Less cowbell
A few weeks ago I wrote about teacher pensions. I was readying the ground to dig into them as an organizing strategy. Basically, since union elections hinge on older members who pay a lot of attention to their pensions, social justice union organizers in teachers unions, who skew younger, could secure more support in their bids for power in their unions by showing how pensions could be better. To do that requires looking at teacher pensions, an arcane area of education policy and finance, with the kind of critical eye I've tried to cultivate in this newsletter.
The response to that post was way bigger than I expected. I got a bunch of emails from readers--teachers, researchers, organizers--talking about pensions and how important and messed up they are.
One reader, a retired teacher in Massachusetts, told me how underfunded pensions keeps her up at night, mentioning both the changing contribution percentages and what the pensions decide to invest in viz. fossil fuels and climate change. They also noted that teachers with pensions can't collect social security in MA. Another teacher, this time in California, noted the same thing, proposing campaigns to repeal this policy and win social security for retired teachers, particularly where cost of living adjustments (COLAs) are bad.
Other readers suggested more readings. I got an excellent recommendation to look at the work of Teresa Ghilarducci, whose book When I'm Sixty-Four is a go-to account, as well as her extensive work at the New School. I got another recommendation for Max Sawicky's writing at Jacobin on pensions, and Sanford M. Jacoby's relatively recent book Labor in the Age of Finance. Dean Baker has also written on pensions for the progressive CEPR. Finally, the Government Accountability Office keeps regular tabs on retirement issues at their dedicated page for retirement security.
So not only is this issue important to people, I've also got a lot more to read. Not surprising.
For this post, I wanted to present some notes on what I've read thus far, notably a contrast between some neoliberal fear-mongering and a solidaristic framework for the history of pensions generally. I'm drawing from a selection of posts written by rightwing economist Chad Aldeman's blog teacherpensions.org and the critical sociologist Mike McCarthy's 2017 book Dismantling Solidarity.
Solidarity: the collective reapportioning of misfortune
I'll start with McCarthy's book, since it provides some much needed perspective on pension politics from an explicitly leftwing perspective. As a preface, I'll note that a lot of stuff I found when googling around the topic of teacher pensions is basically rightwing propaganda, from reports to academic articles to shorter journalistic writing. There's a lot of stuff out there that drapes its ideological project in technical expertise and slick design, so you really need to configure your own ideological position before reading this stuff to make sure you don't get brain worms. McCarthy's book is good for that.
For example, he doesn't use the common private/public distinction to talk about pensions. Rather, he uses a "solidaristic or market-oriented" spectrum to assess pension policies. Pensions must be thought of as more or less solidaristic. He cites a helpful phrase is defining what this means:
As programs in capitalist societies become more solidaristic, the costs of addressing social risks (such as illness, poverty, disability, and old age) are pooled across the population. In Peter Baldwin's phrase, "the terms of misfortune's reapportionment" do not rest on the shoulders of individuals or families, but instead are mutually agreed on at the level of policy and set by the standards of the day.
On the other hand, you have markets, where the terms of misfortune's reapportionment rest on individual shoulders.
As programs become more market-oriented however, individuals increasingly confront the economic uncertainty of life alone, their needs met or unmet by their own private dealings. A greater reliance is put on their personal or familial savings or performance on the labor market.
So when we're thinking about teacher pensions, the question we have to ask ourselves when reading or listening or engaging in conversation about the topic is whether the structure of the policy spreads the cost of social risk collectively or individually, whether the policy is a solidarity policy or a market policy. The more we reapportion misfortune on individual terms, the more we leave people out in the cold to fend for themselves. A market policy might be more 'efficient' perhaps, but is it solidaristic? Does our policy get us to face the social risk of old age together or alone?
McCarthy is a historical sociologist and his goal in the book is to show that pension policy in the US after World War 2 went from solidaristic to market-oriented, a process of dismantling solidarity, embodied in the shift from defined benefit programs to defined contribution programs, like the 401(k). I'll get to some of the history later, but for now let's use his lens of solidarity to look at Aldeman's blog.
More cowbell
Through McCarthy's lens, Chad Aldeman's blog reads like a soldier in the fight to dismantle solidarity in teacher pensions. It's clear from the tone, claims, and his background that his political and ideological project is to restructure public educators' pensions to make them more market-oriented. His dream--and I should mention, a lot of the writing I found when googling around this subject--is to make teacher pensions defined contribution programs (DC) rather than defined benefit programs (DB).
Right now, teacher pensions use a DB structure where retirees get a particular amount of money every year. The benefit is defined. This particular amount gets calculated through some formula, whose terms will differ from state to state and pension to pension. Usually it's a certain percentage of the average wages you made over the course of your career, or a percentage of the salary you made the year you retired.
When the pension is on the hook for this defined benefit, that means it has to pay out what it owes to its members. The pension needs to make enough money to make these payments every year. That money comes from contributions, which are legally mandated, and returns from investments made with the existing pension contribution reserves.
Public school districts and state governments are the ones responsible for making contributions to their teachers' retirement plans. Pension managers then invest the money to hopefully make enough from stocks and bonds to keep the pensions in the black as they pay out to retirees. Market extremists like Aldeman make the case, in as many ways as they can, that this system is unsustainable and the only solution is more markets. They're like Will Ferrell in the Blue Oyster Cult sketch on Saturday Night Live, where the obnoxious guy insists on playing his cowbell louder and louder over the song.
A defined contribution plan, and reforms that resemble or get close to it, expose retirees to the market by making the income they get when they retire dependent on how much they've contributed to their own retirement fund, which is privately managed and thus impacted by the vicissitudes of the market. There's no defined benefit. Rather than pooling resources to address the social risk of old age collectively, it puts the onus on the individual.
Aldeman is a case in point. He argues that pensions are inefficient. They worsen the lives of teachers. They take resources from students. Oh, and they're even racist (he had a special George Floyd edition of his blog where he makes this argument). He makes these claims by calculating pension costs for school districts and comparing them to per-pupil costs and per-employee costs, tracking these costs by racial demographics and teacher turnover and declining student enrollments. He also tracks pension debt, which is when school districts owe back payments on their pension obligations. He notes that districts pay as much in pension costs as they do for tutoring, and how their debts and current pension mandates push them into absurd realms of inefficiency.
I'll get into his claims more in a future post, but just note something. All these things could be true, but Aldeman's recommendation for every such claim, the punch line to every blog post, is that pensions must be more market-oriented. Even if all the things he says are true, does this mean we should dismantle solidarity? It's what makes that SNL sketch so funny: they keep saying more cowbell, even though everyone else in the band knows it's absurd to keep adding more cowbell. It's obnoxious and so is Aldeman.
So what would a solidarity policy horizon look like?
American Beveridge
McCarthy tells a history that gives us a clue. In general, we have to remember that pensions are a kind of welfare program. In addition to fulfilling rights that people have to live their lives, welfare takes care of people when they can't take care of themselves. Healthcare takes care of sick people. Education takes care of people that have to learn stuff that they don't know. Unemployment programs take care of people when they lose their jobs. Retirement programs take care of people when they get old.
The greatest welfare policies in American history were passed in the wake of the 1929 market crash the great depression that ensued, usually called the New Deal. Social Security was the flagship program for old age. McCarthy looks back to the politics of Social Security to show that our approach to old age could have been a lot better.
Specifically, he looks at the Wagner-Murray-Dingell bill from the 1940s. In addition to federalizing unemployment insurance, creating a national universal healthcare insurance system, and increasing disability insurance, it "extended old-age and survivors' insurance to practically all employed persons...offered benefits for permanent disability, liberalized benefits by increasing minimum payments, and raised the maximum by making eligibility less restrictive through a new formula for computing average earnings." It was a significant addition to and step up from social security.
The bill was called the American Beveridge plan, named after the British policy that created the more expansive welfare state there postwar. But Wagner-Murray-Dingell failed to pass congress, introduced in 1943, 1944, and 1946. I mention it to close this post because I think this bill provides a kind of horizon from history. This bill was on the table, something lawmakers have already proposed, and maybe some version of it could be again to achieve a more solidaristic retirement policy. Less cowbell, more Beveridge!