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Republicans are not completely bereft of good ideas for what to do with Social Security.

But
at least one of those ideas — raising the retirement age — is very, very bad. Unfortunately,
it's also the idea that's been embraced by "centrist" lawmakers and policy activists, along with
GOP presidential hopefuls like Chris Christie and Marco Rubio.
It's a bad idea for two reasons.
First, as Ezra Klein recently tweet-stormed, there's an enormous class injustice baked into the
proposal. Life expectancy for the upper class has shot up in the last few decades, but it's
barely budged for the lower class. For the second group, raising the retirement age would
reduce the modest respite at the end of their lives even further. As Jared Bernstein observed,
"I've only heard the 'raise the eligibility age' argument from those whose life expectancies are
going up."
The second reason, which is related to the first but cuts deeper, is that as the economy
becomes more productive, the sane and decent thing to do is lower the retirement age.
Societies — especially free market societies — actually learn at a collective level over time.
Some of this is due to better technology, and some of it can be attributed to better business
models and tricks of the trade. Societies build knowledge, and thus get better at doing more
with less: "total factor productivity" — economics-speak for what portion of total economic
output cannot be attributed to the inputs of labor and capital — has been steadily rising since
we started measuring it mid-century.
Another way to look at it is the output of the economy per worker per hours worked. In 2009,
it took American workers about half the amount of time it took them in the mid-1970s to
produce the same amount of wealth.
This raises the question: What should we do with that bounty? The first option, at one
extreme of the spectrum, is for everyone to work the same amount of hours, but with double
the amount of income. (Now, as the inequality crisis shows, this doesn't necessarily mean
each individual worker's income doubles, just the total amount of income in the economy.)
The second option, at the other extreme, is for total income to stay the same, and we all work
half as much.
This is where you start to get a sense of the importance of the question. There are lots of
valuable and socially constructive things you can do with your time besides work for pay.
You can care for children, clean your home, volunteer at your mosque, travel the world,
throw a BBQ with friends, visit family, help out an aging parent, join a neighborhood play or
orchestra, start a band, work on a hobby or craft, etc.
Needless to say, this is precisely what a lot of Americans do with their retirement.
Of course, most societies do some mix of option one and option two. But the degree to which
America has gone with "more income" is pretty remarkable. Despite being clobbered by the
2008 recession, the labor force participation rate is still higher than it was mid-century.
The average age of retirement for men was a year or two lower in 2011 than in 1962. For
women, it was higher. The number of Americans who complete college has significantly
increased since mid-century, but this delays entrance into the labor force by only a few years.

It's an acknowledgment that people deserve a break after putting in their years in the economy. So in 2035. there's something demented about concluding that the portion of our lives spent in retirement should get shorter. And anyone who's in good physical and mental health and enjoys their job would be free to keep working as long past the official retirement age as they want. So if your first-order goal in American politics is to insure that. You work to live. in 1950. So when the economy is able to give us that same paycheck for less effort. Hell. the gains to living standards would top 50 percent. it's an acknowledgement that there's more to life than a paycheck. and they're willing to shorten and impoverish the retirements of the elderly in order to get it. Time spent not working but still enjoying a decent standard of living is essentially the flip side of the income from time spent working: you can't redistribute one without redistributing the other. thanks to how horribly unequal wealth ownership is in this country. and the economy won't be able to take the pressure. they want even more income. In 2011 it was 1. Retirement is a valued and time-honored part of American and Western culture. spend time with their families. but it might be what's in the country's future — the gains to living standards would be around 25 percent.908. workers can keep seeing bigger paychecks and we can pay for the retirement of our elderly. The only way this wouldn't happen is if Americans decide that. for a small class of elites. the push to raise the retirement age begins to look more than a little perverse. then yes: you're going to find it hard to provide everyone a decent retirement. Beyond all that. and give back to their communities in other ways.Finally. and that the elderly among us should have a chance to enjoy themselves. If productivity keeps increasing at its historic rate of 2 percent annually. it will be 2 to 1. average annual hours worked per person was 1. That ratio dropped from 5 to 1 in the 1960s to 3 to 1 in the 1990s. But remember productivity? Economist Dean Baker did some useful calculations. So a society in which everyone has access to a decent retirement will inevitably be a more egalitarian society as well. the sky's the limit on how much wealth and status they can accrue. economic output per worker per hour doubled. And while all this was going on. The response you usually get from critics is that the ratio of retirees to productive workers is going to increase as the baby boomers retire. This is where inequality comes back into the picture. By contrast.703 — a decline of less than 9 percent. not the other way around. no. we could increase the length and generosity of their retirement and workers would still see bigger paychecks. . When you lay it out like this. Conversely. the drive to privatize retirement through stock instruments such as 401(k)s and the like is effectively a drive to redistribute access to a decent retirement up the income ladder. the drag from the increasing ratio of retirees would be less than 10 percent. and determined that if productivity increases by 1 percent annually between now and 2035 — a historically low rate. and by the time the baby boomer bulge plateaus around 2035.

What would happen if we were to expand these valuable programs instead of cutting them? Right now America has high unemployment overall but an especially severe youth unemployment crisis — a huge setback for an entire generation. which gets more people working and increases tax revenue. . Wouldn’t lowering the retirement age open up badlyneeded jobs for younger workers? But there’s more. which would in turn boost revenues and lower the deficit. which frees up disposable income giving them more purchasing power. And we should consider that the travel. So moving people into jobs attacks America’s deficit problem from both ends. boosting growth. reducing premium costs for everyone else. which brings wages down. lowering Medicare’s overall cost-per-person. the more health care they need.Discussions of Social Security and Medicare tend to focus on the “cost” of the programs without considering the bigger picture: the many ways these programs help people and boost the larger economy. So the oldest people in the private-insurance pool are the most expensive. Getting people working also increases tax revenue and contributions to Social Security and Medicare. This means that lowering the age of eligibility for Medicare takes the most expensive people out of the private insurance pool. there’s more! High unemployment creates a buyer’s market for labor. Of course many people have insufficient savings to retire even with full Social Security and Medicare. And getting people working also increases consumer demand. At the same time. This has a stimulus effect. older people are clinging to jobs. If lowering the retirement age creates enough jobs to significantly reduce unemployment perhaps wages would finally begin rising again. With relatively expensive people over 55 moved to Medicare everyone under the age of 55 would pay lower health-insurance premiums. Plenty of them could and would happily take a rest with just a bit of help. At the same time it adds relatively inexpensive people to the Medicare pool. Moving unemployed younger people into jobs would lower our “safety-net” costs as fewer people relied on public benefits to make ends meet reducing government spending. with terrible economic effects for them and the country. waiting until their retirement benefits kick in. What happens to health care costs if we lower the retirement age? It’s a sad fact of life that the older people get. The people over 55 that move into Medicare are no longer paying health-insurance premiums. hospitality and tourism industries would greatly benefit from a surge of relatively young retirees. But many older workers are counting the days until they qualify for Medicare and Social Security. But wait. Other Economic Benefits Lowering employment and driving up wages means fewer people defaulting on student loans and mortgages. Others like their jobs and wouldn’t want to leave them. On both ends of that equation lowering the age of eligibility for Medicare to 55 helps the country’s economy. boosting their purchasing power as well.

and 75 percent believe we should consider raising future Social Security benefits in order to provide a more secure retirement for working Americans December 2012. You could then lure quite a few people who are ready to quit out of the workforce. But it would have an overall positive social impact. National Committee to Preserve Social Security and Medicare Foundation poll. Cruel budget cuts that tear people’s lives apart should not even be on the table. 67 percent oppose March 2011. 2010. who offered a caveat. Makes you think. universally negative reactions to the idea of increasing the retirement age or cutting benefits at least implies that Americans would probably favor lowering it. Investing in our people to increase our prosperity should be the highest priority. 54 percent no cuts to Medicare. 64 percent oppose raising the retirement age for Social Security benefits Nov 2012. open up jobs. of course. and at the same time leave people who want to continue working alone. It will be more effective as a strategy if you make the option more attractive for a brief window — say three years.In other words. Washington Post-ABC poll. He wrote. is that it helps people. The following is just a sampling of polls that gather opinions on Social Security and Medicare. 84 percent believe current Social Security benefits do not provide enough income for retirees.” July. doesn’t it? PS: I wrote to economist James K Galbraith. The best reason to do this.” . do you really “save money” by cutting that program? Our government’s policies are supposed to reflect things the public wants. National Academy of Social Insurance.      January 2013. Q: Do you support or oppose raising the age for Medicare coverage from 65 to 67? 30 percent support. “I would not do it permanently. Politico-George Washington poll. Wall Street Journal/NBC News. 78 percent of Americans oppose raising Social Security’s retirement age. if a dollar “spent” on a program brings back a dollar’s worth of benefits or more somewhere else in the economy. However. So what do opinion polls tell us about the idea of expanding Social Security and Medicare? It’s difficult to locate polls in which the public is even asked about lowering the retirement age. None of this is to suggest that the cost to government of lowering the retirement age would be covered dollar-for-dollar by the resulting cost decreases in other programs. 77 percent consider cutting Social Security “mostly or totally unacceptable.

he noted. the Central Youth Party’s Joseph Kasozi). The right-wing reaction to this. it would even flip the current dynamic of too-manypeople-chasing-too-few-jobs upside down. and increase the benefits back to where they were in inflation-adjusted 1960s dollars by raising them between 10 to 20 percent (so people could actually live. Instead. when the . which could be filled by currently unemployed young people. When the supply of labor exceeds demand. Which will further increase tax revenues further strengthening the Social Security system. like in France. buy new houses and cars. wages are falling. Additionally. and create a tight labor markets. of course. it would bankrupt Social Security and destroy the economy. President Museveni replied that he’d consider it seriously.” What Joseph Okwakoi understands is that there is a marketplace for labor. it would eliminate the problem of unemployment in the United States. Joseph Okwakoi gets it. and otherwise drive the economy from the bottom up. Okwakoi called on Parliament and President Museveni to lower the age of retirement for government workers (the country’s largest employer) from the current 60 years of age to 55. He’s the president of the National Youth Council in that nation. On the other hand. these new-into-the-workforce people can then pay off student loans. “We shall study it. In Uganda. If enough Boomers left the job market.000 job openings in the country. pointing out that.ne of the most powerful forms of stimulus we could apply to our economy right now would be to lower the current Social Security retirement age from the current 65-67 to 55.” Now that the manpower shortage has eased. the price of labor (“wages”) falls. albeit modestly. a group that has considerable political power (and an affiliated Member of Parliament. will be to say that with fewer people working and more people drawing benefits. tax revenues — which are paying for Social Security (among other things) — would increase. modify the Fair Labor Standards Act of 1938 — which tightened the labor market and reduced unemployment by establishing the 40-hour work week . “The retirement age was actually 55 when we came but because of manpower shortage we put it at 60. This single act would instantly create about 15.to include all hours worked by a person. All those Boomers retiring would make room in the labor market for all the recent high-school and college graduates who are now finding it so hard to find a job. A final step would be to emulate the rest of the developed world and require by law that every worker get at least two to four weeks a year of paid vacation — further tightening the labor market. Earlier this month. and unemployment is rising. We could also. To further tighten the job market and drive up wages (and tax revenues). drop the 40-hour maximum-workweek threshold to 35 hours (used by the Mitterrand government to successfully lower unemployment and stimulate the French economy). But history shows the exact reverse. on Social Security). And as wages go up. Tight labor markets drive up wages.

they knew that if children were removed from the labor marketplace. Greenspan said: We pay the highest skilled labor wages in the world. in fact. Greenspan is still preaching that nowdiscredited and anti-American philosophy he learned from Ayn Rand. And the only way to reverse the past 29 years of Reaganomics/Clintonomics is to tighten up the labor market again. Having already largely wiped out the ability of a blue-collar single-wage-earner family to have a middle class lifestyle over the past 30 years. in the Greenspan world. the price of labor . sure enough. But providing space for a good chunk of the 16 percent of the American workforce over 55 years old will immediately take us to nearly zero unemployment and dramatically stimulate the economy. By reducing the amount of labor available from each worker from the average 60 hours a week or so people were working before 1938. declared an amnesty for millions of then-illegal immigrant workers to increase the supply of labor and depress wages (particularly whacking the carpenters and other construction trades unions). that’s exactly what happened . and laws that made it expensive or illegal to export American jobs. Reagan drove down wages by busting unions (which tighten a labor marketplace). and began the process (completed in a big way by Bill Clinton with NAFTA and GATT/WTO) of dismantling tariffs. but the working class — regardless of skill level — should always be the working poor. While a great start would be to pull out of our insane trade treaties and begin again protecting American manufacturers. Greenspan now wants to go after whitecollar workers by eliminating limits on H1B visas for skilled workers ranging from computer programmers to physicians to scientists. because the skilled are essentially being subsidized by the government. Of course. Reagan also put into the chairmanship of the Fed Alan Greenspan. and Clinton believe this. who openly declared that his most important job as chairman of the Fed was to prevent “wage inflation” — a term which he exclusively applied to working-class people. The investor class would always be protected. It’s also why the labor movement pushed for an 8-hour day and a 40-hour maximum workweek. but they do. in an interview on C-SPAN for Book TV.wages increases. then the supply of labor (the number of people available to work) would decrease and the price of labor (wages) would increase. Reagan. Then we can begin to bring our manufacturing jobs back home from China and . This is the main reason why the labor movements of the 18th and 19th centuries fought so hard against child labor.and it began the creation of a blue-collar middle class.demand for labor is at or greater than the supply of labor. taxes. this is the exact opposite of American labor policy ever since the Reagan/Bush/Clinton/Bush era. In September of 2007. that will take a decade for the impact to be truly felt even if we were to go back to our 1980 tariff levels today. And. increasing the number of people who could be employed and raising wages. It’s shocking that ideologues like Greenspan. we would attract a very substantial quantity of skilled labor which would suppress the wage levels of the skilled. meaning our competition is being kept outside the country. the labor market tightened up. If we would open up our borders to skilled labor far more than we do.

the other important steps (Medicare For All and Card-Check for unionization) to restore the strength and integrity our nation and national economy once had. .

If you dream of switching fields or starting your own business. have suggested that retirement can be hazardous to your health. for example. possibly because they were no longer subject to work-related stress (and had better pensions than lower-ranked workers). And if you want to be your own boss.asp#ixzz4RAw3GzKm Follow us: Investopedia on Facebook . Other studies. could easily keep you intellectually challenged and out of mischief for another 20 years or more.1. It could be good for your health. for example. the more years you’ll have before health issues begin to limit your mobility. It’s an opportunity to start a new career. Read more: The Pros and (Mostly) Cons of Early Retirement | Investopedia http://www. A business you launch at age 60. You’ll be a more desirable job candidate to many employers the more years you have ahead of you. as we’ll get to in the next section. The earlier you retire. See Don't Retire Early . you’ll have more time to get your business off the ground.Change Careers Instead. however. A 2002 study of British civil servants. 2. found that retiring at age 60 had no effect on the subjects’ physical health and that those with higher-level jobs saw an improvement in mental health.investopedia. You’ll enjoy more time for travel.com/articles/personal-finance/073114/pros-and-mostly-cons-earlyretirement. 3. sooner may be better than later.

Finally. immigrants could occupy the jobs and contribute to make pension systems sustainable. People that have worked in lowerpaid tough jobs tend to die earlier than those conducting better paid jobs. Thus. those jobs could be occupied by younger people who are likely going to be more productive.Working can be enjoyable. . Justice is another argument. in countries with aging population. Employees (and self-employed) working at a late ages are not as productive as they used to be. This could be a way to reduce unemployment rates which is another important side effect of the crisis. but most people prefer to devote time to their families and hobbies. If retirement age was lowered. raising retirement age would impact mostly working classes.