The largest annual salary Donald Smith ever collected while working for the city of Detroit was $28,000. But the lure of a pension and a lack of skills to pursue higher-paying jobs kept him at the city for 29 years, even as he watched the industrial stalwart become a faded remnant of its former self.
So until his retirement about eight years ago, he held down various jobs, including working as an emergency medical technician for Detroit Receiving Hospital, a parking-enforcement officer for the Detroit Police Department and a security officer at the Detroit Institute of Arts Museum, where he stood guard over priceless masterpieces.
But now the $679 that he nets in monthly pension payments could be dramatically reduced, which could further plunge him into an interminable web of poverty and hardship. Federal Judge Steven W. Rhodes ruled last week that the city of Detroit could formally file for bankruptcy. He made it clear that public employee pensions were not exempt from the federal Chapter 9 bankruptcy, even though they are protected by the Michigan Constitution.
The ruling essentially states that federal bankruptcy law usurps state law regarding protections for public employees’ pensions, which enables the city to include the pensions of 23,000 retirees in its financial-restructuring plan. The pensions for general workers in the city average approximately $19,000 per year, while police and firefighters average about $30,000.
“I feel like I’ve been robbed,” Smith told The Root. “I did what I was supposed to do for 29 years, but they didn’t do what they were supposed to do, and now I have to pay for it. I feel like they’re picking on us because most of us are old or disabled. They figured they’d hit us because we’re easy pickings. I never dreamed I would have to fight for what I’ve earned. You sit around and talk about the American dream—welcome to my American nightmare.”
The ruling paves the way for Kevyn D. Orr, an emergency manager sent by the state of Michigan in March to oversee the city’s finances, to begin etching out a plan immediately to repay a portion of the city’s $18 billion in debts and restore crucial services. He has said that he plans to submit the blueprint by the first week of 2014.
But appeals are expected to be filed against the ruling. At least one union filed a notice of appeal Tuesday, the Times says, and other unions and pension-fund representatives said they were considering challenging the decision.
Jordan Marks, executive director of the Washington, D.C.-based National Public Pension Coalition, which represents public-sector workers across the nation, told The Root that the group is working with local unions to appeal the decision. Many of the workers, such as firefighters, do not qualify for Social Security because they did not pay into the system.
“What a dark day it is for Detroit’s firefighters, police officers, sanitations workers and other city employees, many of whom do not receive Social Security, [who] will now be left in poverty based on the bankruptcy,” Marks said. “We certainly have our arguments before the court.”
Smith, who suffers from asthma and high blood pressure, is worried that he will not be able to meet his monthly expenses if the city reduces his pension. He uses the money to buy medication, food and other staples. He is not the only one who is worried.
David Allen, a retired firefighter, says that he is no condition to find more work to supplement his income at this time. The 50-year-old Detroit native retired about nine months ago after a spinal cord injury he incurred when a roof collapsed while he was battling a fire, sending him tumbling in a wave of heat. Now, the married father of two teenagers says, he cannot walk without a walker.
“What else can I do other than wait for the appeal?” he asked. “I was injured in the city of Detroit, fighting for its citizens. We do not get Social Security. I’ve heard Orr talk about paying retirees 0.16 cents on the dollar. That will reduce my net to $380 a month. That’s it. There is nothing else. I can’t pay my house note and feed my family on that amount of money each month. It’s impossible.”
The visceral fear and frustration over what would become of his family rose in his voice the more he weighed his options. “In the film A Bronx Tale, one of the characters says, ‘The working man is a sucker,’” Allen continued. “That’s how I feel. I feel like a fool. But I’m still here.
“But what about the widow of the guy who lost his life fighting fires?” he continued. “What about the guy who is paralyzed and in a wheelchair? Yeah, Detroit is going to restructure, but what about the people? Will we be able to restructure?”
Dennis Hunter, a 42-year-old firefighter, says that a restructured pension would put his family in a bind in terms of his retirement plans. The married father of three, who is a homeowner, has been with the department for 15 years. He plans to work until he qualifies for retirement after 25 years of service, but he had to set up a barbershop in Detroit to help make ends meet. His oldest daughter is a sophomore at Michigan State University, and the other two, ages 15 and 12, will be headed to college soon.
“Last year we had our pay cut by 10 percent,” he told The Root. “That alone affects our pension payout. Fire, police, EMS, represent the infrastructure of any city. If you don’t have that, you have chaos. Legally we can’t strike, but the judge’s ruling essentially shredded our constitutional rights. It also set a precedent for the rest of the country to say, ‘Anytime we’re in trouble, we can raid people’s pensions.’ It’s a slap in the face to the American way.”
When he signed up to become a firefighter, he was fully aware that the job would take 10 years off his life because of work stress. But he signed up anyway because, well, who doesn’t want to save lives? There was also the promise of a pension, he said. After last year’s pay cut, he told The Root, his annual salary was reduced to $48,000.
“As firefighters, we don’t get paid a lot to do what we do, but we are promised to get a pension on the back end,” he said. “So we sacrifice the front end of our pay for the back end. We don’t pay into Social Security, so that’s all a lot of us have … the pension that we paid into. The state constitution says it protects police and fire pensions. They didn’t have to touch our pension in order to file bankruptcy.”
Donald Smith, who walks with a limp, says that he has nothing but hope because he is too old and sickly to work. He had hoped that his pension and Social Security would cover his financial needs in his old age, but he may have to turn to welfare to supplement his income. He worked all his life to avoid such a fate, he told The Root.
“I was hoping that President Obama would come in and rescue us,” he said. “They took our taxes to save General Motors, but nobody wants to save senior citizens. Nobody’s coming to our rescue. I bet if I were a dog, they would have a commercial with people crying and carrying on over me. But I’m an old black man. Nobody’s trying to look out for me or hear me. But they need to know that I just want what I worked for. Is that too much to ask?”
Lynette Holloway is a contributing editor at The Root. The Chicago-based writer is a former New York Times reporter and associate editor for Ebony magazine.