Accumulation by Dispossession
Delphi, which was once part of General Motors, promised its salaried retirees 1) a pension, 2) health care, and 3) life insurance. They have 100% reneged on the latter two, and it looks like the retirees will lose about 2/3rds of their pension (although the latter is variable depending on age, apparently).
To keep the company afloat in the current economic climate, they are basically stealing from these salaried retirees.
It’s not clear whether this is legal—perhaps once the company entered bankruptcy they are allowed to fudge on their contracts and promises to retirees? I do know that this group of retirees has hired lawyers to sue. However, it will probably come as no surprise that these retirees don’t really have the money to pay legal expenses.
I know one retiree who, now that his health insurance has been dropped, is paying more than $1,000/month for it. He was paying for this out of his pension. However, once this cut into the pensions goes into effect, his pension will only be about $500/month. So, if he continues to pay for the health insurance, his retirement benefits will in effect be negative.
Doesn’t he have some life savings to turn to? Yeah, most of that was invested in Delphi stock, which is worth shite now.
The equity in his home? Have you seen what the housing crisis has done to the value of homes?
In addition, he’s not old enough to start collecting on social security. Why did he retire so early then, you ask? Because at the time he was faced with retiring with his pension or being laid off (which carries no eligibility for a pension).
Well, he can look for a job, right? Have you seen the unemployment numbers recently? It turns out that the labor market is currently not very kind to 60-year-olds, who are in competition with hundreds of thousands of unemployed people younger than them.
It looks like before long he will be destitute.
And this despite having “done everything right,” as they say: he always worked extremely hard, got a job with a great pension, saved a lot of money, was 100% loyal to the company, etc.
And people wonder why I might be suspicious of capitalism …