Labor Day; working, retiring and living out the “golden years”

Ida May Fuller was the first social security recipient;  Ida May received $22.54 in January 1940 and lived until January 1975.  When she died Ida May was 101 years old;  but when the act passed in 1935 the average life expectancy was closer to 70 years, today it is nearly 80.

Canceled Mail: Could the U.S. Postal Service Really Close?

A great headline and a fitting way to celebrate the Labor Day Week.  The accompanying story in Time, outlines the financial and politician problems of the postal service.  Time says the service is challenged by two things, Congress and labor.  Congress because it controls the price of postage and the details of the cuts in operating costs that the service would like to institute: reducing the number of post offices by 3700, laying off 120,000 people and ending Saturday mail delivery.   Labor because the revenue shortfall and the impending default on a $5.5 billion payment on the 27th is labor related; 80 percent of the obligations of the postal service are employee benefits in general  – retirement funds in particular; for Fedex, by comparison benefits are 32 percent of expenses.

One has to approach all of those number conservatively, but on the surface of the reporting the story is exactly that of GM and the other car manufacturers.  A strong union over a period of 50, 60 or 70 years has successful negotiated the best possible terms of its workers.  But then the union and the postal service (or GM) met the economy and declining sales from increased competition.  The competitors are more efficient and more profitable and that only increases the strain on the postal service; the post office  is of course faced with a much larger problem than car  or other manufacturers or products, the Internet.   The post office provides a service not a product and the Internet offers that same service – for free; people pay their bills online, send emails, send advertising fliers and coupons and more all on online – the postal service is down 22 percent mail volume in the last five years.  The loss of revenues is not adequately offset by a reduction in costs – it cannot reduce the cost of labor enough.

Today we are celebrating a day of labor or a day for the laborers.  In 1882 – (it began a national holiday in 1894) – when the first “Labor Day” was celebrated, unions were struggling to gain a foothold.  In the newly industrialized world of work, wages were low and working conditions were long and difficult.  Over the next century unions made a great deal of progress in organizing workers and in negotiating better working conditions, higher wages and retirement benefits.  The working class joined the middle class and formed the core of the consumer society – the more workers were paid the more they spent on the products and services; that spending drives the economy.  However, the success of the unions has been their undoing; the benefit packages became so high that American companies were not equipped to compete internationally; the ever growing retirement cost have weakened many industries.  The recent recession has exacerbated the problem and added public service unions to the mix. Private industry and government agencies are both struggling to find ways out of the huge debt load of the retirement plans.

Retirement will be one of the major problems of the next decade.  It is at the heart of the debt debates in Congress;  social security is the government retirement program for those without other retirement plans.   As a society were are going to have to find a sustainable way of retirement – and as life-spans increase so will the dimensions of the problem.  Retirement is supposed to be the golden years, the rewards for years of dedication and hard work.  That idealistic view of later years of life may become as unrealistic as a Hollywood romance where the lucky couple meets, falls in love and lives happily ever after. Happy Labor Day!


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