Mabel L. Nassau[135] personally studied the history of one hundred poor old people in the very heart of New York city and observed them as a neighborhood study, dividing her cases into those wholly or partly self-supporting, and wholly or partly dependent upon their families or upon charity. She stresses the fact so abundantly illustrated that it was impossible for most of these destitute individuals to put by money for their old age. The lives of most of them had been spent in the direst poverty, with low wages, almost no industrial training, long intervals of non-employment, illness often due to malnutrition, not to mention the really not very common effects of drink and vice. They often have little experience in buying and have all their lives been cheated and imposed on. Very many have the finest sensibilities, although this is often not suspected because they lack education to express their feelings. In this stratum of society, although the young are often underfed and the middle aged overworked, the old have the hardest time. The burden of the aged falls hardest upon the children, who must get a work certificate as soon as possible to help feed their grandparents. The old generally have a horror of going to an institution; and many of these are so managed as to justify this dread, separating married couples, imposing senseless rules, providing poor food and perhaps no recreation, and greatly restricting liberties, so that life is hopelessly monotonous, with no incentive for personal effort. The inmates generally have no private place, even a locked drawer, to keep personal effects, so that they can really own nothing. Mills’ hotels seem nearer the ideal. Many systems to help the old involve conditions that amount to dominating their lives. Old age is really a risk to which all are liable and self-respect and thrift require us to give more attention to it. It should be no more of a disgrace to accept a pension for old age than for service in war. State aid assumes that the old have added to the health and power of the state by their work, and recognizes this.
The Baltimore and Ohio Railroad established the first pension system in this industry in 1884 and in the last two decades many corporations, mercantile houses, banks, etc., have established such systems. The above Massachusetts Report supplies many details of fifty of these systems. In the modern business world the problem of dealing with aged employees is increasingly difficult. The use of machinery, specialization, and the modern efficiency ideals have made it increasingly hard for the old to keep the pace and the universal demand now is for younger men, so that many firms actually refuse new men over thirty-five. Men wear out fast. To carry the incapacitated on their payroll is not only not economic but discouraging to the working force and it is not humane to turn them adrift. The general scheme adopted in view of these facts is either voluntary or compulsory retirement at a certain age, with weekly or monthly allowances, the amount of which depends upon the length of service and the wage, the expense of the system being borne by the employer with help from the employee. The economic motives, of course, have been more potent than the humanitarian. It has been good business policy, for it not only prevents the waste of using worn-out men but it stimulates loyalty on the part of the working force. Voluntary retirement is generally at 60 and compulsory at 70, but this varies greatly, as does the time of service upon which aid is conditioned, which is usually from 10 to 30 years. Often the allowance is one per cent of the average wage during the last 10 years; for example, an employee who has worked 40 years at an average wage of $50 a month would receive $20. The system is generally administered by a board composed of both employers and employees. Some firms expressly repudiate all contractual rights.
Inquiry was made in Massachusetts of over a thousand employers but only three hundred and sixty-two replies were received; and of these only four had regular systems of retirement pensions, although often special grants were made. This was a very delicate inquiry and the excuses for the absence of any pension system usually were that the business was itself too insecure or that the working force was too unstable and transitory.
Many fraternal organizations have old-age benefits. But the early history of this movement is strewn with financial wrecks, because the rates were too low and philanthropic impulses outweighed scientific methods. Very few of these organizations had anything that can be called old-age pensions or benefits, although some of them are now coming to do so.
A few trade unions have superannuation features, particularly the International Typographical Union and the Amalgamated Societies of Engineers, also carpenters and joiners. But here, again, benefits are small.
Industrial insurance is really life insurance for small amounts and is designed for wage earners, with premiums payable weekly, collected from homes by agents, and the premiums graded in multiples of five cents. This method really began in London in 1854 and despite initial errors the movement has grown rapidly, so that there are now many millions of industrial policies in force in that country. But only very recently have they attempted specific insurance against old age. Here the premiums usually cease at 65 and the annuity is rarely over $100.
The Krupp Company at Essen had, before the war, one of the most elaborate systems of age insurance, conducted solely for the benefit of the employees and to which the Company contributed largely. The scheme is complex and was often interpellated in the Reichstag, especially on the point of forfeiture of payments of members who leave the firm. Each workman pays 2½ per cent, which is deducted from his wages. The system is chiefly for those who do not earn over 2000 marks a year. Retirement is permissible after 20 years of service or on reaching the age of 65. After 20 years the workman receives 40 per cent of his earnings, increasing yearly by 1½ per cent up to a maximum, after 44 years, of 75 per cent. If he dies, his widow receives half his pension, and each child 10 per cent. If the mother dies, each child receives 15 per cent. The total membership varies from 30,000 to 40,000, and the average pension is 683 marks. A number of other large German industrial concerns have adopted certain features of this scheme.
Most of the Friendly Societies of Great Britain make provision for old age insurance but only to a limited extent, insuring at the same time against sickness, unemployment, providing death benefits, etc. The germ of all such work is found in the medieval trade guilds, and the necessity of it was immensely enhanced by the development of the factory system and what is called the Industrial Revolution.
After 20 years of discussion, the Sterling-Lehlbach Act, passed by Congress and which went into effect in August, 1920, provides federal civil-service pensions for all classes of employees upon retirement. It is contributory and compulsory, requiring each to contribute 2½ per cent of their salaries. The minimum age of retirement is 65; all must retire at 70; and 15 years of service are required for eligibility to an allowance, the annuity running from a minimum of $180 after 15 years of service to a maximum of $720 after 30 years. The scheme takes no account of the amount of salary at the time of retirement and certainly $720 is no inducement to a man receiving $2000 to resign.
In recent years there has been a growing conviction not only that the salaries of teachers must be increased, “but some kind of retiring allowance provided for all public school teachers, if teaching is to become a profession.”[136] These are provided by nearly every country of Western Europe; and in 1916, 32 states in this country had made some provision for the retirement of teachers, most of them contributory systems where teachers insured themselves against disability.