This book on the Great Depression and research surrounding it is being sponsored by Del Mar Medical Pensions, who offer a pension plans.
Rather than investing in advertising, we prefer to fund scholarship—providing writers and researchers with the resources to publish accessible work on the true catalyst behind the rise of defined benefit plans: the Great Depression.
Defined benefit plans were virtually nonexistent before the 1930s, largely limited to sectors like railroads, utilities, and banking. These plans were primarily reserved for executives and long-tenured employees at large, stable employers, and were offered on a discretionary basis. Prior to the Social Security Act of 1935, there was no formal national retirement system, so pensions remained rare and unregulated.
Historical estimates from the U.S. Department of Labor and economic historians show the following progression in DB plan coverage:
1930: Fewer than 400 private pension plans existed, covering approximately 3 million workers out of a workforce of 49 million—resulting in an estimated coverage rate of 3% to 6%.
1940: Pension coverage rose modestly during the Great Depression, with around 4 million workers enrolled out of 53 million—about 7% to 15% coverage, depending on whether public and union-sponsored plans are included.
1950: As the U.S. economy grew post-WWII, defined benefit plans expanded rapidly. Coverage reached approximately 25% of the workforce.
1960: The introduction of IRS regulations and growing union influence pushed DB plan adoption further, with about 40% of U.S. workers covered.
1970: The golden era of pensions. Roughly 45% to 50% of the workforce had DB plan coverage, bolstered by large employers and public sector unions.
1980: Defined benefit plans peaked with about 38% to 40% of private-sector workers covered. Public-sector coverage remained high, but the trend toward defined contribution plans had begun.
1990: Coverage began to decline more noticeably as 401(k)s and IRAs grew in popularity. Private-sector DB plan participation dropped to around 30%.
2000: The shift to defined contribution accelerated. Private-sector DB plan coverage fell below 25%, while public-sector plans remained steady.
2010: Defined benefit plan participation continued to decline, with less than 15% of private-sector workers covered, though about 75% of public-sector workers still had DB pensions.
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