Tuesday, June 14, 2005

Keeping The Elderly In The Workforce

When I saw the teaser for Tierney's latest on Social Security ("If the elderly were willing to work longer, there would be lower taxes on everyone and more national wealth and tax revenue to help the needy.") my first thought was, "He's probably going to tell us that if we would only work to the age of 105, like the industrious Chileans, everything would be perfect." (I was inspired, of course, by his past writings.) I didn't actually expect that to be the case, but I was a lot closer than I expected. Meanwhile, Tierney continues to overlook the once-lauded "privatization" of Britain's pension system.

Tierney argues, with little apparent thought given to the realities of life for the elderly, that
Americans now feel entitled to spend nearly a third of their adult lives in retirement. Their jobs are less physically demanding than their parents' were, but they're retiring younger and typically start collecting Social Security by age 62. Most could keep working - fewer than 10 percent of people 65 to 75 are in poor health - but, like Bartleby the Scrivener, they prefer not to.
Those darn lazy elderly workers have, it seems, no incentive to work once their Social Security benefits become effectively fixed.
Once you've worked 35 years, more work often yields only a tiny increase in your benefits (sometimes none at all), but you still have to keep paying the onerous Social Security tax, which has more than doubled over the last half century.

If the elderly were willing to work longer, there would be lower taxes on everyone and fewer struggling young families.
This, of course, is meant to be an argument for privatization of Social Security - that if people contributed to their private accounts, rather than contributing to a defined system of guaranteed benefits, they would have greater incentive to keep working because their "private account" would continue to grow. But somehow, recalling the various elderly people I see working in the community at stores like Meijer or even fast food restaurants, I find it hard to believe that they see no financial benefit from working - it seems far more likely that they are trying to supplement their fixed retirement incomes by working low-wage jobs. Perhaps, though, Tierney (who, in a most non-elitist manner, compares the retired elderly to Bartleby the Scrivener) isn't even aware that such people exist. The Guardian provides a more informed take on the situation:
It is all very well to talk glibly about raising pensionable ages. Nobody has yet explained what many people will do in their extended working lives. Some are capable of carrying on for years past 60: doctors, lawyers, writers, artists, desk workers.

But nobody can reasonably expect manual workers to keep going as their physical strength declines and all the usual ailments of late middle age set in. Even more significant for industry and commerce, it seems absurd to suggest that people in executive roles should be given a right to keep them after 60.

Most of us slow up, some become burnt-out cases. It is already a problem for many businesses that, amid relentlessly changing markets and technologies, key jobs need the energies and imaginations of 30-something-year-olds, not tired sexagenarians.
The Guardian acknowledges that some realignment of the British system may be requires, but unlike Tierney it directly addresses the realities for elderly workers:
Many people in their last working years will have to do humbler jobs than they have been used to, for less pay.
Tierney also argues that by forcing the elderly to work longer before they could retire, ostensibly while removing Social Security from the tax system, the net result would be "more national wealth and tax revenue available to help the needy, including people no longer able to work as well as the many elderly below the poverty line because they get so little Social Security." Hm. So if the elderly work longer, more jobs will magically be created in the economy? If Social Security taxes are no longer part of the tax system (through a privatization estimated to require $2 billion from the general fund?) tax revenues will go up? And the net effect of this will be to allow us to subsidize the impoverished elderly, who presently retire too early because Social Security is so generous? One hardly knows what to say.

And then, to cap it off, he resorts to the Chilean system - and actually suggests that if we had a system like Chile's we could retire sooner than the present system allows. But he apparently recognizes the contradiction, and thus suggests that Chileans have a "saner attitude about retirement" than lazy American baby boomers, and typically intend to work after they retire. (His thesis is supproted by a conveniently perfect quote from an ostensible "typical Chilean", encountered... somehow. Tierney's taking a page from Friedman's style book.)

[Updated to correct hyperlink to Tierney's original editorial.]


  1. Since "struggling young families" aren't receiving Social Security, how is it going to help them if the elderly take "humbler" jobs in late life?

  2. Because the elderly will be retiring later or taking jobs which would otherwise be available to them, limiting their job options, and the money they would formerly have paid as Social Security taxes will instead be a mandatory payment into a private retirement account. What? That doesn't make sense to you?

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