that pushed back the retirement age over time from 65 to 67 – and at the same time worker wages stopped keeping pace with productivity and with income gains for corporate executives.

The result is that today fewer Americans than ever will have a financially secure retirement. The Government Accountability Office in 2014 found that half of all households age 55 and older have no retirement savings at all; close to 30 percent also do not have a pension to rely on, either. Of those who do have a 401(k) or IRA-type plan who were between the ages of 55 and 64, their retirement savings would yield a monthly check upon retirement of about $310 a month.

Morrissey said these realities reinforce the case for expanding Social Security benefits. “That’s the number one thing we need to be doing,” she said. (To support the call for strengthening Social Security benefits, add your name to this petition.)

She added that while waiting for action at the federal level, states can play a role. For example, the California Secure Choice Retirement Plan would opt workers into making regular contributions to a state-managed plan if they did not have a retirement plan available in their job. The state plan would invest in a balanced portfolio of assets that would not be driven by the kinds of management fee incentives that often drive retirement plan investments.

This blog originally appeared at OurFuture.org on March 3, 2016. Reprinted with permission.

Isaiah J. Poole worked at Campaign for America’s Future. He attended Pennsylvania State University and lives in Washington, DC.

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