Pensions Aren't the Problem

Mr. Glaeser, it's poor planning. If companies, in their prime, set aside enough money for pensions - it wouldn't have been a problem. They didn't foresee the rise of foreign competitors and therefore expected everything to remain the same. Unions aren't to blame, GM/Ford/Chrysler and hundreds of other companies are at fault. Many towns and cities lacked sufficient planning as well, not setting aside the necessary funding at the time and instead allowing surprise situations later on.

The fact remains that 401(k)s are dangerous and there's no guarantee companies will increase wages enough to compensate for the lack of pensions. In fact, everything that's happened over the past 20-30 years has proven they won't: wages in the private sector are near stagnant, not even really keeping up with inflation. Pensions are secure and have helped hundreds of millions live comfortably in their retirement. 401(k)s are a mixed bag in terms of savings; not that many people have enough money to adequately fund their retirement. If private companies aren't paying their employees enough to adequately fund their retirement, why will localities do so?

Most importantly, funding one's own retirement through decades of personal saving and investing assumes people have the expertise and frugality to both save and know how to save, when most people don't. Not everyone can be experts at stocks, the market or the safest sorts of investments. Pensions were something that any blue collar person could understand, all the while anyone with a good pension could live decently after retiring. It's funny that, after decades of proving how good they are for people, there are attacks from all over aimed at pensions. It's one of the last frontiers for conservatives and their efforts at destroying middle class America.

Update: I just have to explain my frustration. I'm sick and tired of intelligent people spending so much time examining an issue that they can't even see what's under their nose. Obviously, they think, since there have been so many perceived troubles with pensions lately there's actually a problem with pensions. If they just took a step outside of their box, maybe they'd be able to tell that pensions are only a symptom of the larger problem.

And don't misconstrue those words: there is a larger problem. Corporations haven't proven themselves nearly as efficient as people like to pretend they are, otherwise there would be no pension problems. The whole stock mentality has created a thirst for instant profits, which means companies like General Motors isn't exactly going to be very willing to save more money when they make these deals with unions - thinking the money will be there in the future when that wasn't certain. Companies can't plan for the long term when they're worried about stock holders today - and all those people care about are their instant or near-term profits. Why pay workers higher wages now, when corporations could create pensions and defer payment until retirement - thus increasing their supposed profitability now? Companies could have planned their employee pensions then, instead of getting themselves into trouble now, but they didn't. Workers shouldn't be held accountability for shoddy planning by their employers and lose their rights to have a solid pension. Mr. Glaeser could have written about these topics and actually contributed to the dialogue, but instead he chose to attack one of the few remaining assets many in the middle and working class enjoy.