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Donald Trump showed a glimmer of reason in his last debate when he defended his position as the Republican Party’s only presidential contender who is opposed to cutting Social Security.
Alas, it was but a glimmer. A split second later, Trump took a loony leap from defending America’s most effective anti-poverty program to blaming foreign workers for our fiscal challenges. “They are taking our jobs. They are taking our wealth. They are taking our base.”
Foreign workers are not the ones doing the taking. CEOs of big U.S. corporations are responsible for taking jobs and wealth out of this country. And these CEOs are also the ones who deserve much of the blame for our country’s retirement crisis.
Over the past several decades, top executives have gutted worker pensions. Since 1980, the share of private sector workers covered by defined benefit pension plans, the kind that guarantee a monthly benefit after retirement until death, has dropped from 46 percent to 18 percent.
CEOs have replaced these traditional plans with tax-deferred accounts like 401(k)s, which shift the risk of volatile stock markets onto employees, or scrapped retirement benefits entirely.
Of American workers in the 50-64 age group, 29 percent have no pension or retirement savings in a 401(k) or IRA. These workers will be wholly dependent on Social Security, which currently pays an average benefit of about $1,200 per month.
While cutting worker benefits, CEOs have been accumulating gilded retirement fortunes for themselves. A report I co-authored for the Institute for Policy Studies and the Center for Effective Government provides staggering statistics on the growing retirement divide. The key finding: Just 100 CEOs have as much in their company retirement funds as the entire retirement savings of 41 percent of American families.
On average, these CEOs’ nest eggs are worth more than $49.3 million— enough to generate a $277,686 monthly retirement check for the rest of their lives.
The trends of bloated retirement funds for executives and growing retirement insecurity for the rest of us are inextricably linked. By slashing worker benefits, CEOs can boost profits and stock prices, at least in the short term. And since most executive compensation these days is in the form of stock-based pay, the more a CEO cuts back on employee retirement benefits, the fatter his paycheck.
To reverse the retirement divide, we need to go beyond Trump’s promise to not cut Social Security and actually expand these benefits. We also need to address the skyrocketing cost of long-term care for the elderly. The current monthly cost of nursing home care runs about six times the amount of an average monthly Social Security check.
A campaign called Caring Across Generations is bringing together families, caregivers, people with disabilities, and aging Americans to tackle this problem. One of their major initiatives is to promote affordable long-term care insurance that would also allow for fair wages and benefits for caregivers. In Congress, Senator Mazie Hirono from Hawaii has introduced legislation — the Living Independently for Extended Time Act — that would establish a federal grant program to support innovative state-level long-term care solutions.
How can we pay for all this? Trump’s solution seems to be to somehow force those foreign workers to give our jobs and wealth back.
The real solution is to reclaim the resources that could have been going into making our retirement system work for all of us but has instead been flowing into just a few pockets.
A first step should be to require big company CEOs and other high-income Americans to contribute to Social Security on all their income, including stock-based pay. With the current cap on annual earnings subject to the Social Security tax set at only $118,500, most of these wealthy individuals have already made their entire contribution for 2016.
After slashing worker benefits for so many years, it’s time CEOs started paying their fair share of a retirement system that ensures dignity for all.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is the co-author of the report “A Tale of Two Retirements.”