In 1890, Haber writes, only a quarter of aged workers called themselves “permanently nonemployed.” Those who were often faced harsh conditions. Many in industrialized cities had no family resources to depend on, and, at best, might hope for help from a charitable group or old age home. To protect older workers from this fate, employers and unions sometimes set aside less demanding jobs for them.
In this same era, employers like railroads, factories, and mining companies were under rising pressure from labor unions. To pacify workers, they began adopting benefit programs, including old age pensions.
Pensions were a type of employee benefit that had obvious advantages for employers. Because workers generally received a pension only if they’d been with the same company for decades, they helped employers retain workers. And, because pensions wouldn’t be paid if a worker was fired before retirement, they also provided an incentive for employees to stay on the good side of management.
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