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It’s insane to me that private businesses are strapped with the burden of running the country’s pension and healthcare systems. How on earth the US has managed

It’s insane to me that private businesses are strapped with the burden of running the country’s pension and healthcare systems. How on earth the US has managed to remain economically competitive under those circumstances is a miracle. These functions really need to be divorced from one’s employer, and either run independently via private industry, or via government. Especially in modern times when people job and career hop frequently.

tomrod 7y ago
It did so by kicking the can down the road. When many of these were set up in the post-WWII economy the population was growing dramatically. As with most infrastructure, policy is often scoped to the needs of the current day and gets stale after a few years.
SketchySeaBeast 7y ago
I think we can sum up the previous success of this model with two words: "Baby boomers". Edit: To be clear, I'm not saying "It's all baby boomers fault". It was a massive, prosperous workforce holding up a relatively small retired population. That huge workforce is only recently moving into retirement, causing a massive shift in retired/employed, which is causing problems.
lucb1e 7y ago
> How on earth the US has managed to remain economically competitive Well after you're done working, you don't work anymore. So if a country spends zero on providing pensions, they are actually more economically competitive. Whether one would want to live there is another matter, but the lower income people have little money to move and build a life elsewhere and the higher income people can arrange a good future for themselves.
- speakwithalisp 7y ago
  Losing their income has a greater economic impact than just their own wellbeing. Pensioners might be retired but they are still consumers with debts of their own. Homelessness alone is very costly to the U.S.
  - DuskStar 7y ago
    Pensioners are window-breakers, in today's society. They consume, but never produce. (This used to be less true, with grandparents providing childcare etc) This doesn't mean we should kill them all off! But the consumption of a pensioner (or retiree in general) is more akin to digging a ditch and filling it back in than it is to anything productive. You can't build an economy on consumption alone.
- solotronics 7y ago
  Why not work somewhere high income for most of your life and then finish up somewhere with a nice pension?
  - ghaff 7y ago
    Pensions depend on years worked and often don't pay out at all until typically quite a few years of service have been accrued.
    - solotronics 7y ago
      I meant more along the lines of a country that has a good pension for everyone like in Scandinavian countries.
      - ghaff 7y ago
        I imagine that, unless you have money that makes the question mostly irrelevant, you can't just breeze into a Nordic country around retirement age and expect to settle in and collect nice retirement benefits.
mattnewton 7y ago
Well, they are divorced from the employer these days, because most jobs just don’t offer a pension program at all. Social security is all most people will have at retirement from the comming generations. https://www.marketwatch.com/story/generation-x-stop-slacking-you-need-to-catch-up-on-saving-for-retirement-2019-09-23 https://www.marketwatch.com/story/generation-x-stop-slacking...
- seanmcdirmid 7y ago
  And 401ks, for those that have decent incomes to save $19k/year + match at least. So not almost all will depend on SS, but many surely will.
  - thatfrenchguy 7y ago
    But most 401ks have ridiculously low balances, with the median for people 50-59 at 150k: https://www.financialsamurai.com/median401k-retirement-balance-by-age-is-dangerously-low/ https://www.financialsamurai.com/median401k-retirement-balan...
    - toomuchtodo 7y ago
      48 percent of American households over the age of 55 still have no retirement savings. [1] [2] None. Zero. 401ks were a legislative hack for high income earners [3], and were used to con the middle class out of their additional pension comp. Those funds instead ended up in shareholder pockets, with a small amount provided as 401k matches. [1] https://www.cnbc.com/2019/04/05/these-people-are-on-the-verge-of-retiring-and-they-have-nothing-saved.html https://www.cnbc.com/2019/04/05/these-people-are-on-the-verg... [2] https://www.gao.gov/assets/680/670153.pdf https://www.gao.gov/assets/680/670153.pdf (GAO report) [3] https://news.ycombinator.com/item?id=21827154 https://news.ycombinator.com/item?id=21827154
    - ipython 7y ago
      Those surveys are misleading though. I have a relatively small amount in my 401k because I have not been in my current job for long. Every time I change jobs I roll over the 401k balances into an IRA. So... unless someone's been in their job for 5+ years, their 401k balance may be very low.
legitster 7y ago
Technically they had social security. It's pretty clear that that's not enough to fund the average retirement, but the company chose to offer better to stay competitive.
peterhunt 7y ago
they aren't. private pensions like this are rare and generally pay a few hundred dollars a month [1] while social security, run by the government, pays much more [2] and is what most people exclusively rely on. 1. http://www.pensionrights.org/publications/statistic/income-pensions http://www.pensionrights.org/publications/statistic/income-p... 2. https://www.cbpp.org/research/social-security/social-security-benefits-are-modest https://www.cbpp.org/research/social-security/social-securit...
- ghaff 7y ago
  Unless I'm misunderstanding you, that first link shows that, for people who get pensions, the pension is in the same ballpark as Social Security. (Private pensions tend to be on the lower side but they're still close to $1,000 month which is about 2/3 of the Social Security payment in that table.)
ishjoh 7y ago
So it's interesting, for both of these the explosion in their popularity actually happened in WW2, although both existed before WW2. During WW2 there was a labour shortage as the wartime economy was booming. President Roosevelt signed into law the Stabilization Act of 1942, which froze direct compensation and bonuses, but exempt to the freeze were benefits like health insurance and pensions. So that's what employers started using to attract employees. https://www.chicagotribune.com/opinion/commentary/ct-obamacare-health-care-employers-20170224-story.html https://www.chicagotribune.com/opinion/commentary/ct-obamaca...

tomrod 7y ago

It did so by kicking the can down the road. When many of these were set up in the post-WWII economy the population was growing dramatically. As with most infrastructure, policy is often scoped to the needs of the current day and gets stale after a few years.

SketchySeaBeast 7y ago

I think we can sum up the previous success of this model with two words: "Baby boomers". Edit: To be clear, I'm not saying "It's all baby boomers fault". It was a massive, prosperous workforce holding up a relatively small retired population. That huge workforce is only recently moving into retirement, causing a massive shift in retired/employed, which is causing problems.

lucb1e 7y ago

> How on earth the US has managed to remain economically competitive Well after you're done working, you don't work anymore. So if a country spends zero on providing pensions, they are actually more economically competitive. Whether one would want to live there is another matter, but the lower income people have little money to move and build a life elsewhere and the higher income people can arrange a good future for themselves.

speakwithalisp 7y ago
Losing their income has a greater economic impact than just their own wellbeing. Pensioners might be retired but they are still consumers with debts of their own. Homelessness alone is very costly to the U.S.
- DuskStar 7y ago
  Pensioners are window-breakers, in today's society. They consume, but never produce. (This used to be less true, with grandparents providing childcare etc) This doesn't mean we should kill them all off! But the consumption of a pensioner (or retiree in general) is more akin to digging a ditch and filling it back in than it is to anything productive. You can't build an economy on consumption alone.
solotronics 7y ago
Why not work somewhere high income for most of your life and then finish up somewhere with a nice pension?
- ghaff 7y ago
  Pensions depend on years worked and often don't pay out at all until typically quite a few years of service have been accrued.
  - solotronics 7y ago
    I meant more along the lines of a country that has a good pension for everyone like in Scandinavian countries.
    - ghaff 7y ago
      I imagine that, unless you have money that makes the question mostly irrelevant, you can't just breeze into a Nordic country around retirement age and expect to settle in and collect nice retirement benefits.

mattnewton 7y ago

Well, they are divorced from the employer these days, because most jobs just don’t offer a pension program at all. Social security is all most people will have at retirement from the comming generations. https://www.marketwatch.com/story/generation-x-stop-slacking-you-need-to-catch-up-on-saving-for-retirement-2019-09-23 https://www.marketwatch.com/story/generation-x-stop-slacking...

seanmcdirmid 7y ago
And 401ks, for those that have decent incomes to save $19k/year + match at least. So not almost all will depend on SS, but many surely will.
- thatfrenchguy 7y ago
  But most 401ks have ridiculously low balances, with the median for people 50-59 at 150k: https://www.financialsamurai.com/median401k-retirement-balance-by-age-is-dangerously-low/ https://www.financialsamurai.com/median401k-retirement-balan...
  - toomuchtodo 7y ago
    48 percent of American households over the age of 55 still have no retirement savings. [1] [2] None. Zero. 401ks were a legislative hack for high income earners [3], and were used to con the middle class out of their additional pension comp. Those funds instead ended up in shareholder pockets, with a small amount provided as 401k matches. [1] https://www.cnbc.com/2019/04/05/these-people-are-on-the-verge-of-retiring-and-they-have-nothing-saved.html https://www.cnbc.com/2019/04/05/these-people-are-on-the-verg... [2] https://www.gao.gov/assets/680/670153.pdf https://www.gao.gov/assets/680/670153.pdf (GAO report) [3] https://news.ycombinator.com/item?id=21827154 https://news.ycombinator.com/item?id=21827154
  - ipython 7y ago
    Those surveys are misleading though. I have a relatively small amount in my 401k because I have not been in my current job for long. Every time I change jobs I roll over the 401k balances into an IRA. So... unless someone's been in their job for 5+ years, their 401k balance may be very low.

legitster 7y ago

Technically they had social security. It's pretty clear that that's not enough to fund the average retirement, but the company chose to offer better to stay competitive.

peterhunt 7y ago

they aren't. private pensions like this are rare and generally pay a few hundred dollars a month [1] while social security, run by the government, pays much more [2] and is what most people exclusively rely on. 1. http://www.pensionrights.org/publications/statistic/income-pensions http://www.pensionrights.org/publications/statistic/income-p... 2. https://www.cbpp.org/research/social-security/social-security-benefits-are-modest https://www.cbpp.org/research/social-security/social-securit...

ghaff 7y ago
Unless I'm misunderstanding you, that first link shows that, for people who get pensions, the pension is in the same ballpark as Social Security. (Private pensions tend to be on the lower side but they're still close to $1,000 month which is about 2/3 of the Social Security payment in that table.)

ishjoh 7y ago

So it's interesting, for both of these the explosion in their popularity actually happened in WW2, although both existed before WW2. During WW2 there was a labour shortage as the wartime economy was booming. President Roosevelt signed into law the Stabilization Act of 1942, which froze direct compensation and bonuses, but exempt to the freeze were benefits like health insurance and pensions. So that's what employers started using to attract employees. https://www.chicagotribune.com/opinion/commentary/ct-obamacare-health-care-employers-20170224-story.html https://www.chicagotribune.com/opinion/commentary/ct-obamaca...