Katherine Newman, the interim chancellor of the University of Massachusetts Boston, has devoted much of her career to documenting conditions facing poor and working-class Americans. Her new book, Downhill From Here, Retirement Insecurity in the Age of Inequality, examines the perilous state of retirement in the United States. Gerontology Institute Director Len Fishman recently talked with Newman about the dangers facing the pension system, Social Security and other forms of economic support for Americans as they grow older. The following is an edited version of their conversation.
Len Fishman: Your book reads in part like a post-mortem of the defined benefit pension system. Defined benefits provide a fixed pre-established benefit for employees at retirement, usually based on length of service and salary. They hit their high-water mark in 1980 and then plummeted. What happened?
Katherine Newman: Union density began to decline sharply at the same point. The defined benefit pension system is very much a creature of the collective bargaining power of unions. That’s why defined benefit systems tended to exist mainly where there were unionized workers. And as union density slipped — in part because of deregulation and industry competition – the strength behind the defined benefits began to shrink. Today, a very small minority of Americans have what we would call true pensions – 401(k) plans are definitely not pensions in terms of security and employer responsibility for investment. Continue reading