Don’t depend on the kindness of corporations
Ellen Schultz’s new book, Retirement Heist, illustrates in lurid detail the failure of the American model that relies on employers to provide “fringe” benefits that may actually be life-or-death necessities. Like Michael Moore’s Sicko, which focused on health insurance shenanigans, Schultz doesn’t focus primarily on the have-nots (in this case, the roughly half of all American workers not covered by any kind of retirement plan), but rather on the erstwhile haves: people who thought they had jobs with good pension and retiree health benefits.
In the postwar decades, the system worked reasonably well for many middle-class workers. But by the Gordon Gekko 1980s, corporations realized they had a lot to gain by reneging on these promises. More precisely, the executives of these companies had a lot to gain, since their compensation was increasingly tied to short-term gains at the expense of the companies’ long-term health and reputation, a connection Schultz doesn’t quite make.
Schultz is one of the best reporters around when it comes to exposing corporate malfeasance, and Retirement Heist, despite its depressing subject matter, is a page-turner. Schultz and her former Wall Street Journal colleague Theo Francis, for example, were behind the “Dead Peasants” story Moore covered in Capitalism, a Love Story. If Capitalism left you wondering how the scam worked (how do companies profit from taking out life insurance policies on their employees?), this and myriad other tactics are detailed in her new book.
Schultz’s muckraking is first rate, but her analysis can occasionally be off. For example, she chastises corporate pension funds for supposedly low-balling rate-of-return projections in the go-go 1990s, when realized returns on pension fund assets were much higher than the 9 percent projections. Later in the book, she zings public funds for doing the opposite, using projections that (while lower than historical returns) are higher than the risk-free Treasury rate. While she’s hardly alone in picking on the public funds, I respectfully disagree.