Teresa Ghilarducci

Unions' Role in Argentine and Chilean Pension Reform

The 1981 privatization of Chilean pensions created immediate winners and observable benefits. It also created a model for Latin American pension reform. This study compares the Chilean and Argentine experiences by using political economy models of social welfare development as a framework for discussion. We suggest privatizing pensions could divide workers or create opportunities for unions to garner control over financial capital investments. The Argentine pension reform may diverge substantially if unions increase their participation in the pension fund management and worker education.

Getting it Right: Empirical Evidence and Policy Implications from Research on Public-Sector Unionism and Collective Bargaining

The United States is in the throes of a public-policy debate about public-sector unionism and collective bargaining. The ostensible trigger of this debate is the fiscal crises that state and local governments have been experiencing since 2008. The debate largely centers on the extent to which public employee unions have contributed to this crisis through the pay and benefits they have negotiated for public employees. The role of government as employer is connected in this debate to the role of government as a taxing authority and provider of public services. These roles are often claimed to be in conflict with one another — that is, governments as employers are seen as not exercising the same due diligence in setting pay and benefits as private-sector employers. The research evidence indicates, however, that these claims about public employment are based on incomplete and in some cases inaccurate understanding.

The Future of Retirement in Aging Societies

Amongst the hallmarks of a civilized society are that both the rich and the poor experience increasing longevity, and that both groups are entitled to leisure at the end of their working lives. Yet, as the economic crises of 2008–2009 reduces the value of assets in pension funds an emerging political rhetoric suggests work for retirees is healthy and that pensions take resources from younger people. This study shows that spending for programs for the elderly does not displace spending for younger populations. Evidence from 58 nations reveals pension and education spending increase together, which suggests that when political forces are allied with the elderly and young families, social spending increases across groups. A 10% increase in spending on education (as a percent of GDP) is correlated with a 7.3% increase in spending on pensions. Evidence from the US – where older people have more choices than they had before about working at advanced ages – suggests that older workers are increasing their labor force participation because retirement income is eroding, rather than because older workers find work more attractive and easier to do. Advertisers may link youthfulness with doing paid work but, in the US, the elderly improve their health after retiring, controlling for other factors affecting health status.

How to supplement Social Security fairly and effectively.

Over the past 3 decades, the base upon which Americans obtain income for retirement has become increasingly tied to fluctuations in the financial markets. Because Social Security provides a small percentage of pre-retirement income in retirement, most of the nations workers need a supplement to Social Security. This study demonstrates the failure of the 401(k) system and advances a bold, but realistic, solution to Americas crumbling retirement system: guaranteed retirement accounts (GRAs), a universal government program that supplements Social Security by providing guaranteed rates of return, by locking up balances until retirement, and by mandating annuities at retirement—with survivors benefits. The GRA plan is compared to other proposals, including President Obamas, which aims to expand the voluntary, commercial, individually directed account-based system.

Catch-Up Contributions: An Equitable and Affordable Solution to the Retirement Savings Crisis

This research was performed pursuant to a grant from the AARP Innovation Challenge. To address the needs of two overlapping groups – low and moderate wage workers and workers in their 50s with no or inadequate retirement wealth – we propose a program of cost-neutral voluntary (at least initially) Social Security catch-up contributions, into which all workers would be defaulted, starting at age 40 or 50. The program would use the progressivity of the Social Security benefit formula to target low-wage workers and to prevent adverse selection.

Explaining the Decline in the Offer Rate of Employer Retirement Plans between 2003 and 2012

Workplace retirement plans (deferred compensation plans [DCs] and deferred benefit plans [DBs]) help workers save for retirement conveniently, consistently, and automatically. But the percentage of firms offering retirement accounts is steadily declining. Between 2001 to 2003 and 2010 to 2012, the retirement plan offer rate of firms dropped from 63 to 55%. The drop is driven by a decline in both DCs and DBs. Using a probit model and an Oaxaca–Blinder threefold decomposition technique applied to data from the Current Population Survey (CPS) for 2001 to 2003 and 2010 to 2012, and using longitudinal analysis of the Survey of Income and Program Participation (SIPP) 2008 panel waves 3 and 11, the authors find that the labor-contracting environment dominates individual- and firm-level variables in explaining whether employers offer a retirement account to their workers. Therefore, attempts to raise retirement account offer rates must address the decline in workers’ bargaining power and the changes in norms relating to provision of benefits. This study contributes to the important discussion about trends in DC and DB coverage and the decline in retirement security.

New Policies for an Older Unemployed Population

This study updates what we know about the Great Recession’s impact on older unemployed Americans’ health and pre-retirement life by focusing on their wealth and income sources, health insurance access, poverty rates, unemployment duration, labor force drop-out rates, and Social Security claiming from 2009 through 2012 using the Survey of Income and Program Participation (SIPP) and the Current Population survey (CPS) (Sum, Ishwar and Trubskyy. 2011, Rix 2011 and Van Horn, Corre and Heidkamp 2011). A unique contribution is an in-depth description of unemployed older Americans’ asset levels using recent cross-sectional and longitudinal data that tracks individuals over time to evaluate how their assets changed because of unemployment. All this information helps evaluate how unemployed older Americans have weathered the Great Recession of 2007, five years later.