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Retirees Targeted for Austerity
Nov 18, 2013

Retirees Targeted for Austerity

By Scott Morrow, Retiree Chapter Chairperson

Since the Reagan Administration, workers have been targeted for austerity.  Under that President’s all-out war on workers, starting with his broken promises to PATCO, wages have been stagnant for the past 30 years.  Unions have been decimated with trickledown or voodoo economics to the point that union membership fell from 24.1% of the U.S. work force in 1979 to 13.9% in 1998.  This decline has continued to today with the Bureau of Labor.  Statistics reporting only 11.3% of Americans enjoy a Union at work as of January 23rd.

Most of these Union jobs were in the public sector while in private industries we have dropped to less than seven percent of jobs being Union!  You should all be aware that many states have passed legislation to ban public workers from being able to have a Union shop, thereby reducing how many workers can enjoy Union representation at work even more.

In addition to keeping workers in low paying dictatorial jobs, this trend reduces the Union’s role in getting out the vote and lobbying for worker friendly legislation.  For APWU workers, our Union has done an amazing job of keeping your pay and benefits above inflation so that you are one of the few making a livable wage; but what about when you retire?  Will your annuity and/or social security keep up with inflation?

In 1983, several laws were passed raising taxes, raising the retirement age, taxing retirement income and most notoriously, the windfall elimination provision that adversely affects most of our Postal Retirees to this day.

Sadly, with the current CPI-W (Consumer Price Index for Urban Workers) formula, most retired workers’ income rarely keeps up with inflation.  CPI-W is used to calculate COLA’s for both Social Security and Federal Retirement Systems.  Here is a breakdown of how this is calculated;

Housing: 41.4%, Food and Beverage: 17.4%, Transport: 17.0%, Medical Care: 6.9%, Other: 6.9%, Apparel: 6.0%, Entertainment: 4.4%.

A typical breakdown of what retired workers spend their retirement checks on would have medical care at the top with food and “other” (like heating bills) closely behind.  Many retired workers are not in the market for housing as they have paid off their home or may live in low-income housing units.  As you can see, their COLA is based on the stuff they no longer spend for because they no longer work, and “shorts” the spending areas they rely on to survive.  The CPI-W calculates retirees’ COLAs on an upside down or backwards basis instead of an actual spending basis.

That is NOT all!  There are numerous plans in Congress to reduce social security

payments, increase Medicare premiums and deductibles, raise the eligibility ages for retirement and social security, just to name a few.  Those of you who are retired know this, while those of you getting close to retirement may not.  These austerity measures affect all of us…our parents, uncles, aunts, grandparents, even our children.

The most disturbing issue right now on the table with Congress and the President is called “chained CPI”.  The chained CPI is usually 0.25 to 0.30 percentage points lower each year, on average, than the standard CPI measurements, and almost completely eliminates medical cost inflation. 

Let’s sum up here;

  • unions are decimated
  • workers haven’t had a raise in over 30 years
  • the retirement age needs to be raised
  • retirees haven’t kept up with inflation for the past 30 years
  • now we are going to reduce COLA’s even further for retirees while we increase their medical costs?

Hope you can recognize the warning signs.  Get active NOW!

SM/jd  opeiu #30  afl-cio

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