The Sad Reality of Retirement in America


Kate Harveston

Kate Harveston is originally from Williamsport, PA and holds a bachelor's degree in English. She enjoys writing about health and social justice issues. When she isn't writing, she can usually be found curled up reading dystopian fiction or hiking and searching for inspiration. If you like her writing, follow her blog, So Well, So Woman.

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103 Responses

  1. Avatar Oscar Gordon says:

    I’m fine with either removing the payroll caps, or increasing them well beyond the current limits (sitting at about $112,000).

    Of course, I’m also fine with means testing retirement income, and not paying people who don’t need it.Report

    • Avatar Murali in reply to Oscar Gordon says:

      A payroll tax is a tax on employment. Removing said cap decreases employment at that margin. This means that either those jobs get eliminated, moved or automated or the nominal wages decrease: compensation shifts to forms which do not incur a payroll tax (where possible) or decreases.

      Money is fungible and social security as such is no more in trouble than any other similarly sized expenditure item on the budget. That said, if the rate at which it loses money relative to which it brings in money continues to increase, that can squeeze the budget.Report

    • Avatar Brandon Berg in reply to Oscar Gordon says:

      First, there is no cap on “payroll taxes.” The Medicare tax is not only uncapped, but progressive. Only the Social Security tax is capped, and the cap was $128,700 this year and will be $132,900 next year.

      Second, uncapping taxes would be a massive tax hike, adding about 12 percentage points to the marginal tax rate on incomes over the cap. In some of the higher-tax jurisdictions like New York and California, this would push top combined state and federal marginal tax rates up to well over 60%.Report

      • Avatar Oscar Gordon in reply to Brandon Berg says:

        If we insist on SS, taxes gotta go up, or federal spending down. Personally, I’m all for reducing federal spending, and in this case, I’d be fine with means testing SS payouts. My wife and I save pretty aggressively for retirement, and we keep on top of our investments so we don’t find our accounts drained out one day because a fund tanked. SS payments, while they would be a nice supplement to our plans, are not an actually part of those plans. If we were means tested out of SS, I’d be fine with it. And since we paid in, if something happened and our funds were depleted before our deaths, we could fall back on it.

        But we are part of the skeptical generations that are not counting on SS being there for us.Report

    • @oscar-gordon It is bonkers that the cap exists at all. Getting rid of it would go a long way toward achieving a great good, and the only people who would “suffer” have plenty of money. Its existence is the kind of welfare that the wealthy are often allowed to take completely for granted.Report

      • Avatar Jaybird in reply to Sam Wilkinson says:

        It is bonkers that the cap exists at all.

        The cap was the thing that got the thing passed by the congress in the first place. Without the cap, the bill wouldn’t have passed.Report

        • Avatar j r in reply to Jaybird says:

          This is important. The thing that made social security political untouchable for so many years was the fiction that it wasn’t a welfare program, that it was “insurance” that recipients had paid into and therefore had something akin to an ownership stake.

          By all means, get rid of the cap. At least then we are back in the real world where social security is clearly operating as a social transfer program. That’s the first step to putting on some fiscally sustainable path.Report

          • Avatar Jaybird in reply to j r says:

            By all means, get rid of the cap. At least then we are back in the real world where social security is clearly operating as a social transfer program. That’s the first step to putting on some fiscally sustainable path.

            I agree with this.

            But even if I didn’t, I could argue against it using the arguments that were given against it originally that were arguments strong enough to carry the day back when the law was passed in the first place.Report

            • Avatar Michael Cain in reply to Jaybird says:

              You don’t even have to take it away entirely. One of the key assumptions in the models in the 1983-4 time period when the current taxing arrangement was put in place was that productivity gains would be shared equally across the full range of incomes. That wasn’t an entirely unreasonable assumption: it had held for the previous 30 years, since the early 1950s. It didn’t become obvious for many years that about that same time in the 1980s there was a pronounced change in the pattern and productivity gains were captured increasingly by people earning more than the cap.

              In 1984, the cap was such that almost exactly 90% of earned income was subject to SS taxes. That has declined steadily ever since due to the productivity thing. If the cap had been tied to keeping the 90% figure constant — rather than being tied to increases in the median income — there wouldn’t be a problem. Or at least not the same problem. The trust fund level would be high enough that a slight decrease in the tax rate would probably be in order.Report

  2. Avatar j r says:

    I’m not a big fan of the social security program. If we were designing a public pension scheme from scratch, almost no one would recreate SSDI as it now exists. But how we feel about social security doesn’t matter much, because social security doesn’t really exist. The government takes in some money through FICA taxes and the government pays out some other money in the form of social security benefits. Right now the outflow is higher than the inflow, which is why the Social Security Trust Fund is draining.

    Except the trust fund is an accounting fiction. That money was long ago diverted into the general government revenue. The government can raise taxes to take in more money and it can lower benefits to pay out less money and it will do both those things in the future, because that’s what the math dictates. We call that process Social Security by tradition, but it’s just Congress and the president moving line items in the budget up or down to make the whole thing balance. How future governments make that equation balance will be decided by the same political process that has always decided these things. Plan accordingly.Report

    • Avatar Brandon Berg in reply to j r says:

      Except the trust fund is an accounting fiction. That money was long ago diverted into the general government revenue.

      On that topic, there are a lot of myths about how this is a fairly recent development, with partisans on either side asserting that the other side has raided the Social Security Trust Fund. In fact, the original Social Security Act of 1935 specifies in Title II that any surplus Social Security tax revenues may only be invested in US treasury securities:

      It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States.

      The so-called “Trust Fund” has always been, and has always been legally required to be, nothing more than the government’s right hand borrowing money from its left.Report

      • Avatar Morat20 in reply to Brandon Berg says:

        This has been gone over before, but let’s play the game again.

        Where else does the US government store trillions over two generations except in it’s own debt? It can’t remove the money from circulation, nor invest it in the market. Both would have massive effects on the economy. Is there another country whose sovereign debt is both incredible stable and can absorb so much money?


        So now that we’ve agreed that T-bills are the only place it can store the surplus, we can move on to the other half of the game: How does the general fund handle a steady, very large, influx of cash every year for two generations?

        Place this historically — early 80s, when there were very serious worries about re-trigging inflation, when Congress (and the Fed, and everyone else) were really worried about shoving all that excess cash into the economy — or taking it out in the first place.

        It all falls into place when you also ask “And how do we come up with the general funds to pay back the surplus, as it’s redeemed by SS? We’ll have two generations of cash flowing out as well

        So then came the grand bargain. Having no place other than T-bills to place the money, and worried both about how to pay it back AND the impact of doing so on the economy, the following deal was struck: FICA taxes would rise to generate the surplus. Taxes on higher income (and I believe corporate taxes and capital gains) would be lowered to roughly match the new income flowing into the general fund via SS’s T-bill purchases.

        And in 30 or 40 years, the cycle would be reversed.Viola. Trillions saved without impacting the economy through government spending.

        The logic being that, of course, those millionaires and companies would see, as they always claimed they would, massive returns on that money — far more than on mere T-bills — and their accumulated wealth and spur to GDP growth (trickle down was just a bad joke then, not a dead one) from their extra money would mean they’d still be up even when the taxes reverted.

        So to sum up: The bill is coming due. And strangely, someone wants out of the bargain now that they have to pay.

        Which is why they’ve been pushing Zombie lies — like “worthless IOUs” and the one you repeated — that Congress was supposed to save it and thus spent it, so the blame lies on Congress. No, Congress did exactly as it was supposed to, as did the American public.

        The problem corporations and the very, very rich — having seen endless tax cuts since 1983, not just the one in question here, really don’t want to uphold their end. And so they’ve put a lot of money into getting people to forget who really owes what.Report

        • Avatar j r in reply to Morat20 says:

          That’s a great story, except the funds aren’t in T-billsReport

          • Avatar Morat20 in reply to j r says:

            That’s a great story, except the funds aren’t in T-bills

            Treasury securities, which is the same thing except T-bills are long-term. I’m glad you corrected that very critical bit, which certainly was important.

            Oh wait, no, it’s still US debt. So it really doesn’t matter, but at least now I used the correct term for the long term US debt SSA holds, instead of foolishly using the term for short-term debt.Report

            • Avatar j r in reply to Morat20 says:

              The maturity wasn’t your mistake. Treasury bills and bonds are marketable securities that can be sold on the secondary market. What the Social Security Trust Fund holds are non-marketable securities. I wouldn’t call them worthless IOUs, but they are most certainly IOUs.

              Of course, all government debt, all debt, is a form of IOU. But if the U.S. government decides to stop paying principal or interest on its outstanding bonds, they face a default event, which has consequences. Congress can, at any time, decide to change the value of what the Trust Fund holds and the only consequences would be political.

              And that just brings me back to the original point. The Social Security program is just line items in the federal budget. The value of your future benefits are wholly determined by what Congress and the President decide they ought to be at the time that they are paid.

              Tell yourself all the stories you want about Congress doing what it was supposed to do and rich greedy bad guys. None of that changes the basic facts of what social security is and how the math works.Report

              • Avatar Morat20 in reply to j r says:

                Oh, you’re making that argument. Sorry, I credited you with a point and not the “But money is just paper” approach.Report

              • Avatar j r in reply to Morat20 says:

                As per usual, that is not at all what I said. You are welcome to believe that the non-marketable securities the trust fund holds are the same thing as marketable Treasury bills and bonds, but there is a whole set of laws, market structures, and sovereign debt conventions that say otherwise.

                And all of this is academic anyway. After all the arguments are completed, the government will pay out the amount of benefits that it decides to pay out. They will not be in any way constrained or compelled by the current value of the social security trust fund. If you disagree with that, then please tell me what I’ve gotten wrong and show your work. Everything that I’ve said in this thread can be verified, most of it through the Social Security Administraion’s own web site.Report

              • Avatar Damon in reply to j r says:

                Social Security….the only LEGAL ponzi scheme ever created.Report

              • Avatar Murali in reply to Damon says:

                It is only a ponzi scheme if the money paid in is treated as a supposed investment. But its not, it is a tax and tax monies are, rather explicitly, used to pay current retirees. The so-called social security trust fund is a fairly transparent accounting fiction. It is no more a ponzi scheme than any other tax and transfer program. It would be rather silly to object to any given public retirement policy on the basis that the amount paid to retirees is funded by current earners.Report

              • Avatar Damon in reply to Murali says:

                The use of “lock box” belies that. I’m sure when that phrase was being used more, a lot more people actually believed that it actually worked that way. That deception was being used to generate support for keeping the status quo. Most folks don’t know enough about accounting or gov’t account to even understand how their money is being used/invested….Report

              • Avatar j r in reply to Damon says:

                Social security as it actually exists is not a Ponzi scheme in any meaningful sense of the term. It’s a pay-as-you-go social transfer. We just need to be honest about what that means.

                This is another issue where the rhetoric on either side makes it much more difficult to clearly assess the issue and find a way forward.Report

              • Avatar Damon in reply to j r says:

                Selected comments from wikipedia: ” form of fraud which lures investors and pays profits to earlier investors by using funds obtained from more recent investors”

                That’s pretty close to how the funds move around between current and former workers. The “trust fund” has been portrayed as an “investment” and that your money is safe.

                “A Ponzi scheme is able to maintain the illusion of a sustainable business as long as there continue to be new investors willing to contribute new funds” …just like the current SS set up…although it’s not investor suspicion that brings it down, it’s demographics.

                While it’s not an exact definition fit, it’s close enough for me. Couple that with the ability of Congress to change “the rules” any time they so wish, ie “default” on the promises made before, and it’s shadyReport

  3. Avatar Murali says:

    Retirement is an issue everywhere in the developed world and the general problem of funding retirement does not disappear just by expanding the program. However, retirement is funded, demographics is the main problem. That is to say, with birthrates which have been falling for some time and increases in longevity, you have a relatively smaller workforce supporting a relatively larger set of retirees. Publicly funded retirement programs being insufficient to fund retirement is not unexpected. This is largely because they were designed under a different environment with lower inflation and a larger workforce-retiree ratio. Moreover while increasing benefits is politically popular, increasing taxation to fund those benefits is not. So all public retirement schemes will eventually face some kind of funding squeeze.

    One solution for this is for countries to open up their borders to people from places where there are lots of young people looking for jobs. This will help for a while, but is not sustainable over the long term. Eventually, all countries will industrialise, have lower birthrates and longer lives and by then these migrants would have settled in and become part of the next generation of retirees.

    Any long term solution for retirement funding therefore has to increase the amount people pay in either privately or through taxes and/or decrease the amount withdrawn when people retire. Reducing the number of retirement years is one way to do that. Granted that the goodness of this solution is going to vary from industry to industry (football players obviously should retire a lot earlier than doctors), working into your 70s is not a crazy idea for lots of people.

    As a moral matter, children ought to support their parents in their old age. And certainly as a matter of public policy, the public should provide for those who either through imprudence, misfortune or offspring ingratitude have neither the children nor the personal resources to fund their retirement. But that is a general duty to provide a welfare safety-net.

    A kind of soft paternalism that I could get behind is to, by default, increase everyone’s contribution to their 401Ks to such a level as to be able to fund their retirement at some acceptable standard of living but allow people to opt out of this.Report

    • Avatar j r in reply to Murali says:


      You’re right about the demographics. You’re right about increasing immigration to overcome the demographic problems. And you’re right about the problem of balancing the needs of a retirement scheme with the needs of a safety net.

      The solutions are relatively simple from a math/design perspective, but politically unpalatable because people develop emotional attachments to unsustainable legacy programs. The obvious answer is to move towards some form of forced savings for the retirement part and to bolster the safety net for people of all ages.Report

    • Avatar Mr.JoeM in reply to Murali says:

      Murali: A kind of soft paternalism that I could get behind is to, by default, increase everyone’s contribution to their 401Ks to such a level as to be able to fund their retirement at some acceptable standard of living but allow people to opt out of this.

      Effectively funding retirement is going to require significant inter-generational transfers.

      My quick back of the envelope math suggests that everyone operating off of savings (eg 401k) for retirement is not possible. Even with a number of assumptions pushing it lower, (25% of people run out of money before they die, no further lengthening of lifespan, only calculating SSI replacement) we would need about $64T in additional savings vehicles. This is about the same size as the US Treasury Market, NY Stock Exchange and NASDAQ COMBINED! There is just not enough investment opportunities to feed that level of capital.Report

  4. Avatar Pinky says:

    Can you flesh out / support the first three paragraphs?Report

  5. Avatar George Turner says:

    The big lie is that Social Security was passed to benefit the elderly. Actually it was a clever con perpetuated on the elderly so their kids wouldn’t have to let that loud smelly aunt move into the upstairs bedroom. Instead of the working age families being guilted into letting their elderly parents move in, and listening to those elderly parents bitch about how much they sacrificed and how its their kids turn to pay them back, thanks to Social Security, the geezers only have to be hosted on holidays, when they come over and sit at the table bitching about whatever fiscal doom the AARP was harping on last month. We all just sit and snicker, knowing they fell for the ruse we came up with during the Great Depression, knowing that all the vicious anger they express for Mitch McConnell should rightfully be aimed at us.


  6. Avatar Chip Daniels says:

    Retirement remains out of reach for millions of Americans

    At 80 years old, Coomer is still working as a part-time greeter five days a week at a Walmart in Oklahoma. Coomer is one of the nearly 10 million Americans over 65 who are still working.
    “When you lose your retirement at a big place like McDonnell Douglas, you need a job,” he said.
    In 1994, aerospace manufacturer McDonnell Douglas closed its plant in nearby Tulsa. Coomer, a machinist, had worked there for 29 years.

    But, as economists predicted, Mr. Coomer is putting his labor to more productive purposes, and enjoying the cheap Walmart tee shirts which global trade has brought to him.Report

    • Avatar j r in reply to Chip Daniels says:

      Am I understanding your comment correctly that you think that this man lost his job and whatever claims to a private pension because of global trade?

      If so, it never ceases to amaze me how human beings can find different and imaginative ways to blame the bad things in their lives on foreigners.Report

      • Avatar Chip Daniels in reply to j r says:

        I’m making the astonishing and radical claim that the overall effect of our global trade structure has not, in fact, produced the prosperity advertised.Report

        • Avatar j r? in reply to Chip Daniels says:

          Be specific. What does global trade have to do with this guy’s pension.

          What’s the cause and effect here? And what’s the counterfactual where protection policies lead to this guy having a fully funded private pension?Report

          • Avatar Chip Daniels in reply to j r? says:

            I don’t know the particulars of Mr/ Coomey’s life, or his relationship with his employer.
            What I do know is that his story is not unique, his situation is not an anomaly.

            All across the Rust Belt, there are former manufacturing workers whose lives did not improve as a result of our global trade policies.Report

          • Avatar Chip Daniels in reply to j r? says:

            Specifically, in Article IV, Section iii (a) of the GATT treaty, if the word “may” was replaced with “shall”, the world would be a vastly different place and the Rust Belt would now be called the Platinum Belt.

            Seriously, the complex web of trade treaties and regulations since the 1970’s have not worked as advertised. The blithe assurances we were given that the laid off auto workers and steel workers would somehow move on to better and brighter jobs never came true.

            And we were assured that after a period of adjustment, after a few more eggs were broken, a wonderful omelette would appear.

            But its been 40 years now, and that promise is still a mirage.Report

            • Avatar j r in reply to Chip Daniels says:

              There was no advertising and no one made any promises about omelets. You’re constructing straw men. The world became more competitive and we adapted as best we could given the political and technological constraints. There was no Golden Age, at least not for the majority of people, and even if there were, nothing lasts forever. The world changes. It’s the one thing that doesn’t change.

              This particular plant that Mr. Coomer worked at in Tulsa was a McDonnel Douglas plant that made some parts or all of various military and commercial aircraft. When it shuttered it was making parts for fighter jets. What’s your story for how that can be chalked up to trade? Did the U.S. outsource all of its fighter jet manufacturing to China?

              If you want to make claims about whether people are worse off becaus of some event or trend, then you need to actually do some work to quantify effects and compare the the counterfactual alternative. If you’re not doing that, then you’re you’re not doing anything but telling non-falsifiable just-so stories.Report

            • Avatar James K in reply to Chip Daniels says:

              The US has done well out of freer trade, its just that the Rust Belt has not. And that is an exception, New Zealand’s trade reform caused a lot of unemployment in the short run, but ti went away in less than a decade.

              The question isn’t “what’s wrong with global trade?” it’s “what’s wrong with the Rust Belt?”. That’s an important question, and one that deserves an answer, but blaming a global trade system for the economic malaise of a specific part of a specific country strikes me as reaching.

              Also, Article IV of GATT covers “Special Provisions relating to Cinematograph Films” and it doesn’t have a section iii (a) so I have no idea what you’re talking about there.Report

              • Avatar Chip Daniels in reply to James K says:

                But don’t the American citizens living in the Rust Belt have an expectation that their elected officials negotiate trade agreements that result in a benefit to the American citizens?

                And the citation of Article IV was meant as a whimsical joke, but its endearing that you looked it up.

                And hey wait a minute!

                If GATT is about “free” trade, why do they need “special” provisions for film?
                Shouldn’t “free” trade just mean “Yeah, y’all can just do whatever you want, no restrictions anymore”.Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                But don’t the American citizens living in the Rust Belt have an expectation that their elected officials negotiate trade agreements that result in a benefit to the American citizens?

                I guess that depends. If, for example, the businesses in the Rust Belt had been operating in ways that were terribly inefficient in multiple ways, and perhaps they survived solely because of protectionist trade policies, then one would expect that such businesses would either evolve or die when such trade policies were discontinued.

                Now, one could criticize the US government for failing to protect the employees of said businesses while allowing the responsible leadership (both corporate and Union) to slip away on golden parachutes, but that isn’t the fault of Free Trade Agreements.

                Unless said free trade agreements specifically tie the hands of governments from interfering in the collapse of local businesses, or the employment of golden escape devices.Report

              • Avatar Chip Daniels in reply to Oscar Gordon says:

                The immiseration and stagnation of the American middle class wasn’t due to a single catastrophic event, like Article IV of GATT.

                Like all great catastrophes, it has multiple causes- automation, the internet, changing family and household structure all played a part.

                What I lay at the feet of politics however, is how we chose to react to these changing forces.
                Even now, after 40 years of a steady decline, we are still, even now, being told that the best course of action is for government to shrug its shoulders and do nothing. Negotiating for global standards on wages, workplace conditions and environmental protections is laughed off as impossible.

                What makes this outrageous is that this advice is always and only ever directed at the middle class workers.

                When financial interests and oh, lets say film studios, want to protect their interests, they negotiate clauses and regulations to enhance their interest, or minimize its loss.Report

              • Avatar j r in reply to Chip Daniels says:

                The immiseration and stagnation of the American middle class…

                This is a well-turned phrase, but it’s also one of those things that makes me wish more Americans spent time in other parts of the world.Report

              • Avatar Chip Daniels in reply to j r says:

                What is truly ironic, is that one reason Americans don’t travel as much as they used to is, get this, wait for it…

                The 40 year immiseration and stagnation of the middle class.Report

              • Avatar j r in reply to Chip Daniels says:

                In 1975, about 1% of the U.S. population applied for a passport. By 2018, that number rises to 6.5%.

                Maybe that’s because so many people already had passports 40 years ago and the median middle-class American was already a jet setter. But probably not.Report

              • Avatar Murali in reply to Chip Daniels says:

                Negotiating for global standards on wages, workplace conditions and environmental protections is laughed off as impossible.

                The two central conceits here are that:
                a) it is desirable for the whole world set some global minimum wage and

                b) The global minimum wage would be anywhere near the american minimum wage. If anything like a fair negotiation with India, China and ASEAN takes place, the global minimum wage would be non-existent or very close to it. The lowest wages in India and China, even if doubled, would be still much lower than the current american minimum wage let alone the french one (which is only about $11 or 9 euros/hr.) The only way it could be otherwise is if North America, Europe and Australia* basically decided to imperialistically impose it on the rest of us. I suppose you are fine with imperialism if it is your preferred policies imposed on the rest of the world, but I don’t see why the rest of the world has to go along with that.

                *Australia has the highest minimum wage in the world at $15/hrReport

              • Avatar Chip Daniels in reply to Murali says:

                For the same reason that there isn’t any such thing as a global tariff.

                We could, however, negotiate an agreement on scale of wages, which take into account the different standards of living in each nation.Report

              • Avatar Murali in reply to Chip Daniels says:

                If minimum wages are to be adjusted to the different standards and costs of living in each nation, what makes you think that the wages in currently low wage countries would be high enough to the stem the flow of jobs to those countries and why would any of those countries agree to such an arrangement?Report

              • Avatar Chip Daniels in reply to Murali says:

                For the same reason any country would agree to a General Agreement on Tariffs and Trade.

                You want to buy and sell with us, you negotiate on what is important to us.Report

              • Avatar Murali in reply to Chip Daniels says:

                Is this a global agreement administered by the WTO or is this a bilateral or multilateral agreement between the US, India and China?Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                Like all great catastrophes, it has multiple causes- automation, the internet, changing family and household structure all played a part.

                You answer your own question. The middle class has no specific representation in these negotiations.

                The Film industry has very specific wants when it comes to global trade. It’s relatively easy for that industry to distill those wants into things that can be successfully negotiated into trade agreements. This is why they pay lobbyists.

                Unions get to play the same game because they too have a very narrow focus, they care about their workers within a given industry or set of industries. But what is best for any given Union is not necessarily best for the middle class as a whole (it’s likely good for some swath of the MC, but often at the expense of some other swath, so it likely washes out).

                Ideally, our elected representatives are looking out for the wants of the MC, but you seem critical of both parties efforts to protect the MC in these negotiations so I’m not sure what you’d have done.

                I mean, can I interest you in a non-binary party system, or maybe a parliamentary system?Report

              • Avatar James K in reply to Chip Daniels says:

                The people of the US? Sure. The Rust Belt specifically? No. And make no mistake just about everyone who doesn’t work for (or own a lot of shares in) those old steelbelt industries is better off for freer trade.

                And I would be all in favour of getting those special provisions taken out of the deal too. It irks me that such provisions are included in what should be quite straightforward deals.Report

              • Avatar Chip Daniels in reply to James K says:

                Better off how?

                All across America, are the young people of today finding it easier to buy a house than their parents did? Are their jobs easier to get, have better benefits and pay more?Is their medical care cheaper and more accessible? Are their retirements more certain and secure?

                Or do you mean better as in “wow, those tee shirts and cell phones sure are cheap!”Report

              • Avatar Jaybird in reply to Chip Daniels says:

                Buy a house where? San Francisco, California? Plymouth, Michigan? Hey, you can get a nice 2 bedroom, 1 bath in Grand Forks, North Dakota for only $139,300! (You can probably talk them into paying the closing costs for you!)Report

              • Avatar Pinky in reply to Chip Daniels says:

                How easy do you think it was for parents to buy houses? Dad’s two jobs were at the factory and the warehouse; Junior’s two jobs are at Starbucks and selling his childhood comic books on eBay. And their medical care isn’t cheaper, but it’s better and more accessible. It’s not obviously the fault of international trade that their medical care costs more. As for their retirements, since we’re talking about young people, a lot of it has to do with the decisions they’ll be making over the next several decades.

                And wow, cell phones do change lives. They make it cheaper to travel, easier to learn, faster to get around traffic. They make it safe for Mom to live independently.Report

              • Avatar Chip Daniels in reply to Pinky says:

                Why doesn’t Junior just get a good union job at the factory?Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:


                Have you ever worked for an industrial Union, or have family who has?

                If dad isn’t in the good graces of the Union Bosses, there is no way in hell Junior is getting a job at the factory, assuming there is one to be had.Report

              • Avatar Chip Daniels in reply to Oscar Gordon says:

                I graduated high school in 1978, and went to work at a unionized factory in my home town, which offered an entry level job on the line making triple the minimum wage, plus health coverage, and union representation in any disciplinary matters.

                A lot of the blue collar workers there bought houses and supported families on the strength of their union job.

                Now that factory long since shuttered, the jobs moved to China.
                And the guys I worked with might very well be the red faced shouty old men who advise Junior to go out and get a job at er, oh, maybe Walmart or something.Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                I take it you didn’t stay there long, then, since you went to school and got that whole Architect gig, right?

                Area I grew up in was very blue collar, lots of factories, strong Unions, and the Unions held tight control over the jobs at those factories. Want an entry level position at Kohler, you’d best have family in the good graces of the Union or they wouldn’t even look at your application.

                You act as if these Unions are all wonderfully egalitarian institutions just trying to give every able bodied American a chance at a better life and some protection from the avarice of management. That’s not even close to the reality of a lot of the Unions. I wish it was, because that ideal is something I can support. But Unions that are maybe in sight of that ideal are the exception in the US.Report

              • Avatar Chip Daniels in reply to Oscar Gordon says:

                Isn’t it a staple piece of advice found in almost all guides to entrepreneurs to network, associate, glad hand and schmooze the right people?Report

              • Avatar Jaybird in reply to Chip Daniels says:

                (Did we just pivot from “workers” to “entrepreneurs” without acknowledging that we’d done so?)Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                To echo Jaybird, workers are not entrepreneurs. To expand on that, you are saying that a person with limited skills and education, who lives in an area with limited opportunities, should be required to make the local Union Bosses happy (for whatever bit of power games makes them happy) just so they can have a shot at an entry level job.

                You probably think Madigan has the right of it here, don’t you?

                The egalitarianism just rolls off of you, don’t it?Report

              • Avatar Chip Daniels in reply to Oscar Gordon says:

                So a guy who sells his labor as an employee and the guy in the next cubicle who sells his labor as an independent contractor, have a different set of moral norms about networking?

                Seriously, is that the argument being presented here?

                I actually hate networking, but it seems weird how it goes from being a highly touted admirable skill at a startup mixer of techbros, to being an evil act when at a factory.

                I honestly don’t get it.Report

              • Avatar Jaybird in reply to Chip Daniels says:

                Is it as easy to become an independent contractor in 2018 as it was to become a (unionized!) factory worker in 1954?

                Because I thought we were comparing people fresh outta high school in1954 to people fresh outta high school in 2018.Report

              • Avatar Chip Daniels in reply to Jaybird says:

                I’m trying to grasp why networking is good for independent contractors, but evil for employees.

                Why “having to please the union boss” is bad, but “having to please the at-will boss” is OK.Report

              • Avatar Jaybird in reply to Chip Daniels says:

                What are we talking about?

                Stuff you need to do to keep your job?
                Stuff you need to do to get a meeting with the hiring manager?

                It seems to me that it’s vaguely fair to have higher standards for employees than for interviewees.Report

              • Avatar Oscar Gordon in reply to Jaybird says:

                Stuff you need to do to keep your job?
                Stuff you need to do to get a meeting with the hiring manager?

                This. Networking doesn’t guarantee me a job, all it does is make me aware of opportunities and possibly get my foot in the door for an interview. And if I’m very lucky, maybe I’ll have someone inside recommend me for the job, provided I don’t tank the interview. But I still have a fair shot at a job even without the networking. No one is going to toss my resume out just because I don’t know someone that the hiring manager is good friends with.

                The way some industrial Unions operate, you don’t get a foot in the door without already having a person in good standing in the Union vouch for you, and even then, family members are often given preference over non-family.Report

              • Avatar Chip Daniels in reply to Pinky says:


              • Avatar James K in reply to Chip Daniels says:

                In the social sciences we have the concept called “attribution”, which is the art of figuring out what is causing what. This is a complex and technical topic, and I don’t have time to go into it all, but one of the big things we don’t do is take two things we don’t like and blithely assert one causes the other. Let me walk you though a couple of quick examples:

                Housing and land are what we call “non-tradeables”, not because they can’t be bought and sold, but because they can’t be imported and exported. This means that of all the possible explanations for unaffordable housing, WTO rules is one of the least likely.

                Similarly, the rapidly rising cost of healthcare is a problem mostly confined to the US, so why would you expect that a global institution was responsible for it? The same goes for inequality by the way, inequality is rising in the US, but not the rest of the world so I’d start by looking for US-specific causes, not global ones.

                And finally, yes cheaper phones and T-shirts (and cars and all the other goods that are cheaper because of freer trade) matter, lowering costs of living is precisely equivalent to increasing incomes. And since that is something trade actually did cause, yes I’m going to keep pointing it out. It may be less obvious to the likes of you, but it matters a lot in aggregate.

                This is my problem with your argument here, and the similar arguments you have presented in the past. It’s not that you aren’t pointing at real problems, because you are there are real problems here that deserve a proper solution. But nothing you’re talking about is going to help at all. This is where you do share some commonalities with Trump (though unlike him I don’t think you’re doing it on purpose) – you seeing people who are suffering and offering them snake oil.Report

              • Avatar Chip Daniels in reply to James K says:

                Housing and land are actually good examples of WTO effects.

                As you say, when incomes fall, it is precisely equivalent to prices going up.

                Except that our trade policies haven’t caused “all” incomes to fall. And they haven’t caused “all” prices to fall either.

                What they have done is caused “some” incomes to rise, and “some” to fall, and “some” prices to fall, while others remained the same.

                What they have really done is bring the 1st World and 3rd World directly together.

                In 1958 for example, a worker who manufactured toilets might buy a house next door to the plumber who installed them.

                In 2018 however, the plumber earns an American wage, yet when he goes to WalMart, he is literally shopping in China, paying 3rd World prices.

                Which is sweet!

                Except the factory worker who used to make toilets has to compete with those same Chinese workers for wages, yet, when he rents a house, as you say, it is nontradable, and he has to compete with the plumber.

                Maybe this is why it is so hard to evaluate the landscape. It is wildly uneven, dealing out radically different outcomes to different people.
                And worse, the solemn assurances that this landscape is just the natural order of the universe and man should not trifle with it, is proving patently false. It is obvious that the landscape is tilted, rigged in favor of those who sculpt it.

                Maybe “Do Something, For God’s Sake” might sound like snake oil, but I think it still sounds better than “Remain Calm, All Is Well”.Report

              • Avatar James K in reply to Chip Daniels says:

                Did I say we should do nothing? In fact I said the opposite multiple times. I’d just prefer a solution that will do more good than harm.

                I spend a lot of my professional life thinking about housing affordability, and I don’t think inequality is the main issue – for one thing inequality is really only growing in the US and housing affordability is a problem all over the place.

                The culprit I would finger is urban planning laws – the problem with letting the voters decide how land will be used is that the median voter is a home owner and is therefore indifferent to the problem of insufficient supply. There are ways of remedying this, they involve constraining the ways local governments can restrict development, and moving away from needing government permission for development to more of a tax-based system where doing something that’s disruptive to your neighbours requires you to compensate them.Report

              • Avatar Chip Daniels in reply to James K says:

                My beef is a bit larger, with the whole notion of how we talk about the response to global trade.

                When film companies decided to insert provisions into Article IV of GATT, do you think they got lectures on the Invisible Hand and Econ 101?

                “Free Trade” is often sold as a removal of restrictions, a reduction in the power of government to some natural state of freedom.
                The truth is the opposite.

                Global trade agreements are actually a construction of new regulations, and increase in government power.

                Which is not necessarily a problem. Except that the regulations are a negotiated agreement of varied interests, and one group of interests is conspicuously left out, and that is the interest of laborers.

                And worse, even the notion that labor should have an legitimate self interest in these negotiations is argued against, like it is is a perversion.

                Even here, when I argue for a global structure of minimum wages, there are all these dark warnings of unintended consequences from such an unnatural act.

                Yet…no one involved in the negotiations thinks the same way about the film industry, steel industry, consumer products industry interest.Report

              • Avatar James K in reply to Chip Daniels says:

                Who’s “we” in that comment, because every economist I know finds those special provisions exasperating. Honestly, free trade agreements themselves are a second-best solutions. Trade barriers are stupid and counter-productive, they can and should be eliminated unilaterally.Report

              • Avatar Chip Daniels in reply to James K says:

                “We”= People who vote, and the people they elect. People who negotiate the agreements, and the people who ratify them.

                Even the term “trade barrier” is like “Government waste”.
                When there is an agreement to construct a global court that can adjudicate international contract disputes, and the member nations agree to enforce the decision, this places bounds on all the market actors.

                Is this a “barrier”? Or is it a safety rail that makes markets more safe in which to operate in?

                Well both because markets can’t exist without a safe space in which to operate, where there are restrictions and barriers placed on bad behavior.Report

              • Avatar JoeSal in reply to Chip Daniels says:

                “Well both because markets can’t exist without a safe space in which to operate, where there are restrictions and barriers placed on bad behavior.”

                You probably need to unpack that, because there are plenty of markets operating in places that aren’t ‘safe’ and are self regulating against ‘bad behavior’. Despite the nefarious authoritarians that place restrictions and barriers.Report

              • Avatar James K in reply to Chip Daniels says:

                Is this a “barrier”? Or is it a safety rail that makes markets more safe in which to operate in?

                Does it make it easier for people to trade for mutual benefit, or harder? Does it make trading with foreigners more like trading with people for your own country, or less? Does it make the choice to buy or sell more driven by individual preferences or by regulator preferences?

                There are answers to these questions, and they don’t involve elevating the interests of American steel workers (and owners of steel plants) over every other person on Earth (including other Americans).Report

              • Avatar Chip Daniels in reply to James K says:

                Rules that make it hard for local jurisdictions to govern their own affairs (like TPP) simultaneously make international trade more like trading with people in your own country.

                “Making trade easier” means establishing a system of control of trade.
                Which property claims are valid, which contracts are recognized under the system of control are ultimately questions of whose interests are being protected or left adrift.

                There is no objective, neutral marketplace free of competing interests.Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                Note again that it is ‘we’ who are doing this. We elect our reps and trust them to make trade agreements. We seem to be largely OK with said agreements. And those who are not OK with said agreements, those who largely voted for Trump, are considered stupid, and racist.

                These agreements are not the result of some secret cabal (although their negotiations could use a whole lot more transparency), they are the result of the efforts of our elected officials.

                Trade agreements are the result of the democratic process.

                PS When it comes to making rules about how ‘you do what we want or you don’t get access to our markets’, A) Ask the drug cartels how well that interferes with their business, and B) Access to markets goes both ways, and if you tell someone they can’t sell here, then they are libel to not buy from here as well. So maybe we don’t get as many imported Japanese cars, but our farmers also have trouble selling their products overseas.Report

              • Avatar Chip Daniels in reply to Oscar Gordon says:

                Aren’t drug cartels a perfect example of a spontaneous order that arises absent a governing body?

                With the emphasis on “cartel”?Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                Sure, but the absence of a governing body can be because no governing body exists, or because the governing body declines to govern. Drug Cartels exist because our government refuses to govern that market. It instead insists that it knows best. Kinda like how you keep insisting that your preferences are what’s best for everyone.

                But let’s really break it down here, there are always winners and losers as markets change. Your issue is that you really don’t like the current crop of winners. TBH, I don’t really like the current crop of winners, but I’m not interested in trying to change who the winners are by trying to resurrect conditions that no longer exist. I’d rather spend more money and effort getting our workforce more competitive in the new markets.Report

              • Avatar Chip Daniels in reply to Oscar Gordon says:

                Well if we are to the point of agreeing that international trade agreements are negotiated agreements by self-interested bodies, then we have made a lot of progress.

                Why is it that being “more competitive” is the sole legitimate tool available to labor?

                When corporations wish to increase their profits they have a wide range of tools available- subsidies, tariffs, taxes, socialized infrastructure etc.

                As we’ve noted here in our discussions about suburbs, there are all sorts of ways that public policy can benefit workers such as free college, transportation, rental assistance and so forth.
                Couldn’t there also be benefits to labor in the form of a global minimum wage, workplace safety standards and so forth?

                Before anyone jumps in with “but those will produce bad effects” can we at least accept them as every bit as legitimate as increasing copyright protection, and global courts for contract resolution?Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                Why is it that being “more competitive” is the sole legitimate tool available to labor?

                It should be the only tool available to anyone, capital or labor. But this circles back to the point you seem to keep ignoring. Capital has it’s interests represented and protected because they have lobbyists. Labor is, in theory, represented by the politicians negotiating the agreements. If you feel like labor is getting the short end of the stick, then stop complaining about the concessions capital gets, and start complaining about how the representatives of labor are not protecting those interests.Report

              • Avatar Aaron David in reply to Oscar Gordon says:

                Unions have lobbyists also. In fact, that was a minor side plot in season 2 of The Wire.Report

              • Avatar Oscar Gordon in reply to Aaron David says:

                I know, but as I said elsewhere, a Union lobby is at worst going to negotiate for the same things the industry is, and at best is going to negotiate for things specific to it’s membership alone. E.g. the UAW is not going to lobby for things that help the SEIU, except incidentally, but they will lobby for things that help the US auto industry.Report

              • Avatar Michael Cain in reply to James K says:

                …it’s “what’s wrong with the Rust Belt?”. That’s an important question, and one that deserves an answer…

                It is. Some of the problems the Rust Belt faces, trivial and otherwise: the weather sucks, on average; lots of relatively-isolated medium-sized cities; infrastructure problems (eg, regionally there’s most of a trillion dollars needed to fix the sewer systems); plenty of metro areas where the urban core’s population crashed and has never recovered; relatively shrinking population (the states in an extended Rust Belt are on pace to lose 7-8 seats in the US House after the 2020 census); years of talent (human capital) drain.

                This is a region with the population of a good-sized European country where, with a limited number of exceptions, the economy has been suffering for decades, pulling other things down with it. There’s no obvious or easy way out.Report

              • Avatar Chip Daniels in reply to Michael Cain says:

                It isn’t even just the Rust Belt.
                Even here in California we used to have a thriving manufacturing sector, with a few auto plants,a steel plant, and a huge aerospace industry, plus their associated vendors suppliers and ecosystem of businesses that fed to or from them.

                Those are all gone now. The tech sector which all the kids nowadays are talking about doesn’t generate the volume of middle class jobs that the old industries did.Report

              • California, and Southern California in particular, still has a thriving aerospace industry, accounting for about 10% of global aerospace output. Satellites and rockets instead of planes. Like most industry, doesn’t use nearly as much moderate-skill labor as it used to.

                It’s missing a lot of the things that I think are problems more specific to the Rust Belt: eg, bad weather, isolated and/or run-down infrastructure, decades of brain drain.Report

              • Avatar Murali in reply to Michael Cain says:

                infrastructure and brain drain would seem to be the key issues. Why is bad weather an issue?Report

              • Avatar Michael Cain in reply to Murali says:

                A second-order effect, certainly, but still… I know people here (Front Range Colorado) who relocated because of the mild weather. There have been companies who have relocated here who mention the weather as part of the quality-of-life things they are looking for in public statements. I know people here who have turned down relocations to the Rust Belt because they don’t want to suffer through hot humid summers and/or nasty slushy winters. Many lists of “why relocate to Colorado” put the weather around five or six on the list.Report

              • Avatar Oscar Gordon in reply to Chip Daniels says:

                Michael is right, aerospace is much more highly automated than the days past, because the tolerances are so much tighter, and humans have a hard time keeping to those tolerances. Your middle class aerospace factory worker is a CNC operator, or a PLC programmer, or similar. Even at the Lazy B, more and more work in being done by machines, and the low skill humans are just getting parts aligned in jigs and forms.

                Also, the cost of operating a manufacturing facility in CA has gone up quite a bit. Or perhaps I should say that the cost of operating an older facility has increased a lot. If I’m an aerospace company with an older plant in Long Beach, and it’s becoming unprofitable to operate that plant, I can either spend the money to upgrade the plant so that it is cheaper to run, or I can see if there is a place I can move the work to that requires less capital infusion. Sure, that old assembly line in Kansas needs some updating, but it can be acquired and re-purposed for a lot less than upgrading the CA plant.

                Or maybe they do upgrade the Long Beach facility, but once it’s done, instead of needing 10000 workers, they only need 2000, and those 2000 are going to be skilled and well educated, not your 70’s era factory line worker.Report

              • Interestingly, SpaceX plans to build the BFR at Berth 240, an area shared by the Ports of Long Beach and Los Angeles. It’s at least partly a transportation thing. Finished rockets will be lifted by crane directly from the construction facility onto the ships/barges that will be used to deliver them to the various launch facilities.Report

        • Avatar North in reply to Chip Daniels says:

          Well you’d maybe be on stronger footing if you asserted that the overall effect of our global trade structure has not, in fact, produced the prosperity advertised for the US on a national level because you’re slam dunk wrong from a global perspective.Report

          • Avatar Chip Daniels in reply to North says:

            Yes, I know that story very well.

            And the answer usually is where a guy like me makes a snarky comment like, “Good news, Mr. Steelworker! You’re living in your car and your wife is addicted to opiods. But on the bright side, a guy in China just bought a Mercedes!”

            But that too is bullshit since it feeds the Trumpian view that the world is a zero sum place, where widespread prosperity for both the Chinese and Americans is impossible.
            It is in fact, a case for peasants to fight like dogs over scraps while the lord in his manor feasts.

            This is why I refuse to use the term “globalism” or “free trade” because those are diffuse buzzwords.

            Our structure of trade doesn’t need to be how it is. There are a million variations of how we negotiate trade treaties, a million variations of how we implement them and respond to them, all of which would return a better outcome than what we have now.Report

        • Avatar Pinky in reply to Chip Daniels says:

          “I’m making the astonishing and radical claim that the overall effect of our global trade structure has not, in fact, produced the prosperity advertised.”

          No, you’re not making the claim about the overall effect. You’re making it about specific cases, even while saying you don’t know the specifics of them.Report

    • Avatar bookdragon in reply to Chip Daniels says:

      What does global trade have to do with this guy not collecting a pension? After 29 years, he is entitled to his pension no matter why the plant was closed. Yes, MCD is gone, but it “merged” with Boeing in the mid 1990s, so it’s not like their pension fund disappeared in some shady bankruptcy shell game.

      Also, if you know anything about MCD’s history, globalism is not what drove that company into the ground. They failed because of going all in back in 1989 on the very Amercian homegrown idiocy of the Total Quality Management System (TQMS). I know engineers, now working in various other places, who worked there at the time. It was a standard joke among all of them that TQMS actually stood for “Time to Quit and Move to Seattle”. The reorg that came with TQMS lead directly to the failure and cancellation of the A-12 and from there it was all downhill.Report

  7. Avatar Michael Cain says:

    All of this and more means retirement in America is in an incredibly sad and precarious state right now.

    I am trying to decide if the fact that my wife and I have started what looks to be a reasonably comfortable retirement is another piece of privilege that I need to feel guilty about.Report

  8. Avatar Michele Kerr says:

    Doesn’t SocSec still pay out to marrieds? That always seemed something that should go by the wayside. Or perhaps it did and I missed it.

    Any woman who hasn’t worked for 40 years and is now expecting to live off her husband’s contributions–and being paid beyond that–is who should be working at Walmart.Report

  9. Avatar Jaybird says:

    So my questions deal with the assumptions from this:

    All of us will grow old. All of us deserve an independent, unencumbered, enjoyable and dignified retirement.

    A “dignified retirement” requires a guaranteed source of income, independent of employment status, to insulate us against illness and other hardships we can’t always plan for.

    My grandmother spent her last days in a *DINKY* two bedroom, one bath apartment in an assisted living facility. Her room had a dinky bedroom, a dinky bathroom with a walk-in shower, a dinky kitchen with a fridge, sink, and oven, a dinky living room about big enough for three people to sit in comfortably if they weren’t eating (two if they were). Another bedroom that was big enough for a bed, a closet, a nightstand, and a bookcase.

    I mean, this place was smaller than my first apartment.

    But the kitchen didn’t necessarily see a lot of use. There was a cafeteria and you could have meals (from the cafeteria) delivered to your apartment twice a day (breakfast and lunch). Additionally, I walked past a community room where a pleasant enough young woman was playing Hangman on a whiteboard with a handful of retirees. The category written at the top of the whiteboard was “1950’s Toys”.

    It struck me as vaguely like a college dorm. Just for old folks.

    It struck me as the *IDEAL* retirement place. Holy cow. Sit in your room, watch your television, maybe wander down the hall from time to time and play a game of hangman, go to bed. Wake up. Do it again.

    Live where it’s always Saturday.

    I suppose the downside was that it was in Michigan. Not the part of Michigan that you’ve heard of. It was in the mushy middle. Closest movie theater was a bit of a drive away from there. Closest culture? Well, there’s Detroit, I guess. Windsor. Toledo. Ann Arbor.

    You willing to be a retiree in Nowhere, Michigan? It’s pretty affordable. It might even meet spec for independent, unencumbered, enjoyable and dignified.

    But you’ll be nowhere.Report