Category: Social Responsibility Page 2 of 3

The Press Needs To Help Build the Common Good

On October 12, 2018

In Common Good, Democracy, Internet, Social Responsibility, The Press

Image: epceurope.eu

While, it is necessary that all of us be engaged in building the common good – the press establishes the national dialog on major issues. When the press focuses on reporting problems only, with no solutions, monitoring or follow up we are left with a sense of frustration, desperation and hopelessness. One way the press can make a difference is to stick up for the people who cannot defend themselves. Recently, the PBS News Hour, assigned their correspondent to follow a three year old immigrant girl through her process of being reunited with her parents after separation at the border. PBS by staying on the story, asking the hard questions and continuing to press the administration for her status illuminated the fate of thousands of other children. A week ago, The New York Times completed an in depth analysis of the Trump family fortune and how Donald Trump acquired his fortune essentially as a gift from his father paying very little in taxes.

We see these in depth analyses and vigilant reporting as necessary to keep the truth flowing to citizens to help them make good decisions. Yet, reporting on major topics often winds up being a sound bite of 30 seconds or a few short sentences quoting a Senator or Congressman with very little context. The text of what the legislator says is scrolled across the bottom of the TV screen in summary form, with no data, context or way to follow up.

The internet makes available a wide variety of reliable research sources such as local, state and federal government agencies, non-partisan research groups and universities. Corporations have finely tuned their decision processes around a simple approach – gather data from all sides of an issue or topic both qualitative and quantitative, analyze the data, look into various solutions, present multiple solutions to decision makers, then decide.

The public today has major issues that need to be addressed by government agencies and their leaders – we need high quality reviews and analysis available to everyone to make good voting decisions. The old style of journalism focused on a lead to grab attention and then fill in the details later through the body of the story or at the end needs to be examined in the Internet age. Front page news can continue to present headline stories, yet they should be placed into context, with qualitative and quantitative data, presented graphically for easy viewing, with expert analysis from 360 degree points of view.

The fact there are only a few national newspapers, which fewer people are reading does not help the situation toward building the Common Good. We need Internet providers like Facebook, Google and Twitter to be the next generation of journalists, instead of feeding the fragmentation and opinion masquerading as news. A quick reading structure to the story, using multimedia maybe thought of as the ‘teaser’, graphics and charts with expert analysis from multiple points of view. Every story needs to go the next step and focus on how to solve the problem presented. Often, only problems are published leaving the reader with no way to take action. Some stories, do leave Internet links or ways to contribute to a family who had a fire and needs shelter. Yet, the major stories of our time: climate change, opioid epidemic, workers being left out of the economic mainstream, loss of hope in ghetto areas, or escalating health costs are not covered in an action enabling format. In this blog we have taken a building toward the common good and action approach by starting with a basic issues, providing a graphic of data from a non-partisan source, then follow up alternatives and action to solve the.problem.

The press needs to take responsibility for the fractionalization happening when a constant drone of problems are broadcast to people with no follow up, no facts for building a common understanding, presentation of alternatives and next steps for action to solve the problem. We need to become a problem solving society and the press in how they communicate issues to us can take us a long way toward a common good building nation.

Resetting the Web’s Balance of Power

By Patrick Hill

On October 4, 2018

In Corporate Power, Internet, Social Responsibility, Solution

Internet pioneer, Tim Berners-Lee has an audacious yet powerful goal for his latest startup Inrupt. He wants to “reset the balance of power on the web and reignite its true potential.” Building work with other Internet activists at MIT he is developing a decentralized personal web based platform called Solid. He is introducing a ‘Netscape’ browser front end that gives the user control of all his own content. During a demo he shows a fundamental set of tabs with a To-Do List, Calendar, Chat Address Book and eMail. Yet, this screen hides from the user one basic difference, all his data is stored in a POD or Personal Online Data store. All the content he creates or uses is stored in a POD, not some corporate server like Google, or Facebook.

Source: Tim Berners-Lee – 9/29/18

Users of the Inrupt browser and applications are given a Solid identity and access key to personalize security. Berners-Lee envisions an Alexa like persona assistant, he calls Charlie where a user can be comfortable accessing health records, financial accounts and personal memos in POD storage not a Amazon cloud server. He sees global web developers writing appls for Solid and Inrupt to take back the Internet, provide the security and safety of personal identity management and reduce the need for government regulation.

We are excited about the opportunity to finally end the corporate control of user created content which we have always believed is the user’s property not the Internet application provider. Google, Facebook and Apple have the idea that they own our content, can do anything they want with it, including selling it to partners without our permission.

Solid and Inrupt are revolutionary in scope, technology and return the Internet to its original vision – to empower users and link them together on a peer to peer basis. Not, a corporate behemoth holding all the content power to a weak end user. Maybe with technology like Solid we can finally get back to a democracy of entrepreneurs, small business and users controlling their content, its use and distribution!

Building Economic Independence Can End Hopelessness

By Patrick Hill

On September 28, 2018

In Common Good, Consumer Protection, Corporate Reform, Education, Entrepreneurship, Heartland Economics, Household Debt, Social Responsibility, The Elite

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: operationhope.org

The greatest threat to a civil society are people without hope. They are angry, feel the system is rigged and look for scapegoats as the cause of their poor economic standing. This group left out of the economic mainstreams is located in rural regions where globalizations has taken jobs, and in inner cities where companies have fled to the suburbs. These people that John Hope Bryant calls, The Invisible Class, are off the economic grid, and largely left out of the political mainstream as well except when they demonstrate on the streets when a policy has gone too far.

Economic independence is crucial if we have an economy that works for the 99 % not just the 1 %. To build economic opportunities our governmental policies and programs must ensure a level playing field for all people and support a high quality education for all income levels.

It is about building our society for the common good. It means enabling building enterprises, non-profits and organizations that serve people. Our policies should be about enabling the ability of people to build. We need to rethink our framing of labor from a cost to an asset which it always was. Capital means in the Latin root ‘knowledge in the head’ derived from the capital end of a column at the top in a building. Poverty is not about money so much as a dearth of relationships and know how to build the skills toward a productive life, where money is a indicator of success.

Somehow the early accountants working for middle age Venetian families invented double entry accounting systems with debits and credits called assets money, land and equipment while labor was labeled an expense. Labor is viewed as an expense to this day because the owner-entrepreneur has to pay employees to work. Workers have had the ‘cost’ yoke around their necks ever since. Yet, are employees really a cost? The staff are the ones doing the work, creating the product or service and solving the problems – money does not create the product or service only people do. CEOs are often heard to say that employees ‘are our key asset’ but then treats them like second class citizens in making policies in the company, gaining a fair share of the profits or enjoying job hours flexibility. Today, Wall Street applauds wages being stagnant for the 80 % while profits go up and wealth accumulates for The Elite.

We need to change our perspective about people and their labor. How do we build an economy that works for all? One way is to focus on enabling, The Invisible Class with economic independence. Bryant points out that most of these people have credit scores at 550 or below, so they can’t get jobs, buy automobiles, or purchase a home. In short they can’t participate in the economic mainstream. Bryant’s Operation Hope program teaches those in poverty how to increase their credit scores, start businesses and strategies for accumulating wealth. By bringing them into the economic mainstream they can begin to feel more confident about their lives and the future. Operation Hope has partnered with Bank of the West who invited Bryant to locate Operation Hope offices inside their branches. Bank of the West in a far reaching vision understands educating prospective customers on the good use of credit and finance will make them better customers and likely to come back for additional services.

We need to learn from programs like Operation Hope, understand its key elements and see how to implement its tenets and power on a major scale like the Marshall Plan if we are to make a dent in the level of poverty in the Heartland or cities. The only way we are going to increase the size of our economy in a fundamental way is to empower millions of workers who are out of the economic mainstream. We have more companies going bankrupt then new businesses being started for the first time since WWII. It is time to recognize we have people who are assets with innovative skills to can build an economy that works for all.

High Tech Behemoths Run State and Local Politics

By Patrick Hill

On September 25, 2018

In Corporate Power, Corporate Reform, Democracy, Housing, Local Politics, Social Responsibility

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: youtube.com

Recently the high technology power houses like Google, Facebook, Uber and Amazon have appeared in the news related to national issues privacy, Russia hacking, driver contractors and conservative viewpoint censorship. There is an even more troubling trend; major high tech corporations are controlling key decisions, policies and direction of development for many major American cities and states. Amazon is throwing its weight around the U.S. in search of a 2^nd corporate headquarters.

Source: LA Times – 1/19/18

Amazon has already received millions of dollars in tax subsidies and compensation for locating warehouses in some regions. The Governor of Maryland has offered a $5 billion package of transportation and tax breaks to the company to locate in Maryland, while Newark and New Jersey have offered a $7 billion package of subsidies. Amazon has been adept at Seattle politics as well, when the city unanimously passed a $275 per employee tax on businesses to pay for homeless shelters and affordable housing. Amazon along with local businesses pushed back and the measure was repealed.

Apple purchased a site previously owned by Hewlett – Packard for its Apple Park spaceship headquarters. The Cupertino city council was delighted with the plan to put 14,000 employees on the site, doubling the number of workers at the large parcel. After the headquarters building was built the local council realized that the traffic congestion around the site and the city was going to be a major problem. The city then proposed a per employee tax to gain revenue of $10 million versus the present tax structure based on square footage would have netted only $800, 000. The proposed funding would have been allocated to buses, road widening, express lanes and other traffic flow enhancements. Apple and other businesses protested so the proposal was tabled until the 2020 election.

Uber has gone into cities all over the country from its base in San Francisco without authorization, creating major competition to local taxi companies. Cab companies in most cities purchase a medallion from the city at great expense, some in the hundreds of thousands of dollars to license them to provide ride services in the city. Uber has run into opposition in some major cities like New York, where the number of cars is capped.

Google has quietly purchased hundreds of acres of land in downtown San Jose, until newspaper stories began to spot light the land purchases. The high tech behemoth plans on deploying up to 20,000 employees around the city hub and train station. Planning for a huge employee center near public transportation makes sense, but local businesses and housing near purchased lots are under pressure to sell to make room for the corporate plan. Local housing groups are concerned about the availability of affordable housing and small business.

Next steps

Our concern is that major corporations, their planning departments and executives have so much power that local elected leaders have little clout to push back on building or development that may not be in the interest of the local community. As local government struggles to gain revenues lost to an Internet based economy, and stiff opposition from local citizens to raising taxes causes local city government power to decline.

Local leaders will need to rethink their base of power in the city, seeking alliances with local businesses while building a base of economic support for city services. Cities and states often interested in luring businesses to their local regions spending hundreds of millions of dollars in the process maybe missing the point of their charter. Building necessary infrastructure, affordable housing, fast transportation systems, healthcare for those not covered and safe streets are their mandate from local citizens. It is a challenging time for local and state governments, yet they need to take up the mantle and assert the policies and programs they were elected to implement. Plus, corporations need to take responsibility for their actions and how they affect building the common good of the community.

What are our goals as Americans?

By Patrick Hill

On September 14, 2018

In Common Good, Democracy, Education, Self Interest, Social Responsibility

Image: bu.edu

We need to come together on what we all want if we are to have a government that works for all not just the rich. What are our goals? What is our mission as a country? What binds us together in seeking the common good?

The Preamble to the Constitution provides insights and guidance:

“We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”

Let’s look at the first phrase ‘ to form a more perfect union’ – this phrase implies that things are not perfect that the country is a work in progress. To ‘establish justice’ for all means not a system of justice just for the top 1 % or the privileged. Justice means that the law is blind to outward power or religion, race, color or other personal factors. Justice says that equality of justice for all under the law needs to happen in applying the law to all, so the poor, black or others don’t feel the weight of justice on them greater than other people. To ‘ensure domestic tranquility’ we won’t enjoy life, raise families, perform in our jobs, or provide service if our country is in constant uproar or unsafe. Peace needs to be protected and available to every citizen, including those living in ‘unsafe areas’, they have a right to live in a safe neighborhood too. Tranquility means the political dialogue between difference points of view is conducted in civility and respect.

To ‘provide for the common defense’ means that we expect our government to keep us safe from foreign aggression and the government – not vigilantes are to keep the peace under the Constitution. To ‘promote the general welfare’. Key environmental elements of our existence we all share; air, water, land means we will be strident in protecting our natural resources. We need to support institutions that sustain the general welfare like federal, state and local agencies that ensure we have access to all these environment elements but also, education, health and freedom to travel.

Finally, to ‘secure the blessings of liberty to ourselves and posterity’ implies that there is equality of opportunity for all. We all have differences, we have the liberty to pursue whatever goals we have for our lives, our families and our friends. We need to ensure that equal opportunities are safeguarded and provided for all regardless of wealth, race, color, religion or orientation. Education is a keystone to our providing a path for those at the lower end of the income scale to apply themselves, get a good education and contribute to our country to the highest level of their ability possible.

Our country thrives as the most prosperous country in the world because we let people be free to follow their dreams and help those who come to our shores to pursue their dreams here. We need to remember the goals the Preamble to the Constitution sets out to establish through a government by the people. We must become united in these shared goals to make real progress in solving the national problems we face.

California Urges World Leaders to Move Fast On Climate Solutions

By Patrick Hill

On September 13, 2018

In Climate Change, Environment, Scientists, Social Responsibility, Solution

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: globalclimateactionsummit.org

Yesterday, California Gov. Jerry Brown, convened the Global Climate Action Summit in San Francisco. The Summit brought together climate change leaders from around the world in private, government and non – government sectors to focus on action-oriented programs to mitigate the effects of global warming. Just before the meeting started Governor Brown signed into law a goal for the state to be using 100 % electric and renewable energy by 2045.

The conference sponsors focused on urgency in their introduction to the conference:

“The Global Climate Action Summit, happening midway between Paris 2015 and 2020, is timed to provide the confidence to governments to ‘step up’ and trigger this next level of ambition sooner rather than later.

The momentum we generate this year must lead to bending the curve of emissions down by 2020—science advises us that this gives the world the best opportunity to prevent the worst effects of climate change. 2018 therefore must be the beginning of a new phase of action and ambition on climate change.

The Summit will underscore the urgency of the threat of climate change by mobilizing the voices and experience of real people, in real communities already facing real and stark threats. It will challenge and channel the energy and idealism of people everywhere to step up and overcome it.”

The carbonization of our planet is the preeminent challenge of our times, possibly threatening our very existence long term. World-wide temperature records are being set from Tokyo to Washington as the following heat map for 2018 indicates:

Source: The Washington Post – 7/5/18

About 25 % of the heat is being soaked up by the ocean causing algae blooms which can contaminate water and cause wildlife to die. Scientists in the Pacific Northwest have discovered how certain ocean plants can dilute and mitigate water acidity. There are a variety of solutions being developed by governments and private businesses, yet what we need is a coordinated effort focused on those solutions that are most effective, affordable and can be quickly implemented.

We applaud California leaders for taking the initiative on this critical issue of our times to urge world governments to implement solutions to climate change before the problem goes beyond our ability to cope with the effects.

57M Gig Economy Workers Hit Benefit Limits

By Patrick Hill

On September 5, 2018

In Corporate Reform, Gig Economy, Health insurance, Retirement, Social Responsibility, Wages

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: thcceomagazine.com

Gig workers create millions of dollars of goods and services for the U.S. economy yet remain frustrated at not picking off a benefits stream for themselves. While, gig economy workers enjoy ‘lifestyle benefits’ they are lacking in good health insurance, retirement plans, stock options and addons like commute cost compensation, discounts at restaurants, staff lunches, evening taxi service, onsite laundry and company cafeteria. Income is irregular and unpredictable for contractors whether the gig is a project or a longer term assignment with an agency.

In Silicon Valley and many high growth regions jobs in security, food concession, facilities management, IT, accounting, travel, web design, and HR have been outsourced, contracted or shifted to independent contractor roles working in their home. While independent contractors have autonomy and work flexibility they are missing key benefits. Contingent workers like Uber drivers using the Uber app to find riders and handle billing are essentially working for the company yet not enjoying full time worker benefits.

So, how widespread in our economy is the contractor workforce? Gallup completed a recent survey and found about 36 % of the workforce is engaged in some type of gig work.

Sources: Gallup, The Wall Street Journal, The Daily Shot – 9/5/18

Seven percent of workers had one traditional job and a gig job while 3 % had two gig type jobs for a total of 10 % with two jobs. Workers in the bottom 80 % in income have seen their wages actually decline over the past 10 years. So, it is no surprise they need to hold at least two jobs to maintain their standard of living. The number of workers holding multiple jobs has skyrocketed in the past few years.

Sources: Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/5/18

Note the high during the Great Recession of multiple job holders, and yet today in a strong economy we see a similar peak in workers with multiple jobs. Is this economy really working for the majority of the labor force?

Next Steps:

The economy has not ‘lifted all boats’, we know that the top 10 % in income received 90 % of the income gains since 2008. The most recent Tax Bill from Congress benefited the top 1 % and corporations to the tune of a $1 trillion deficit to be paid by all taxpayers who are seeing their incomes and benefits decline. The gig economy has been a mechanism for corporate executives and their wealthy shareholders to cut costs, pass along retirement benefits responsibility to employees and shut many workers out of profit sharing programs.

We have proposed in previous posts that in addition to raising worker wages, gig economy works would be well served if they received health insurance from birth, a retirement program in tandem with Social Security at the time of a worker’s first job and other income protections.

It is time we recognize that the gig economy is here to stay, it is a key component of the dynamism and flexibility in the workforce to drive growth and innovation – we need to plan for the just needs of workers to make the economy work for all.

Workers Facing High Prices, Stagnant Wages Are Taking On Debt

By Patrick Hill

On August 28, 2018

In Consumer Squeeze, Corporate Nation State, Corporate Power, Corporate Reform, Debt, Inflation, Low Income Finance, Social Responsibility, Wages

Image: guardiandebtrelief.com

Worker pay continues to stagnant. Yet, companies are raising prices. The price increases are due to tariff based supplier cost increases and government tax credits juicing the economy. The Federal Reserve survey for July in the Philadelphia area showed that manufacturers plan on raising prices by 3 % versus 2 % last year.

Source: HIS Markit, Bloomberg – 8/28/18

How did companies get this pricing power? Corporations have received a $1 trillion tax cut, reduced regulations by the Trump administration, less oversight by the EPA, and less scrutiny on mergers. Companies are at the zenith of their power allowing them to raise prices, keep wages low – below inflation, while increasing profits and executive compensation.

Source Bureau of Labor Statistics, Bloomberg – 8/24/18

Worker economic power continues to wane, as real wages actually turned negative this past month. Worker share of income as a percentage of non-farm business income is at a 70-year low even in a strong economy.

Source: Bureau of Labor Statistics, Bloomberg Businessweek, The Wall Street Journal, The Daily Shot – 8/27/18

How are consumers handling the budget shortfall? By borrowing, the debt as a percentage of income of the bottom 80 % is 4 times the debt of the top 20 %.

Most of this debt is in the form of credit card, auto loans and home equity lines of credit. Home owners have done a better job keeping their first mortgages in line with incomes this year versus the housing bubble of 2008.

Next Steps:

Caught between high prices and flat real wages, consumers are filling the budget gap by piling on debt. Companies are getting even richer from both sides of making a profit – increasing income by raising prices and reduced costs by keeping worker wages low.

Why is this vise tightening on worker budgets? Corporations are accumulating power every day at an ever increasing rate; buying other companies, issuing stock backs to hype stock price, increasing lobbying budgets to get the federal government to make rules that tip their way, consolidating supply channels, distributing manufacturing world-wide and automating every job they can conceive be done by a robot. Prices are rising due to tariffs in many industries, the wide spread use of tariffs on some consumer goods, contagion of one product category to another (tit for tat) and shrinking channels of distribution reducing price competition.

Meantime, workers continue to lose power at even faster rate than corporations gain power. Wages have been stagnant for 20 years for the bottom 80 % in income. We have outlined in previous posts why wages have actually declined – rise of corporate power, fewer unions, automation, mergers in the same industry reduce the overall number of jobs, increased availability of candidates over the Internet, outsourcing, and the gig economy. Workers are getting some relief in the gig economy with lawsuits to recognize Uber drivers as employees, but it is a tough long slog through the courts. Overall, most court decisions are favoring companies in reducing union power, allowing companies to give millions to campaigns unchecked (Citizens United case) and overtime pay.

Eventually prices will rise too high for declining incomes causing consumer spending to fall. Consumer spending has been falling this year, with the most recent decline announced today, as a revised downward revision to 3.8 % in 2^nd quarter.

Sources: BEA, Factset – 6/1/18

Remember, corporate executives are compensated handsomely for what? Making more profit by increasing income and reducing costs. Workers, after all the PR from executives are viewed as a cost when managers get into salary and compensation review meetings. Workers are being squeezed between low wages and increasing prices nationally to feed the ever increasing profit making systems of corporations. Until, we as a society start to see that workers need to be an equal partner in corporate management, sharing in profits and benefits things will not change. Without workers receiving a fair share of the economic pie, the common good will suffer and will lead to civil unrest and a contracting economy when consumer spending evaporates. The economic reality is that the U.S. economy is not working for the bottom 80 % and until it does we are faced with major disruptions in our economic life.

Corporations Have A Responsibility for The Common Good

By Patrick Hill

On August 10, 2018

In Common Good, Corporate Power, Corporate Reform, Social Responsibility, Wages

Image: Your Little Planet

Corporations provide the economic foundation for the common good in supporting a community. Air, water, and land need to be kept in good stewardship by companies using these natural resources and returning them as they found them. Yet, there is an economic responsibility too – good jobs for fair pay while keeping the social contract with the worker.

The New York Times returned to the Carrier site in Indianapolis that 20 months ago President Trump ‘saved’ from being moved to Mexico. Today, the furnace plant is plagued by absenteeism and concerns that the plant will be shut down when the political light is gone. Management has not helped when the CEO of the Pratt and Whitney that owns Carrier said that there would be lost jobs and automation would help to reduce costs. Unfortunately, the Carrier situation is true for many blue collar workers in America, always looking over their back, with a cloud hanging over their job future. There isn’t a cloud hanging over executives careers.

How can workers make commitments, to their families, pay mortgages, make car payments are send children to college when there is economic uncertainty hanging over them.

It used to be that corporate management was concerned with the future of their workers in a deep and personal way, which was reflected in their policies. All too pervasive in executives suites throughout America is the focus on profits, stock price and how to make more money – with worker security and careers taking a second place or not at all in the financial plan. Certainly corporations have extreme competitive pressures worldwide, government regulations and personnel laws to adhere to. Yet, when companies announce automation plans, they seem to forget the people losing jobs to robots are unlikely to get another job that pays as well.

Automation is a social concern, damaging the common good that workers can’t be just flung out of work while all the executives left make more money. There is something intrinsically unfair with this model.

People are the most important resource in our economy, we need to be thinking of how we treat people when economic storms come. When companies automate workers out of job they need to take the social responsibility for ensuring the worker thrown out of work and still progress positively in their economic life. While, a capitalist democracy supports corporations as private property and run entity, with the onslaught of automation corporations can’t just run the other way after giving the laid off worker a small severance check and say ‘good luck’ That approach is just not enough, the corporation profits the worker loses. We need to end the spiral down for workers, they need to be guaranteed a productive economic life just the same way an executive who is left with the benefits of an automated factory.

Seniors Feeling Financial Crunch – Increased Bankruptcies and Pension Overpayment Collections

By Patrick Hill

On August 6, 2018

In Consumer Squeeze, Medicare, Public Interest, Retirement, Social Responsibility, Social Security, Wages

Image: debt.org

Researchers tracking the financial blight of seniors report that seniors over age 65 are 3 times more likely to file for bankruptcy. Seniors are caught by reduced pensions, co pays on their children’s student loans, spiraling medical costs and lost wealth from the Great Recession.

Sources: Consumer Bankruptcy Project, The New York Times – 8/3/18

The post – Baby Boomer generation is feeling squeezed too as their bankruptcy filings are up over 66 % for the 55 to 64 year old group. Many Baby Boomers just beginning their retirement or in the their last years of savings were hit hard by the Great Recession, wiping out 401k investments in stocks and losing home equity wealth too. In all households lost $14 trillion in wealth, most of the income and asset recovery of the past 10 years has gone to the top 10 % in income.

The Consumer Bankruptcy Project is an ongoing effort led by Professor Thorne, University of Idaho; Professor Lawless; Pamela Foohey, a law professor at Indiana University; and Katherine Porter, a law professor at the University of California, Irvine. Their universities fund the project as they review court documents and send out questionnaires to retirees.

Social Security has not been able to fill the gap. Nor was Social Security designed to be the sole source of income for seniors – it was setup to supplement pensions and savings. Over the past 30 years corporations have shifted from defined benefit (pension direct payment) plans to defined contribution plans like 401k where the worker makes the majority for the contributions and the employer is off the hook to make direct fixed payments. Yet, today for 33 % of retirees receiving Social Security it provides 90 % of their income. Medicare and drug costs cut into their Social Security checks:

Sources: The Kaiser Family Foundation, The New York Times – 8/3/18

Health care spending for the average retiree is increasing every year beyond Social Security income and drugs become more expensive, some with standard prices of $70 per dose gauged up in price to $1700 per dose.

Adding insult to injury firms like AT & T are contracting with collection agencies to claw back overpayments to pensioners. The firms make up the calculation tables and send out the checks now they blame the pensioner, who has already spent the money. It is important if the retiree receives a statement of planned disbursements to send back incorrect checks, however in most cases the checks were sent over some years until the error was found and the retiree had no idea that there was an overpayment.

Next Steps:

The perfect financial storm for retirees comes down to the basic fact that corporations shifted their responsibility for pensions onto workers helping the financial services industry sell more financial products to an naïve and financial challenged workers. Professional financial managers were replaced by amateur workers doing their best to invest their 401k plans and save for the future. For the bottom 80 % income the last 30 years their wages have been stagnant with increasing educational costs for their children and increasing medical costs for themselves. The federal government has been of little help, not indexing Social Security payments to the actual costs seniors incur for increasing medical and health services costs.

Pension Claw backs – this makes no moral sense, many retirees have spent 20 or 30 years of their lives for the business, the business made the mistake they need to take care of it. In AT & T’s case they spend billions on stock buy backs to make their executives and shareholders rich, they could take a fraction those funds and take care of their seniors and fund their pension liabilities appropriately.
Retirement Income – in previous posts we have recommended that instead of an incredible mess of 401k accounts, financial houses and amateur investment management by workers, a guaranteed retirement program be implemented starting at the time a person begins work and receives his Social Security card. Worker savings toward retirement would be transferred into this one account for a lifetime, with Social Security contributions by the federal government, and savings by the worker. A portion would be guaranteed by the federal government and professionally managed as a defined benefit plan. Workers could opt for professional management of all their funds as well.
Medical Costs – as we have recommended health insurance should be run by one entity the present Medicare operation for all Americans from the time of birth. Medicare already has a formulary for drugs, and should be authorized to negotiate drug costs for all patients. Standard compensation for procedures and quality of care implemented for Obamacare should be extended. Drug companies will no longer be able to buy back their stock, but instead will be required to spend those funds to bring drug costs down, or reduce costs in other ways. Direct prescription drug advertising should be outlawed to save the over $1 billion spent a year in wasted advertising and spend the funds on price reductions.