Our country, however, is still far behind others in this respect.[137] The first city-school system to provide retirement funds was in Chicago in 1893, followed two years later by a New Jersey mutual-benefit plan, and there are now eight or nine types of state, county, and city pension systems in the country. The peculiar difficulty here is found in the fact that one-fourth of our 720,000 school teachers leave teaching every year, making the average term of service four years and causing 185,000 new inexperienced teachers to begin each year. Thus few expect to benefit from such a system and so long as it is voluntary it is utterly inadequate. “While pensions and tenure help to secure and hold good teachers, they also make it possible to free schools with social justice and dignity from superannuated and incapacitated teachers. This is almost as great a benefit as the others to the schools, the children, and society.”
There are two volumes[138] which, as Professor H. S. Pritchett well says in an able article on pension literature (Fifteenth Annual Report of the Carnegie Foundation, 1920) “mark the close of one period in the history of pensions and the beginning of a new scientific one.” The most difficult question is the method of calculating the amount of superannuation benefits. If the basis is the flat rate, this is simple; but if it is the average of the salary given during the last five or ten years, or during the whole period of service, the difficulty in determining the amount of actual contributions to yield the prospective benefit becomes very great. Teachers’ salaries are, especially now, very unstable. A pension system based on anticipated pay leaves too much in suspense. It is difficult to provide pensions on a subsistence basis, which also bears some relation to final salary. If the pension is too high, there is temptation to retire too early; if it is too low, to retire too late. Ultimately, too, teachers must be able to migrate without loss or change of status and this would involve reciprocity between different cities and even states. In New York, before the new system went into effect in 1921, there were 2,000 different rates; and in Pennsylvania, 86. The new system of New York, which developed because the old one had settled into bankruptcy, although optional for teachers appointed before 1921 is compulsory for those appointed after and the pension is to consist of half the average salary during the last five years; the payment is not to exceed $800 and this will be paid after 25 years of service. The old view which held that the very word “pension” suggested a cripple and real manhood would compel everyone to lay by for old age, and which flattered those who entered their profession in youth with the hope that in old age they “might be permitted to sun themselves on the veranda of a state poorhouse,” has entirely passed away. But pensions are no longer considered as a form of charity or a form of paternalism, or even as a reward for service. They only demand of the teacher the same thrift as do savings and their proper function is to secure efficiency of service and they should be regarded “as a condition of service just the same as a salary.” Most of even the best recent systems, like that of the District of Columbia and the Y. M. C. A. officers’ pension plan, which is just about to go into operation, are a compromise between the old and the new ideas. The same is true of civil-service pensions in New York state and city.
The Carnegie Foundation for the Advancement of Teaching in 1920 had a total fund of $24,628,000 and its retirement allowances for that year were $875,514.04, with allowances then in force to 555 individuals, or an average to each of $1,568.77. The fund was originally administered solely in the form of gifts but the unexpected number of applicants made it necessary to gradually change to a contractual plan involving very moderate contributions from the institutions benefited, which now include those of Canada as well as of this country. It is one of the most wise and beneficent gifts of the great philanthropist who founded it and its influence in giving permanence in the sense of security to active professors still efficient, and relieving institutions of those past their usefulness to make way for younger men, is unquestionably for good.
The President of the Foundation has grappled with the whole subject of industrial pensions. It was at first planned that the same principles should be applied here as those in the more stabilized professions but this is impossible because of the labor turnover each year, which amounts to 100 to 200 per cent of their employees in some industrial establishments. It is one of the functions of the pension system to reduce the turnover and to secure continuity of service and avoid migrations. Many systems do not provide for the return of the employee’s contributions in the cases of withdrawal or dismissal, or for the use of such contributions for other purposes, so that the fund accumulated would soon, in some cases, run into millions. It does not follow, however, that the opposite tendencies now manifest to seek a solution of the problem in a non-contributory scheme are sound, for this would still encounter the opposition of labor unions, who see in all such schemes a return to feudalism or an attempt to make labor stick to its job by the use of vague promises, to the fulfillment of which the employee himself contributes in the long run in the form of depressed wages. The Metropolitan Life Insurance Company, however, seems to have found a way out and has proposed to “write annuity contracts maturing at the age of 65 under which the pension is purchased each year in small units representing either flat rate or a percentage of salary. The employer, the employee, or both, make a contribution each year toward the pension to fall due on the retirement of the employee,” who receives a bond each year that assures him a pension when he retires, each bond being complete in itself. This scheme costs little to administer and it meets the objection against a non-contributory system, that although pensions defer pay only the employee who survives in the same service until retirement receives the benefit promised, by the provision that this bond is given each year and becomes his property, to be realized at a fixed age in later years.
Frederick L. Hoffmann[139] gives us one of the sanest and most compendious summaries of the negative views on this whole subject. Present systems have not eliminated poorhouses or the pauper’s grave. Of the 1,981,208 individuals in the United States over 70, according to the census of 1898, a great majority would welcome a pension; and of all legislation this is most irreversible. On the contrary, old beneficiaries constantly agitate for more. State pension systems, too, do not materially reduce the cost of charitable relief, whether indoor or outdoor. Only in a last resort should the state attempt to do what can be done by private institutions or by private individual foresight and nothing should discourage voluntary thrift of any kind. Where pensions have caused the removal of beneficiaries from asylums or almshouses, the results have generally been unfavorable. Pensions are chiefly of benefit to those not within the scope of poor law administration or private charitable aid. It is just this class which pensions would help that is now most efficient in helping themselves. If the family is at all kept up to its ideal, the young will help the old as they have been helped by them. This is not charity but mutual aid based upon mutual obligation for service rendered and there can be no substitute for this. It is this class that forms the backbone of a nation and which, by even moderate foresight, could provide for a modest support in their old age. The billions of dollars that they have invested in savings banks and in insurance institutions of various kinds show that they are not unmindful of the future. Legislation is needed to stamp out fraudulent enterprises designed to attract small savings on the plea of large returns; therefore, security should be the first consideration in such investments. The prevailing wages should make it possible for the masses of wage earners to provide the support necessary for their old age, at their own cost and in their own way, if they are given sufficient intelligence and motive and could feel sufficient security. To take an example, 5 per cent of a wage of $900 per annum, or $45, commencing with the age of 30 and continuing to 65, would produce an annuity of $450. Of course, the earlier in life the periodical payment begins, the smaller would be the annual amount required to be paid. The fact is that parents who have done well by their children seldom come to grief in their old age, except by special misfortune. Nothing must be done to weaken the virtues here involved. The view that old-age pensions should be given as a right and not as an act of charity is one-sided, because wage workers have not spent their lives in behalf of the state but have sought to aid themselves in their own way and sold their services to the highest bidder.[140]
L. W. Squier[141] tells us that of the 18,000,000 wage earners in the United States, about 1,250,000 reach the age of 65 in want and are not sufficiently supported by public or private charities which, in round numbers, cost the country $250,000,000. Of the 2,000,000 non-fatal accidents Hoffmann estimates per year, the old, to be sure, have somewhat less than their share. The United States Bureau of Labor lately estimated that $220,000,000 per annum is the average the laborer has to pay for medicines alone, not including doctors’ bills, and about 79 per cent of those in almshouses are either physically or mentally defective. Our total pension outlay for the War of the Revolution, that of 1812, the Indian wars, Mexican, Civil, and Spanish, in regular establishments and unclassified, he estimates at $4,230,381,730. Despite the world unrest there are probably ever increasing numbers who look forward to a quiet old age, and we must depend more and more upon inculcating thrift wherever possible and encourage all to earn more than a living wage.
Present-day man, at his best, is certainly far below the standard, for nowhere among wild animals do we find so many with defective teeth, vision, tonsils, bowels, flat foot, etc., and the rejection of nearly one-third of the drafted men for physical unfitness was a most significant fact. The trouble is men will not take pains to prolong life and still shrink from medical examinations at all ages. Some tell us that old people do so most of all, fearing to know the truth about their condition.
This very cursory sketch must suffice to show the increasing interest in and the growing magnitude of the economic problem of old age. But before closing this chapter let us glance at the efforts of the new Life Extension Institute to prolong life and increase efficiency. It is said to be “five per cent philanthropy,” and all those whose lives are insured are to make a definite effort to avoid sickness and defer death. Members are inspected gratis and all others can be for a moderate fee. A regular system of examination for repairs is provided for, just as all manufacturers do for their machines, with a written report to the person’s family physician. At the start the Postal Life Insurance Company turned over to the new organization its well established system of examinations for policy-holders and the Metropolitan Life made an agreement for periodic examinations. The company’s conservation policy leads an impaired man to consult a physician before it is too late, and this, we are told, has reduced the death rate among those examined. They plan to extend this over the whole country. Two-thirds of the profits beyond 5 per cent are to go toward increasing the further usefulness of the Institution. Judge W. H. Taft is chairman of the Board of Directors while Irving Fisher is chairman of the Committee of One Hundred on Hygiene.[142]
In the Nation of January 8, 1914, commenting on the hygienic reference board of the Life Extension Institute the writer tells us that they will even tackle such problems as ventilation, how to clothe and feed the body, etc. Some have advocated compulsory annual examinations for all. This the Nation condemns. There is the danger of false diagnosis as to degree or kind of defect. An ailing man might be injured by knowing the seriousness of his trouble. It might detract from the joy of life and to compel it would be an undue invasion of liberty, for it is not like vaccination and similar measures necessary for all.
What the old need is an occasional examination of sight and hearing, of respiratory, circulatory, digestive, and perhaps sexual system, each by an expert, with hygienic and therapeutic suggestions based upon these results. This the Life Extension Institute does not attempt to furnish and it is perhaps too much to expect yet.