Practically overnight the Stewarts
found themselves robbed of their job
security—a story that is becoming all
too familiar across America. Of the
nearly 1. 9 million jobs that have vanished since the recession began in late
2007, more than 600,000 belonged
to people in manufacturing, many
of whom were in their final, peak-earning years. That caps a decade
in which 4 million factory workers
watched their jobs evaporate, many
because of imports and the relocation
of U.S. factories overseas. “We’ve never seen such a protracted downturn
in manufacturing in modern history,”
says Bob Baugh, executive director
of the AFL-CIO Industrial Union
Council. And it’s not over yet: the Economic Forecasting Center at Georgia
State University predicts Americans
could lose 1. 1 million industrial jobs
in the next 12 to 15 months. “Nobody
knows where the bottom is,” says Robert Scott, an economist at the Economic
Policy Institute in Washington, D.C.
The situation is particularly distressing for older workers, who are bearing
the brunt of these job losses. According
to U.S. Department of Labor statistics,
more than half of recent plant-closing
victims are 45 or older. By contrast, the
majority of factory workers who are
still employed are under 43.
“These are people with 20, 30, 40
years working in manufacturing jobs,”
says Lynn Minick, a workforce-devel-opment specialist at the National Employment Law Project in Indianapolis.
“They believed these were going to be
the jobs they would retire from.”
HOW SAFE IS YOUR PENSION?
EVEN IF YOUR COMPANY FILES FOR BANKRUPTCY, you’ll receive your company
pension. But it may not be every penny you expected.
In the United States every defined-benefit retirement plan is insured. When
a company files for bankruptcy, it chooses between two paths. It can pursue
liquidation if there really is no hope of salvaging the business, or it can file for
reorganization and try to stay alive by slashing costs and attracting new investors. The pension plan is always terminated in liquidation and usually in reorganization. That’s when the Pension Benefit Guaranty Corporation (pbgc.gov),
a federal insurance agency, takes over the pension payments. Only employees
with the largest pensions take a hit: the PBGC’s maximum annual payment,
which rises with inflation, is $54,000 this year for workers who retire at age
65. Like any insurer, the PBGC has restrictions. For instance, it prorates recent
pension increases. But in all, 84 percent of retirees get their full pension.
In rare cases an employer maintains its pension plan during reorganization.
That generally happens for one of three reasons: the benefit is low; employee
turnover is high; or the pension plan is new.
Of course, it’s better for a company to avoid bankruptcy altogether. Congress
gave some help in this direction in December by relaxing the 2006 Pension Protection Act’s strict rules governing pension funding. Counterintuitive as it seems, this
move is one that endangered workers should embrace. “Given the economic
downturn, employees are better off than if the company was forced to make
a large pension contribution,” says Dallas Salisbury, president of the nonpartisan
Employee Benefit Research Institute. “It’s better to stay in business than make
a contribution.” —Fran Hawthorne, author of Pension Dumping (Bloomberg Press, 2008).
As factories close and jobs dis-
appear, older workers and retirees
are being stripped of hard-earned
benefits; working families are being
thrown into turmoil. And yet amid the
tales of loss and anxiety are occasional
stories of hope. While many older
workers are struggling to survive,
others, such as Sally Stewart, who is
now studying to become a medical
assistant, have learned new skills—
and are doggedly forging new lives.
Americans have lost nearly
$3 trillion from their retirement
accounts over the past 14 months,
causing many older workers to postpone retirement—or return to the
workforce. Others have been laid off or are worried about the future. If
you’re looking for full- or part-time work, you can find timely resources and
advice at aarpmagazine.org/money, including:
; WHERE THE JOBS ARE Discover which industries are still hiring and
where employment prospects are holding up best.
; HOW TO GET A JOB Check out AARP’s free job site, with thousands of
positions from all over the country. You’ll also find a listing of the best
employers for 50-plus workers.
; WHICH TACTICS WORK BEST Get tips on résumé writing and interviewing,
plus practical articles such as “Working From Home—Beware the Hoaxes.”
JOB RESOURCES AND MORE
Older manufacturing workers who
lose their jobs are less likely than their
younger colleagues to find new ones.
Their skills, developed over decades,
don’t always transfer away from the
assembly line. “By the time you’re an
older worker, you’re a fully formed
commodity,” says Alicia Munnell,
director of the Center for Retirement
Research at Boston College. “You
have specific skills and history, and it’s
harder to find a match.”
Indeed, a 2004 study by John
Schmitt, an economist at the Center
for Economic and Policy Research in
Washington, D.C., found that 24 per-
cent of men and 34 percent of women
between 55 and 64 drop out of the
labor force entirely after layoffs. And
because they have more emotional and
financial ties to their communities, it
can be harder for (CONTINUED ON PAGE 74)