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Actually, The Retirement Age is Too High
The most dangerous conventional wisdom in the world today is the idea that with an older population, people must work longer and retire with less.
This idea is being used to rationalize cuts in old-age benefits in numerous advanced countries -- most recently in France, and soon in the United States. The cuts are disguised as increases in the minimum retirement age or as increases in the age at which full pensions will be paid.
Such cuts have a perversely powerful logic: "We" are living longer. There are fewer workers to support each elderly person. Therefore "we" should work longer.
But in the first place, "we" are not living longer. Wealthier elderly are; the non-wealthy not so much. Raising the retirement age cuts benefits for those who can't wait to retire and who often won't live long. Meanwhile, richer people with soft jobs work on: For them, it's an easy call.
Second, many workers retire because they can't find jobs. They're unemployed -- or expect to become so. Extending the retirement age for them just means a longer job search, a futile waste of time and effort.
Third, we don't need the workers. Productivity gains and cheap imports mean that we can and do enjoy far more farm and factory goods than our forebears, with much less effort. Only a small fraction of today's workers make things. Our problem is finding worthwhile work for people to do, not finding workers to produce the goods we consume.
In the United States, the financial crisis has left the country with 11 million fewer jobs than Americans need now. No matter how aggressive the policy, we are not going to find 11 million new jobs soon. So common sense suggests we should make some decisions about who should have the first crack: older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?
The answer is obvious. Older people who would like to retire and would do so if they could afford it should get some help. The right step is to reduce, not increase, the full-benefits retirement age. As a rough cut, why not enact a three-year window during which the age for receiving full Social Security benefits would drop to 62 -- providing a voluntary, one-time, grab-it-now bonus for leaving work? Let them go home! With a secure pension and medical care, they will be happier. Young people who need work will be happier. And there will also be more jobs. With pension security, older people will consume services until the end of their lives. They will become, each and every one, an employer.
A proposal like this could transform a miserable jobs picture into a tolerable one, at a single stroke.
74 Comments so far
Show AllDamn! What can you say when someone says something that is one hundred percent right-on. Raising the retirement age can only increase the unemployment rate--especially reducing employment for the young. As Galbraith says, it is inappropriate to worry about the reduced number of workers paying into SS since machines take the place of workers that would have been paying into the system. A way has to be developed which takes the wealth generated by increased productivity and sends it directly to Social Security, avoiding the large deductions workers see in their paychecks. This is not rocket science. Any competent leader in government could find a way to make it happen. Too bad we don't have any.
JKG follows in the footsteps of his father John, one of FDR's economists. That's why he's 100% right-on in his views. Richard S. Cook did all the "rocket science" to answer your question. He's the "credit as a public utility" guy. Since humanity is getting increasingly more productive, fewer people, lbs. of material, ergs of energy, units of time, are needed to make & grow the things we need (eventually a small, professional workforce is all we'll need to make things). Eventually, people can be successfully pensioned off, based on the amazung productivity of an advancing science & technology base. Mr. Cook says it will be similar to Alaska's "permanent fund" where Alaskans get a check directly, based on their oil industry production.
Although JKG is spot on, I must note that his statement that workers will experience pension benefit cuts "most recently in France, and soon in the US" needs to be updated. Many US private employers have been cutting or eliminating benefits for the past three decades, many public employers including the US Gov. have been diluting benefits for new hires during the past three decades, and many public employers started cutting benefits for all employees in 2010 and are increasing the amount workers pay into the programs while further cutting benefits en masse this year.
Although the media provides endless coverage of CalPers, Federal Retirement and other programs that provide generous benefits that have not been cut, the media never covers most public employees' retirement packages that always provided a fraction of what corporate retirement packages and the few generous public employment programs provide. Many of these public employee retirement packages were meager to begin with and now they are being cut.
Correct. In the larger picture, FDR's agenda (shorthand: uplift for "the forgotten man/woman") has been under serious & near constant attack since JFK's assassination. The imperial enemy (ie. the financier/mafia) finally gained the upper hand by Reagan's time. They think they are about to seal the coffin of the "forgotten man/woman", when, in reality, they're about to breathe their last. This emperor has no clothes. They are completely & utterly bankrupt (the inter-alpha group of financiers & their affiliates over here in wallstreet/boston vault/ chicago xchange/etc...). Imperial over-reach. As they close their fist upon the prize (the world), rigor-mortis sets in.
I agree that public-sector workers should probably retire earlier, and cushy professional jobs like lawyers, but private sector workers who saw their 401Ks evaporate are in no position to stop working just yet.
That is why Social Security contributions need to be collected on all income, not just the first $106,000, so benefits for all recipients can be increased so workers are not at the mercy of 401k plans that even in a bull market don't buy much retirement (and in a bear market turn retirement into a pipe dream for most participants).
A good solid transaction tax on stock trading oughta do the trick. A 50% tax on bounus's over $100.000 should not be objectionable to anyone.
Legalize and tax Drugs and Prostitution, (Like Corporate Bribes to Pols) will do wonders to bringing down the deficit.
Last but not least my favorite. A Luxury Tax on SUV's $10,000 fed, let the states add some too. Unless you can prove you have a family over six-persons, then you pay only 1/2 the tax.
>^^<
I agree entirely with this article. There are TOO many workers for the number of jobs and the World economy has TOO much productive capacity.
This capacity either sits idle , or produces stuff that is not really needed.
With Globalization it is made orders of magnitude worse.
There are people who are in their 50's who have been laid off who spend years looking for another job. How is it helpful to an economy to have them receiving UI or welfare or some such rather then receive Social security or pensions which has already been paid for?
Drop retirement to 60. Double the benefits paid out using as revenues higher taxes on the wealthy and lifting the cap on what is paid a year to Social Security/CPP. Ensure this money does not become another source of "General Revenues". RAISE payroll taxes based on a progressive system.
This would create MILLIONS of jobs. Retired 60 year old grandparents can be a great boon to single parents still in the workforce. With more years of "Good health" ahead of them they can play more active roles in rebuilding the sense of Community.
Working them till they are too sick to work, wherein their entire productive capacity for their entire lives is dedicated to making some Corporation and its shareholders wealthier is NOT SANE.
The USA never was a sane country. But perhaps this is true of the entire western model.
The USA is sane...what part of the Raygun era mantra GET RICH OR GET OFF didn't you understand ?
Great idea! I'll see to it that this happens right away. Or, as soon as republicans get a conscience and democrats find courage.
The Democrats demonstrated great courage by extending the Bush tax cuts including Obama's "temporary payroll tax holiday" that cuts Social Security funding thereby giving Obama and the Republicans the leverage to destroy it.
Lowering the retirement age would instantly create job openings as older workers ditch jobs that they're tired of anyway.
"A proposal like this could transform a miserable jobs picture into a tolerable one, at a single stroke."
Lowering the medicare eligibility age to zero would instantly create job openings as workers ditch jobs that they're only keeping for the sake of their crappy private sector health UNsurance.
Both proposals together could transform a miserable jobs picture into a good one, at a single stroke. These solutions are ready and at hand. No new programs needed. No need to re-invent the wheel. Just the stroke of a pen.
Judging from the number of baby boomers I know who remain in the work force solely for the employer-sponsored medical benefits, Medicare for all would reduce the unemployment level below that of the dot.com era when anybody who could fog a mirror could get a job.
You can bet, however that Obama will soon announce his plan to cut Social Security, thereby assuring that many boomers never retire and the already high unemployment rate for young Americans increases.
Obama will go down in history as the guy who took the Raygun Revolution over the finish line.
Obama has already said that he admires Ronald Reagan as a president who ended the excesses of the sixties and enjoyed a successfull transformatative presidency.
I am the lord king of all idiots for having voted for this piece of shit. He's coming after Social Security because he needs a billion dollars for his reelection and must screw the disabled and elderly to appease his Wall Street masters.
Obama has already said that he admires Ronald Reagan as a president who ended the excesses of the sixties and enjoyed a successfull transformatative presidency.
I am the lord king of all idiots for having voted for this piece of shit. He's coming after Social Security because he needs a billion dollars for his reelection and must screw the disabled and elderly to appease his Wall Street masters.
I've been telling myself, "The Sheeple will Re-Elect Bummer" "Theres nothing you can do about it" I have it taped to my mirror at home. Trying to get ready so I don't go off into a sucideal depression when it happens.
>^^<
Serious, I too predicted it. Did you know he gained a few points on the polls after a few crocodile tears after the Tucson killing?
Nah, you will change your mind and shout, Hallelujah Obama is shit!
Great article, awesome comments...unfortunately, this makes way too much practical sense for our government to even consider. That, and it would show some compassion; Good sense and compassion. No, not from OUR government. That is so 1930's!
Yes, the lack of compassion really sucks. It's across the board. It may be a sign of the times, but it will be our undoing.
is- not will be, It's already happening. Turn on Faux news, a Teabagger site, your local paper, and watch the pieces fall everyday.
America = A suicide pact!
>^^<
Right on. Since we've been taken back, over the past 30 years, to a cheezy re-enactment of the 1890's robber-baron era (at least THEY had an aristocratic notion of "noblesse oblige" back then), a return to the 1930's FDR era would represent a sociological advance of 40 years. Now that's progress & change we can believe in. Only the bankster robber-barons stand in the way.
Sorry for the numbering approach, but it may prove useful when commenting.
1. Retired people need some kind of price controls on costs such as property tax, or they will not be confident in retiring. Or the base Social Security must be boosted, with cost-of-living adjustments to keep up with inflation. Does anyone think this latter is politically feasible in the current climate? (Would that it were!)
2. Although we may be able to provide all the _things_ we need with a small labor force, and hence fewer jobs, we have a shortage of workers in areas that may be even more crucial-- planning for sustainability; taking care of elderly and infirm; debating, aiding, and implementing changes that are demanded by global warming. And in some cases-- industrial farming-- reform may require more workers, not fewer. How will society address that? The corporate model obviously won't.
3. Society and capitalism push unneeded materialism upon us. To resist it is sometimes to incur punishment and outlier status. Nevertheless, it is this materialism that is chewing up the planet. We need to reward people who do with less. We also need to share ownership of objects-- electronics, for example-- whose manufacture incurs social and environmental costs (the rare earths that cell phones use which are extracted in bloody fashion from the Congo, e.g.). And this needs to be done globally, not just in one nation.
I don't know how these goals are to be accomplished, but we somehow have to wrap our minds around the consequences of our current actions, which are dooming us and our beautiful green and blue planet...
As I see it the biggest fear is MEDICAL! Fear of having to choose between eating and pills. Most retired folk I know have been confronted with that problem at least once in the last 20yrs.
We can bomb the world, but not let our parents have a worryfree retirement!
>^^<
Very perceptive points. I am afraid that any model that is based on simply reforming the current system is ultimately doomed, as it dooms the planet that sustains us. While I appreciate Galbraith's reasoning, we must face that fact that the "efficiency" that drives this model is based on environmental destruction, accelerated climate change, and enormous human and animal suffering. We need transformation, not reform. I know this may seem impossible in the current political environment, but the time will come when it is too late for either reform or transformation.
It is easy to imagine what life could have been like if I had retired 8 years ago. I'd still be healthy enough to stay awake more than 10 hours a day. That is, I'd have missed out on the last 8 years of positions where a 60-hour work week was expected, since down-sizing and outsourcing made the conduct of business so inefficient that the grunts were ordered to take up the slack. Personally, I'm grateful that the combination of job recession and age discrimination forced me into retirement, even one of relative poverty.
A redesign of the workforce in favor of younger workers is only part of a rational solution. Full productivity requires organization development that supports the best work of every employee. No one benefited from the tens of thousands of dollars I wasted on an education. The bullying and manipulative office politics that have dominated corporate culture for decades simultaneously squelches creativity and redirects what could be productive energy into self-preservation tactics.
It is easy to imagine a world where full creativity is unleashed and, for example, the energy crisis averted. Until a radical change within corporate culture allows productivity itself to be redefined, changing the retirement age to match the culture will ultimately result in mandatory retirement at 40 years of age or death, whichever comes first.
I've never been more creative, now that I've retired (no job since age 60). Although I don't get paid for it, (only on SS for 8 months--2 years early), I think my contributions have been worth far more to society than when I had to work a 40-50 hour week on "dead-end" projects, in which the "creative phase" had already passed.
That said, I would be in favor of reducing the full retirement age for work to age 60, with the proviso that one spent 16-20 hours a week (9 months per year) doing work that was both enjoyable and contributed to society until age 66, as long as it is not medically hazardous to do so (doctor's approval). Working with young people would be a good choice for many to engage in.
Hopefully, it would be found to work so well that this could be extended down to age 55, but with 20-24 hours of work per week being required (job of choice).
What a great alternative to working until you die! Could you imagine the whining - "This is a one page bill!! How can we pass it when no one has read it??!!" Unfortunately, to show compassion and abolish serfdom would never have a chance.
Have faith, I'm sure the congress critters can manage to tack 1800 pages of earmarks to it. As long as it's passed in the middle of the night like the Patriot Act, who is to be the wiser.
>^^<
Wasn't it Lieberman who killed this idea in the Senate? That's not what the rich like Joe want for me. I am lucky, I only have to work till 66 and a half to get my full benefit right now although the SS contribution rises till age 70--an incentive to keep working. I don't want to. My retirement is in T bills--what my advisors said is the safest investment. Unless of course we default on the national debt and they too become worthless. In that case I will not be able to retire--I'll have to work rill I die. I think that's just what Joe had in mind for me. He gets to retire and I don't.
Lots of comments about working till you die. I, for one, intend to keep working till I die. But I'm going to do it on my terms. I've started a small one man business. It's amazing the tax benefits you can get. And a home business is something that can keep you active and feeling good about yourself. Make your own hours. Take a vacation any time you can afford it. It just has to be something you enjoy. And keep it simple. Take advantage of the system.
You might even be able to help out someone else by sharing your business or your ideas. Or share the work and the income.
Did I miss it, or did he not explain how to pay for it ?
As a liberal, I don't buy the right's hysteria that we can't afford social security, but someone, somehow, has to pay something.
Maybe I'm old fashioned, but if you are retired, you ain't earning an full or even partial income - who pays the rent ? the gas bill ?
The author should at least have given a reason why this is not a problem
ezra adams: why is this question always asked about social security, medicare and other human needs related expenditures but never about weapons systems and war spending? We have the money to fund earlier retirement for seniors--you know it and I know it. But not if we keep pissing $1 trillion annually into the wind for "defense," i.e., biggest welfare program in human history for weapons manufacturers.
"why is this question...."
but the Gal piece isn't about wars or other stuff, it is about retirement
"you know..."
as a professor of economics, Gal has to do better then that; he has to lay a reasoanble coherent plan, otherwise it is no better then a limbaugh rant
also - and this goes for the poster below - war money is partly about hegemony, or power, but partly about jobs; if you cut the war budget by x, that is a lot of unemployed people, just like cutting schools or any other gov't function.
I don't know what the answers are, but, again
Gal as a prof of econ should provide at least a link to the answers
Sorry there isn't any viable answer and green projects no matter laudable are to few and far apart and American's can't afford most of them.
If a 60 something retires, a young worker with no job (getting unemployment or food stamps or medicaid and/or more or all) gets a job. This pays for itself.
Attacking the problem from a different angle, re-instate glass-steagall, go into bankruptcy re-organization, cancel & repudiate the 17 trillion dollars of phony indebtedness (we supposedly owe to "too big to fail" wallstreet). POOF! the "where's the money going to come from?" question disappears. Then adopt Richard C Cook's "credit as a public utility" plan to fund all & any necessary & productive programs (basically Lincoln's greenback plan to raise funds, which is Ben Franklin's ideas on the superior virtues of a well-regulated paper currency issued as credit towards future increases of productivity).No nation need be held hostage to the greed of a financier/mafia. Blow them off (& make the people's leaders wear armored vests & stay in the bunkers for the duration of the reforms).
Start by taxing the rich and ending the wars. Next, begin plans to confiscate all the assets of any manufacturer that moves oversees or out of town: let them go without one tax dollar but keep the factories for the workers to run and to sustainably produce what they need locally. Decentralize governance to the local and redistribute the land under the stewardship of indigenous people. People will find their way back to trading with one another fairly and close to home.
This proposal makes perfect sense, it is rational, it is good for workers. That's why we're definitely NOT going to see it enacted.
Someone talking sense. Of course, he will be ignored.
Some great posts earlier.
I agree with much of the economic thinking here but would point out that there are some psychological issues to consider. For example, most of us have probably heard of the guy who was healthy until he retired and then dies within a few months from a disease he didn't have while working. Some of us are so defined by our jobs that we suddenly feel hollow or useless if we are no longer working---whether laid off young, or in sudden retirement---and this can be harmful to your health.
Many communities have facilities such as Senior Centers or counseling services that can help, but many esp. rural areas have nothing at all. So many people spend the day sitting in front of a television set. Retiring on a low income is a special challenge. (Actually, I've noticed that many people writing to CD seem to be low-income retired or disabled and CD is an alternative for them.)
So among the changes needed to enable earlier retirement would be a mobilization of resources to do battle on this front. Meanwhile, today the exact opposite is happening (such as massive cutbacks in social services, libraries, etc.).
From the article: "Our problem is finding worthwhile work for people to do, not finding workers to produce the goods we consume." This is largely true but it is also the case that this is within the current context of capitalist maldistribution. For example, most of us have probably seen an old wooden building being bulldozed and landfilled, perhaps noticing how much perfectly good seasoned wood was destroyed, but we don't make it possible to dismantle the structure by hand, let alone renovate it. We could, but we don't.
OTOH, a good argument could be made that we really need much less "work" in this country, given the amount of sheer waste we produce. For example, we should dismantle the "health" insurance companies---look at all the paper we'd save!---and put those people to work fixing our failing infrastructure.
Oh well...
-30-
Too much like right!
This is absolutely right on. I was laid off my job 2 years ago at the age of 66, and am STILL unemployed. NO ONE WILL HIRE ME. Granted, I am not an executive or brilliant scientist, but just an administrative assistant who should be able to find some kind of remunerative work to keep me fed and housed. But the minute they see me, it's over. Now, I do not look my age...look about 60...and no gray hair, no wrinkled skin, fashionable, up-to-date with computers, intelligent (BS in Education), reliable, yada, yada, yada. But do you think they will hire me? NO! I have had 22 interviews in the last 2 years, all of which I was imminently qualified for....some I was overqualified for....and not one offer of employment.
I started collecting my SS at age 65 and 10 months but that is just barely enough to cover my rent & utilities. So what am I supposed to do? Hop on an ice floe and float out to sea? There are no jobs for the ordinary worker past 65...hell, there are none for most past 60. I can't stand on my feet 8 hours a day as a greeter at Walmart...nor would I want to. If I can't get a job at 66, 67, 68....how can anyone get a job at 69 or 70, if they raise the retirement age? With the glut of unemployed on the market, and fewer and fewer jobs available because of overseas competition, employers don't have to hire anybody over 40 or 50. Soon we'll be a nation of the rich, a few in middle age who haven't lost their jobs, and millions of old people struggling to live.
GLORY: I hope you will not find my suggestions condescending, as they are NOT given in that spirit. Since you have SS as a base, you are allowed to earn up to what, $1000 a month additionally, without losing those benefits?
You could tutor students part time.
You could probably work as a hostess weekends in a classy restaurant.
You could run an ad and offer to work as a personal assistant to a busy professional.
I've worked as a freelance writer for over 30 years, and while there have been ups and downs, I've learned that if you make yourself available (and that may sometimes mean providing free content to get your name into the pipeline), work has a way of finding you.
I dated an attorney (11 years older than me) who told me he lamented having to live on social security now. I suggested he get a job at a cool bookstore, or tutor law students in passing the bar exam.
We all have talents. The challenge these days is to find ways to earn income by working for ourselves and making these skills available within a less structured (or orthodox) context or framework.
One of my friends made a living baking banana breads and blueberry muffins. Each morning she'd make deliveries to a number of guesthouses. At $1. per muffin (they retail for $1.50-2.50) she could bake 50 a day and make enough to live on.
In these times we need to be creative, and think outside the box.
the wage scales are being reset...lowered...
an older person with a good paying position may want to think twice before giving that up...a similar post may not be around...
even if the experienced worker vacates, the young person stepping into the role may well get half the pay the older person was getting, as industry takes advantage of a flooding labor pool...
even labor unions are buying into this thinking...better half the money than none...
manufacturing product from the planet is reaching EOL...related jobs are, as well...
old people, young people...won't matter...planet is dying, and jobs kill planet...
I just heard a man calling in to a progressive talk show and he said that 15 years ago he was working as a meat cutter at $16.50 per hour. He said he just heard of a friend who took a job as a meat cutter at $8.25 per hour. Now, THAT'S progress! Not! Costs have quadrupled and wages have been cut in half.
Ah, America....land of opportunity.
Populations decrease during times of economic stress. That could help us in twenty years or so. The babies born now will not have such competition for jobs--the coots will be dying off--perhaps from crappy healthcare--and there will be plenty of openings for the young. China will have labor shortages due to its one-child policy and Japan and Europe are well on the road to a dramatically smaller population. Things will straighten themselves out in time. The post-war baby boom population rise is responsible for some of the trouble we are experiencing now. This, too, will pass.
First the damnable protestant work ethic must be called into question.
Yes, you are correct: chuck this mentality and there goes the "work" ethic.
Galbraith is 100 percent correct
the real value of money is the good and services that are available to buy
................
since we produce more goods and services than ever before with less labor than ever before that says 2 things
...................
a. there is plenty of money for everyone (ie the value of the money supply = the value of goods and services to purchase)
so there is plenty of money value
.....................................
b. we need to work so much less to produce the same amount of goods and services
................................
so what should happen is we should all:
retire earlier
have more vacation days
have better benefits
be paid much more for the work we do
......................
all of this should be happening
................
but for power hungry greedy, selfish, violent, arrogant, ignorant assholes