At one time, almost all American workers planned for their retirement based on their company’s pension plan. For working several decades at the same company, corporations would reward loyal workers guaranteed income that would last their whole retirement. Then in the 1980s, companies started to switch pension plans out for 401(k) plans. Instead of paying retired workers a monthly income, companies would create investment portfolios for workers that were usually made up of mutual funds, stock bundles, and bonds that workers could hold on to and cash in during their retirement. Companies saved millions switching pension plans out for 401(k) s. However, the plans were less predictable than pension plans. Since they were based on investments, 401Ks were susceptible to market down turns like the 2008 recession.
Another unintended consequence of the switch from pension plans to 401(k) plans, is it puts political candidates that run on workers’ rights platforms at a major disadvantage.
One might ask how do retirement plans effect political candidates? The answers as stated above is the value of workers’ 401(k) are dependent on the performance of the stock market. If a political candidate wants to reform workers rights, such as increase unionization or decrease outsourcing and automation, the stock market will suffer losses. The fear of losses to the stock market and therefore, loss of value to 401(k)s, then cause voters and constituents to make decisions on who they vote for by selecting candidate who usually put corporate interest first therefore favoring corporate friendly candidates.