The “three-legged stool”: That phrase may not be familiar to everyone, but most people who work in public policy or private-sector insurance have heard it used to describe the U.S. retirement system. It suggests that our system for retirement security was designed to stand on three “legs”: Social Security, employer pensions, and individual savings.
Subliminally, the image evokes efficiency. A stool is a chair for people and a table for small things, but at a much smaller size and with 25 percent fewer legs.
Our current economic order idealizes efficiency, but leaves the human factor out of its equations. It economizes on the insignificant at the expense of the invaluable.
The “three-legged stool” is image is misleading. A stool isn’t stable unless the legs are of equal length, and there’s nothing efficient about our patchwork retirement system.
The Three-Legged Lie
Writing in the New York University Review of Employee Benefits and Executive Compensation Nancy Altman documented the history of the phrase and debunked the thinking behind it. Altman, who is the president of Social Security Works (where I am a senior adviser), reports that the phrase was first used in a 1949 speech by an employee of Metropolitan Life Insurance. As Altman notes, “The metaphor was a useful image for Metropolitan Life and others promoting private pensions and seeking to sell private sector annuities that supplemented Social Security.”
The “stool” idea is pernicious for at least three reasons:
The Social Security lie.
It deceives people about today’s Social Security, which was designed as a full pension program—and as the foundation for a much broader system. When people believe this, they’re willing to accept lowering Social Security’s benefits below what’s needed for a decent life.
The employer pension lie.
For the “stool” to work, employers have to offer pensions that are fair and adequate. Private-sector actors are notoriously bad at providing social benefits, for obvious reasons: it’s contrary to their financial interests. The history of recent decades bears this out. Many full-time workers have seen their pension plans reduced, while many millions of workers have no pension plan at all. The result is an imminent retirement crisis, made worse by the 2008 recession and the pandemic.
The savings lie.
Worst of all, the “three-legged stool” provides the opening for policymakers, politicians, and pundits to blame people for their own suffering. The working public has been routinely castigated for decades for levels of savings their leaders deem morally bankrupt.
Our national culture has prized the belief in thrift as a virtue. That’s fine—provided that people are being paid, not only a living wage, but a more than adequate living wage. Otherwise, they won’t have any excess income to set aside. That’s the reality for a large number of working people today. The “three-legged stool” allows politicians and pundits to wag a disapproving finger at workers without savings, without taking responsibility for their inability to save.
Altman dismantles the “three-legged stool,” and the assumptions behind it, with lawyerly precision. Nevertheless, the phrase took on a life of its own. It’s not the first time, or the only time, this has happened. Take, for example, the description of Medicare and Social Security as “entitlements.” That word was originally used to indicate that people were legally entitled to receive these programs as soon as they qualified for them (most commonly through age or disability).
But in the 1980s and beyond, as “entitlement” or “entitled” were increasingly used to describe selfish people, this phrase was embraced by opponents of these programs. It fit well with another folksy-sounded attack on these programs—the notion that people who received their benefits were “greedy geezers.”
The phrase matched with the political mood of the 1990s, the Clinton era. That was when so many similar phrases entered the Democratic/centrist policy lexicon—phrases like “skin in the game” and “shared responsibility,” which imply that people in government programs are freeloaders.
Then there is the broader rhetorical attack on not just “entitlements,” but government programs in general: the idea that the federal government has to “balance its budget and make the hard choices like a family sittin’ around the kitchen table.” (Politicians, especially Ivy League-educated ones, tend to do some serious g-dropping whenever they discuss cutting social programs. This inflectional exsanguination, this suffixal suffocation, is designed to be… well, folksy.)
Whether you’re an MMT advocate, a Keynesian, or a Friedmanite, the comparison won’t wash. It’s absurd to compare federal lawmakers to a family sitting around the kitchen table (on three-legged stools, presumably). What family allows Grandma to starve and Junior to die of untreated sickness so that big brother can buy another jet and Dad can hoard his millions overseas?
A Real Vision of Security
I don’t blame people, even experts, if they accepted the term at face value. Like all good rhetorical devices, it’s seductive. And, like all good rhetorical devices, it reshapes our thinking without engaging our critical faculties.
But the phrase has been debunked, thoroughly and effectively. That confers responsibility on anyone in a position of influence—the responsibility to understand that it’s wrong, and act accordingly. Words shape thinking, and thinking shapes policy.
The history of Social Security shows that it was conceived as a complete, cradle-to-grave plan to ensure financial security for everyone. The retirement program that now bears that name was originally seen as the first step in a much broader plan that included national health care and a jobs guarantee.
Social Security carries a vision of the nation as a mutually supportive community, where no one should live in want, or in fear for their future. That benefits all of us. The idea of the “three-legged stool” suggests that Social Security was never meant to be secure. It leaves people to fend for themselves when times get tough. And it desecrates the vision of a mutually supportive society.
A clear understanding of Social Security compels us to increase its now-inadequate benefits and extend its companion programs—including an improved Medicare for All—to everyone.
This article was produced by Economy for All, a project of the Independent Media Institute.