Detroit workers fear effects of city's bankruptcy

The word 'Bankruptcy' is seen painted on the side of a vacant building by street artists as a statement on the financial affairs of the city on Grand River Avenue in Detroit, Michigan July 26, 2013. – Reuters pic
The word 'Bankruptcy' is seen painted on the side of a vacant building by street artists as a statement on the financial affairs of the city on Grand River Avenue in Detroit, Michigan July 26, 2013. – Reuters pic

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DETROIT, Aug 4 — Thousands of pensioners already struggling to get by are afraid they will be pushed into poverty if the city of Detroit is able to slash their benefits in a bankruptcy court.

Retired fire chief Jerry Franklin Smith spent 39 years battling blazes in a city filled with abandoned buildings and too many arsonists.

He’s worried that if a bankruptcy judge allows the city to wipe out its obligations to his pension fund he’ll need to somehow find a job at the age of 78.

“I’ve only done physical things all my life. But I really can’t do them anymore,” Smith told AFP.

“It makes you nervous.”

Police and firefighters don’t qualify for the federally-run Social Security pension plan, which has an average payout of US$1,268 (RM4,130.51) a month. So their city-run plan is the only thing keeping them out of food banks or even homeless shelters.

Luckily it is better-funded than a separate plan run for Detroit’s other municipal workers. But it is still owed millions and the city is hoping to slash all pension and retiree health care benefits in order to wipe out debt and reduce future costs.

Emergency manager Kevyn Orr was in court Friday urging a federal judge to find the city eligible for bankruptcy in the second such hearing since the birthplace of the US auto industry became the largest US city to go bust on July 19.

Orr has estimated that about nine billion dollars of the city’s US$18.5 billion in debt is owed to the pension funds and retiree health care benefits of the city’s 10,000 workers and 20,000 retirees.

Unions and the pension administrators dispute his calculations and have filed suit to block any significant cuts, noting that pension benefits are protected by Michigan’s constitution.

“Governor (Rick) Snyder has taken an oath to protect every aspect of our constitution, thereby he would be violating said oath should he fail to protect our pensions,” said Mark Diaz, president of the Detroit Police Officers Association.

“Though there is a great deal of uncertainty about the direction these proceedings will go, know this; there is no end to the lengths we will go in order to protect the heroes who protect the City of Detroit.”

The legal fight could drag on for months or even years, leaving city workers and retirees who’d planned their lives around those previously fixed payments in limbo.

Carol Conner, 63, has already seen her modest monthly stipend shrink after the city imposed higher fees for retiree health care benefits.

“How am I supposed to get by?” said Conner, who lives on Detroit’s crime-ridden east side on a monthly pension comes that currently comes to less than US$1,600.

Conner, who retired from her position as a building attendant to care for her 83-year-old mother, said she is among many Detroiters who turned to the city as a job of last resort.

The pay wasn’t very good, but she needed a job and health care benefits after a long spell of unemployment. Conner worked at Chrysler and General Motors—which were successfully restructured under bankruptcy protect in 2009 thanks to billions in help from the federal government—but was downsized before she could quality for a pension from either automaker.

Even if she could find another job, she couldn’t take it because her mother “can’t be left alone anymore.”

Many retirees bristle at the fundamental unfairness of being asked to pay for a financial crisis caused by decades of mismanagement and complex social and economic problems.

“I earned it. It wasn’t something that was given to me,” said Michael Mulholland, 65, who retired from water and sewer department.

“It’s deferred income,” he explained. “I worked with a lot of contractors. They didn’t get a pension but they made a lot more money than I did. I won’t have the opportunity to get a retroactive raise.”

Once a bustling beacon of industrial might, the Motor City is now a poster child for urban decay, its landscape littered with abandoned skyscrapers, factories and homes.

Detroit has seen its population shrink by more than half—from 1.8 million in 1950 to 685,000 today—as crime, flight to the suburbs and the hollowing out of the auto industry ate away at its foundations.

Crime is rampant, and the city literally cannot afford to keep the lights on—a whopping 40 per cent of streetlights are out.

Roger Howard, 55, doesn’t think the bankruptcy process will make life any better in his troubled neighborhood on Detroit’s east side.

“It would just make things a lot worse for me, said Howard, who was forced into retirement after 31 years as the city sought to slash its budget. – AFP

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