Thursday, September 8, 2011

"Fixed income" complaint lacks firepower

You used to hear it all the time: "I'm on a fixed income and ... ." The complaint came almost exclusively from retirees commenting on some new tax increase or price hike.

That complaint is less common now because most people can claim to be on a "fixed income." Over the past five years, annual pay increases have disappeared for large numbers of workers. Even some government workers, who once could rely on a 3 to 5 percent pay "cost of living" increase or a "merit" raise, are now facing flat wages or even reduced take-home pay as cities, counties and states begin charging employees for part of the cost of health care or retirement reserves. Many private industries have imposed a wage freeze as a means of reducing costs while avoiding layoffs. Other industries have resorted to layoffs to cut costs, and some unionized companies (look at the auto industry) have actually reduced pay rates.

So the complaint that "I'm on a fixed income" no longer generates the sympathy it once did. The "fixed income" assertion was often not accurate anyway. Since the 1970s, Social Security has incorporated an automatic cost-of-living increase that, in most years, increased monthly benefits. Only when inflation was very low were Social Security benefits "fixed" from year to year. Some pension plans and annuities are truly "fixed" — they pay the same monthly rate year after year, but Social Security has been annually adjusted to match the rate of inflation and eliminate loss of "real" income.

The "fixed income" complaint has lost steam largely because there are millions of unemployed workers who would love to be on a "fixed income" or any other kind of income. Millions of others have taken lower-paying jobs in order to escape unemployment. As one of the latter category, I would love to have had my income "fixed" at what it was five years ago, when it was capped by a company wage freeze.

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