A race to the bottom?

New Census Bureau data released earlier this week shows that more Americans are living in poverty now than at any time since 1993. While an increase might be understandable, given the uncertain economy, the numbers are still staggering. An estimated one in six Americans, or 15.1 percent of the population, is living in poverty. That translates to 46.2 million people – the highest number in 52 years.

As defined by the Census Bureau, the poverty threshold for a family of four in 2010 is $22,114 a year. However, as we’ve noted before, these numbers probably understate the true level of poverty in this country. In any event, if such a high percentage of the population is living in poverty, prospects for a secure retirement look pretty bleak for far too many Americans.

The new poverty figures come on the heels of news reports describing the ways that companies are cutting back on the salaries and benefits they provide to their employees. 

A recent New York Times article highlights a two-tier pay scale that has been implemented by Detroit’s Big Three automakers, in which new hires receive lower pay and benefits than long-time employees. Embraced by the automakers, these new wage scales have been lauded for helping the automakers return to profitability. But, for the workers on the lower end of the wage scale, the road to profitability isn’t as clear. According to the article:

Some benefits for the lower-tier workers are scaled back as well. They get the union’s traditional medical benefits, but a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.

This “new personal retirement plan” places the burden of preparing for retirement on the backs of the very workers who are helping the automakers emerge from the brink of financial ruin.  Cutting pensions doesn’t make sense at a time in which the poverty rate for a family of four is at the highest it has been in 28 years.

The retirement security provided by a lifetime, guaranteed pension does more than just supplement income in retirement. Pensions lift people out of poverty.  People without pensions are more likely to live in poverty than those who have them.

 A report released earlier this year by the National Institute on Retirement Security states that “more than one-third of households that rely only on individual accounts plans will have income either below or near the poverty line. 

In a hearing on Tuesday, Senator Bernie Sanders (I-VT) noted that the United States has the highest overall poverty rate of any major industrialized country on earth, according to the Organization for Economic Cooperation and Development. With fewer companies offering traditional pensions and 401(k) plans proving to be inadequate, we are going to have to do something to address the retirement income crisis in this country.  Otherwise, the poverty rate is only going to get worse.

This blog entry was written by the Pension Rights Center's Joellen Leavelle and is cross-posted on the Pension Rights Center's PRC Perspectives blog.

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CHRISTOPHER CRUISE: Welcome to THIS IS AMERICA in VOA Special English. I'm Christopher Cruise. FAITH LAPIDUS: And I'm Faith Lapidus. Many small, family-owned businesses in the United States are struggling to survive. Along with the sluggish economy, they face competition from big box chain stores and restaurants. This week on coach factory outlet online our program, we visit a Washington, DC area hardware store, drugstore and restaurant and learn how they are competing successfully for customers. CHRISTOPHER CRUISE: The restaurant business is very competitive in the United States and many people choose to eat out at well-known chain restaurants. So how are small, family-owned restaurants Coach Outlet Store Online making ends meet? We visited Primo Family Restaurant in suburban Washington. It is an example of a small, family-owned operation where business is booming. Young diners enjoy a meal at the Primo Family Restaurant in Alexandria, Virginia FAITH LAPIDUS: It is another busy day at Primo Family Restaurant -- a popular dining Coach Outlet Online Store spot in Alexandria, Virginia for more than twenty-five years. C.A. Savoy says he does not like the atmosphere or food at the chain restaurants. Instead, he enjoys eating at Primo's. C.A. SAVOY: "Everything in here is home cooking. It's all fresh food and delicious." Server Tina Mitrakas has worked at Primo's since Michael Kors Handbags Outlet it opened. TINA MITRAKAS: "I like the customers. Everybody is friendly. I like the people I work with. It's like my second home. Lynne Sepple's son Nick is here, celebrating his birthday. LYNNE SEPPLE: "My son has been here since he was six days old. He's been here once Coach Factory Outlet a week since then and now he's 10." CHRISTOPHER CRUISE: Mary Wise often stops by Primo's after work. She plays the role of Martha Washington, wife of the first United States president, at nearby Mount Vernon. It is the home and property where George and Martha Washington once lived. Ms. Wise says enjoys coach outlet store Primo's because it feels comfortable. MARY WISE: "It is a place where you can consistently have good food, not too expensive. You know Coach Outlet Store Online you're never going to be confronted with something that's a surprise. I think people like that." Another appeal, she says, is owner Jim Nicopoulos. JIM NICOPOULOS: "I like to get involved with my clients. I find out about them. I touch them. I have to be involved with my customers and my staff at the same time." Everyone calls him Jimmy, including Mr. Savoy and his wife, who are long-time customers. C.A. SAVOY: "We've become part of Jimmy's michael kors outlet family now. He refers to Joyce and I as his mother and father." FAITH LAPIDUS: Jimmy bought Primo Family Restaurant five years ago. It is truly a family business - from the photos on the wall, to the dining area, where his father-in-law seats patrons. And in the kitchen, Jimmy's cousin Spiro Routoulas Michael Kors Outlet Store prepares Greek specialties. SPIRO ROUTOULAS: "He's a funny guy. He comes inside the kitchen and tastes what I make. Oh, it's fun." JIM NICOPOULOS: "It's quality control, Greek-style." Besides the food and friendliness, Jimmy says Primo's has another appeal over the chain restaurants. JIMMY NICOPOULOS: "Chain restaurants have to go Coach Outlet Store Online through a process of buying their food from large industries and distributors. We can get our produce local and our meats." CHRISTOPHER CRUISE: Elizabeth Bessel notices the difference and stays away from the nearby chains. ELIZABETH BESSEL: "I don't find the food to be that great. When I eat here, Jimmy Michael Kors will come to the table and tell us that he got that produce from somebody's farm."

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