The $6.6 Trillion Retirement Problem: Unions Push Boost to Social Security Benefits
David Moberg
ORLANDO — Contrary to its enemies posing as friends, Social Security is not in crisis. But there is a real retirement crisis, the AFL-CIO executive council warned here on Wednesday, and increased — not reduced — Social Security benefits offer the best solution to that serious challenge.
Republicans may raise a cry for benefit cuts or privatization to “save” the program by destroying it. And some Democratic politicians may grant their false crisis claim but argue for smaller cuts. But ultimately Social Security faces only a potential shortfall after 2036 in its ability to pay full benefits — a distant problem Congress can easily fix by eliminating the cap on wages subject to FICA taxes.
But even without shrinking or privatizing Social Security, the retirement security of most working Americans is in danger. Wages have stagnated for most workers, reducing the opportunity to save. Traditional defined-benefit pensions are dwindling and under attack in the public and private sectors.
The executive council, spurred by the united New York AFSCME, strongly criticized Democratic Gov. Andrew Cuomo for deep cuts in benefits and for effectively dismantling the state employee defined-benefit plan. In addition, half of workers have no employer plan, not even risky 401(k) plans. Housing wealth shrank after the illusory bubble burst, and many workers’ investments have fallen victim to growing financial volatility. Even existing Social Security benefits replace much less of pre-retirement income than pubic pensions in other advanced industrial nations.
Add it all up, according to a study last year by the Boston College Center for Retirement Research, and American workers’ retirement resources are $6.6 trillion short of what they need for secure retirement.
A good retirement plan that provides for those unmet needs could be easily moved from one employer to the next, would involve government, employers and employees with shared responsibilities, and would have pooled assets that were managed efficiently by professional managers under careful oversight, the AFL-CIO argues.
Then the federation concluded, “But we already have such a program. It is called Social Security.”
Any increased benefits should be skewed to help the poorest but be shared widely, said AFL-CIO deputy policy director Kelly Ross, and the cost-of-living-adjustment should reflect the rapidly rising healthcare costs for retirees, not the “chained CPI” favored by the right that would steadily erode benefits.
Separately, Sens. Tom Harkin (D-Iowa) and Bernie Sanders (I-Vt.), have introduced proposals that move Social Security towards labor’s goal. Although the AFL-CIO favors raising the Social Security cap, Ross said, its proposal leaves open some funding questions and the issue of how much of pre-retirement income would be replaced.
While it certainly will go nowhere this year, the AFL-CIO’s plan opens the confined, misleading space of discussion. As the resolution states, “We must change the terms of the debate….” And then win it.
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David Moberg, a former senior editor of In These Times, was on staff with the magazine from when it began publishing in 1976 until his passing in July 2022. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.
