Thursday, April 26, 2012

Social Security and Jobs

Good morning!  About to rain yet again, here in the Catskills.  March was mild here, as if it were April, and April has been March, with freezing nights and days in the forties. 

In the news this week was that the Social Security fund has been dropping quicker than expected, and is expected to run out by 2033, rather than last year's 2036 estimate and much sooner than the 2050-ish extimate that was around for years.  A Los Angeles Times editorial this morning, "Fix Social Security, Now" (good luck!), mentions the possibilities of raising Social Security taxes 20% or cutting benefits 16%. 

The jobs crisis has, of course, put pressure on Social Security cash flow.  Many people who never expected to retire anywhere near this early have seen no alternative to diving on their benefits at the earliest age they can take them, 62.  The ranks of these involuntarily retired will only increase, and by the time the baby boom generation, with its inflated population, gets completely past that age, it will be 2026.  So where do we go?

In my first book, dissertation Prospects for Increased Post-65 Career Employment for the Baby Boom Generation (2007), I named the possible solutions to Social Security funding as follows:

- Increased taxes
- Reduced benefits
- Increased immigration
- Needs-based reimbursement
- Subdivision into personal or private accounts
- Raising retirement ages.

I advocated the last solution, and still do.  One plan that would maintain the same share of population that was over 65 between 1980 and 2000, which was 13%, would increase standard retirement ages to 67 in 2015, 68.5 in 2020, 70.5 in 2025, 72 in 2030, and 72.5 from 2035 to 2050. 

Considering that one study of life expectancy and aging characteristics, back in 1988, said we could have a straight increase to 75, the plan above does not seem too extreme.  After all, American longevity at age 65 has increased from 11.7 years in 1900 to 17.6 in 2000, and is going higher, with overall health improving at least proportionally.  And since adoption of retirement at age 65 in the 1880s, U.S. life expectancy has increased so much that if indexed in the same way now, retirement would be at age 98. 

Of course, Social Security has long been regarded as the "third rail" of politics - touch it, and you die.  But we're coming up on the time when we will have no choice.  Can we get it together to maintain the social security system, which is more valuable than ever with the lack of jobs?  You tell me.

Friday, April 20, 2012

We Need Both Sides

Happy Friday!

What will Congress do about the jobs crisis?  It has not seriously addressed the issue, and it may not for a while.  What's more, they probably won't get too far when they do.  Why not?

More than in my memory (I'm 55), Congress is divided into two sides that are far apart.  I won't say "intractable," but they are both driving very hard bargains, and have not worked together well.  Last summer, President Barack Obama and Speaker of the House John Boehner met a number of times to agree on a plan for the new budget.  Both gave away a lot, with Obama agreeing to cut entitlements and Boehner accepting significant tax increases.  They truly met in the middle.  However, the deal failed when neither could sell their plan to their side.  Even if both Democrats and Republicans agreed that the jobs crisis is permanent, the outcome of talks on it might be much the same as happened with the budget.

The good news is the employment situation does not require an immediate solution.  There are still 140 million jobs in the United States, and that number may increase (though not in relation to population) this year.  That means Congress, and by extension the rest of us, have time to implement improvements. 

By the end of the decade, most on both sides will at least strongly suspect that the number of jobs will never again match the number of people who want them, that it is more than just a recession or even a Great Recession (which, by the way, is long over - look at corporate sales, corporate profitability, and stock market performance) holding them back.   We are in Work's New Age, during which we will all see that we need ever-shrinking shares of American adults to work.

Can we adjust successfully to our new reality by using only conservative or liberal ideas?  NO!  Both sides have good and bad ones.  We are not going to ease this transition sufficiently, for example, by cutting taxes all around.  Nor will it help to squeeze businesses by mandating minimum wage and other pay increases.  On the other hand, a WPA-style infrastructure jobs project, along with an all-out cost-benefit assessment and repeal of many laws that inhibit jobs, would be greatly beneficial.

As I have said on the radio many times, the upcoming presidential election is not going to decide the issue.  It doesn't matter whether Mitt Romney is elected, or Obama again, or anyone else - if Congress will not negotiate, we will not go anywhere.  Can they do that?

I encourage your comments and discussion.  Agree or disagree, the most important thing we can do is realize we have a permanent problem, so put something down.   Have a great weekend!

Tuesday, April 10, 2012

Welcome to the Work's New Age blog!

Welcome to the Work's New Age blog!  Many people have asked if I could write about what is happening in the news about the jobs crisis, which is PERMANENT and will NOT end with better economic times.  Indeed, since Work's New Age was published in late 2011, many things have happened that reinforce that viewpoint, and are happening every week. 

Watch this space for much more!