Chapter IV: Statistics of Old Age and Its Care (2)

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.

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.

A few other voluntary organizations for the benefit of the old should be mentioned here.

The “Borrowed Time Club” of Oak Park, Illinois, dates from the year 1900 but was reorganized in 1911, and in 1920 had 294 names on its roster. It admits only those of seventy years of age or more and has clubrooms of its own in which it holds weekly meetings. One of its most impressive customs is an annual meeting devoted to the memory of the brethren who have died during the year, with a service at which a floral tribute is laid upon each vacant chair placed in a line on the platform by younger members of the families of the deceased. Political and religious questions are barred. There are no fees but a voluntary offering once a month, and any citizen of whatever creed or race, whether rich or poor, is eligible. Fraternal sympathy and companionship are fostered. There is music and a prayer at most of the meetings, illness of members is reported on, current events discussed, and a program usually provided. “The main purpose of the organization is to bring happiness to others.” There are perhaps a hundred and fifty associate members. This club has several branches, and others of similar name and character have been established in other cities.

To the writer, the name of the club seems unfortunate in assuming the Biblical limitation of life at three-score-and-ten, as if we were incurring indebtedness and living on by the special indulgence of Father Time if we surpass that age. Why are we debtors after more than before this age, when the fact is we are living on capital accumulated or inherited and in no sense on credit? The religious features that seem to characterize every program are well and no one could have anything but commendation for the interest displayed in sick members or in the annual tributes to the dead. But the thanatic outlook from the “west window” should not predominate and the discussion of current events and interest in vital problems should be kept most lively to offset the attitude of patheticism to which the old are only too prone.

The Sunset Club, at present largely composed of women over sixty, has little organization although it has many branches in various parts of the country. Its purpose is not only to have old people help and be helped by others to useful occupations but to supply reading matter, chaperones, etc. Anyone can start a club anywhere, intellectuals can get together, the rich can help those in need, those with unoccupied time can help those who need sympathy and companionship, those with happy homes may occasionally open them to the homeless, or they can simply form good cheer circles. There are no dues but volunteer funds have sufficed for this “silver-haired sisterhood,” which has often provided friends for the friendless and employment for the unoccupied. Many women of the more or less leisured class have thus found spheres of usefulness which they preferred to bridge, gossip, “kettledrum or kaffee-klatsch.” Some branches of the club have an exchange where members can send things that they make for sale. Young couples, especially brides, are often aided in starting homes.

In Kilmarnock, Ayrshire, Scotland, is a beautiful public park with an avenue of old trees under which the old men of the district who were come to the resting time of life used to foregather “for a crack and a smoke.” Then a kind man, remembering the frequent rainy days there were, presented them with an old railway carriage as a shelter where this group could meet in shower or shine. Later the park was extended and a public-spirited man erected a pretty little dwelling for the club, red tiled, with a veranda all around. Here are games and books and here the club meets at will. Provision has also been made for a yearly summer holiday for the members.

Stroudsburg, Pennsylvania, boasts an octogenarian society, the last annual meeting of which on September 29, 1921, witnessed a gathering of twenty-one members.

A sagacious and venerable correspondent has suggested to the writer that the time is ripe for some kind of a senescent league of national dimensions which should, of course, establish relations with all existing associations of the old but should slowly develop a somewhat elaborate organization of its own, with committees on finance, on the literature of senescence, including its psychology, physiology and hygiene, etc. If such an organization under any name were founded, it should certainly have an organ or journal of its own that should be the medium of correspondence, keeping its members informed to date upon all matters of interest or profit to them, perhaps keeping tab on instances of extreme longevity or unusual conservation of energy, with possibly a junior department eventually for youngsters of fifty. It should concern itself with the phenomena connected with the turning of the tide of life, which so often occurs even in the fourth decade. It would be interesting to know how such an organization would appeal to intelligent old men and women. That it might do great good is hardly to be doubted.