How would lowering the retirement age for SS to 55 help with jobs?

[matmar]

I've heard Thom Hartmann make a case for lowering the age to 55. He explains this might result in half of those eligible to take early retirement thus opening up those jobs for the unemployed to fill.

But isn't this just flip-flopping two groups of people off and on government assistance (unemployment insurance - Social Security benefits)?

What am I missing?

The previously unemployed would now be paying into the system instead of drawing from it while you have a new group, more people, taking Social Security benefits?

Help.

[jtown1123]

1. NO, because those workers would be paying into Social Security for those that took

early retirement. I guess it's flip flopping in a way, but a lot of folks age 55 are nearing the ends of their careers anyways and it is terrible to have a young folks out of work when they are starting their careers. The longer they are unemployed, the further they get left behind. Unemployment is very different than SS. Unemployment runs out, SS doesn't, which is the big difference.

[Nuclear Unicorn]

9. I'm not sure I'm understanding

If, you lower the retirement age to 55 then X numbers will actually take that retirement.

That leaves X number of jobs open to be filled by younger workers. You don't gain a net number of jobs; it's still just X. Add to that the fact that the number of non-working, potentially productive people stays the same.

Moreover, older employees tend to be paid more so if taxation is %-based you might see revenues decline. Additionally, unemployed younger workers may take public assistance/UI but those are temporary whereas retirement is a permanent expense.

Of course this assumes that there would be an economic incentive for people to go on to early retirement. As SS tends to equal a significant reduction in household income that is 10 fewer years for people to save, pay off mortgages etc.

You will also see a decline in expertise as older workers tend to be more managerially aligned. It's the young workers that are the hammer-swingers, it's the older workers that are supervisors.

[jtown1123]

14. That makes sense. I think it's been suggested as a temporary measure.

It's hard to say in practice if it would work. Like you pointed out, older workers have different skill sets and are in more managerial positions in later years. It's an interesting idea.

I think what it would really help is those older workers who are unemployed and are facing age discrimination. Not so sure it would necessarily open up jobs.

[matmar]

26. Thanks for the insight.

Was wondering how it could work if there were no increase in the amount if jobs as you pointed out. And your point about the loss of tax revenue from higher paid older workers getting replaced by younger less paid workers adds a new dimension..

[FarLeftFist]

34. This would lower the unemployment rate at the very least.

Besides, it seems crazy that someone should have to work until 65 when the average life span is 77. 55 would give a better quality of life and may even help people make more money i.e. Grandpa/Grandma, slightly younger, could easily watch their grandkids while BOTH parents go to work making even more income.

[Nuclear Unicorn]

40. Actually, no it wouldn't lower the unemployment rate

That's the point. Unemployment only goes down if you add jobs above what you currently have. This isn't adding jobs, it's just changing the name of the person sitting at the desk or swinging the hammer. If you retire Joe and hire Bill you did not add any jobs and now Bill must pay part of his salary to pay for Joe's retirement unless Joe is 100% self-sufficient (and only the ~1% get to do that).

[lumberjack_jeff]

50. Sure it would. Bill is no longer looking for work and neither is Joe. n/t

[Nuclear Unicorn]

52. That's a bit over-simplified.

You might just as easily put everyone on retirement from age 18 and then claim nobody is looking for a job, ever.

[lumberjack_jeff]

57. There are X number of jobs. There are 1.2X people competing for them.

Wages are depressed for this reason. Employers don't increase the supply of jobs, so workers should constrain the supply of labor.

In 2000, the employment to population ratio was about 65%. Today it's about 58%. The number of workers between 55 and 67 is roughly equal to the jobs lost since 2000.

[Nuclear Unicorn]

59. I agree a labor surplus depresses wages but

depressing the supply of labor won't help wages. For starters, long-term employees have higher wages than new hires, so this scheme will backfire and depress wages even more.

Employers don't increase the supply of jobs

They do when they want to increase profits by having productivity keep-up with demand.

In 2000, the employment to population ratio was about 65%. Today it's about 58%. The number of workers between 55 and 67 is roughly equal to the jobs lost since 2000.

I don't want to sound harsh but this is an irrelevant statement. Economies are NOT based on people cashing paychecks, they're based on people producing things other people value. It's why you don't see a lot of snow removal businesses in southern Texas. The economy has to be based on jobs that have value.

If the idea is to just have people cashing government-printed paychecks then just throw money in the street. Of course then you'll have hyper-inflation because the money becomes worthless and you'll need more of it to purchase the same amount of goods. When that sets in we'll long for the days of wage-depression because the loss of actual buying power will no longer trickle away, it will gush.

SS retirement just changes the nature of the problem because SS benefits have to be drawn out of the economy. No SS retiree lives 100% off their own payroll contributions. If they could we would not need SS because everybody could fund their own retirement. So adding to the number of retirees just adds to the amount of money the government must A) take out of the economy B) create by fiat thus raising inflation or C) increase the national debt...which incurs both A and B, just later down the road.

[lumberjack_jeff]

62. "depressing the supply of labor won't help wages." Of course it does, that's why unions work.

With the possible exception of marketing staff, employers don't hire to increase profits. They hire to fulfill demand.

People can value things to their hearts content, but if they have no wages with which to purchase those things, it doesn't effect an economy.

Economies are absolutely dependent on consumers. People without money aren't consumers.

Let's take a different tack. Social security is paid for via a tax on wages, right? If a million people were retired next month, do they take their jobs with them, or will their employer hire replacements? The latter, of course. So the retirement of a million people when 15 million are looking for work doesn't decrease the total wages paid. In fact, since employers might begin competing for employees instead of the reverse, wages will go up.

Anything which increases wages without decreasing the number of jobs will increase SS revenue. Also, the million people who retired are offset by a million younger workers who now have jobs instead of unemployment.

It
a) increases wages
b) decreases pressure on government by reducing unemployment
c) increases SS revenues

But it also
a) increases benefits paid out in SS

It's a net positive.

[ProfessorGAC]

54. That's Not Right

The UE numbers do not count people who are voluntarily retired. UE goes down by creating jobs or by reducing the number of people eligible to fill those jobs. Retirees do not count in the UE stats. Layoffs, firings, displaced workers (factory closed) etc. do count, because those are voluntarily surrended positions.
GAC

[Nuclear Unicorn]

55. That's just a statistical categorization, not a measure of economic productivity

The fact remains the actual number of jobs existing remains the same. No new jobs are created. Someone could just as easily say blonde people are no longer counted as unemployed and Oh! Hey! We just cut unemployment nearly in half!

As I pointed out up-thread -- mass-early retirement might actually worsen the economy as older employees have, on average, higher wages adn since tax revenues are generated on percentages of income the tax receipts would decrease. Job growth, period, is the only way to really cure unemployment.

[ProfessorGAC]

63. You're Dodging

Nice try, but really weak. Nobody argued about net jobs. That wasn't my point or the point of any posters i read. It still makes UE go down the way it's computed and has been for a long time.

Now you're chaging the frame to avoid admitting you're wrong.

And, as to affecting the economy negatively, you have ZERO evidence or econometric theory that supports that notion.
GAC

[RaleighNCDUer]

56. That's all bass ackwards.

You make an assumption that retirement is equivalent to unemployment. It is not. When you are 25 and unemployed you have no fall-back - you have no savings, no 401k, no SS. All you have is unemployment for a period of time. When you retire you DO have savings, pensions, 401ks, SS. As retirees draw down those resources they pump up the economy, at the same time that the paychecks to their replacements do the same.

If income-tax revenues possibly decline, so does business cost. Businesses get more bang for their buck from younger workers, making the businesses more profitable and (with a proper tax structure) generating more tax revenue. And, in ANY industry innovation comes from younger workers, not older workers. Why do you think techies who lose their jobs wind up working at WalMart? Because the kids coming up behind them are more attuned to what is happening in their field. What good is 'managerial expertise' of an older worker when his expertise is in writing code for DOS?

Finally, retirees don't just sit around and collect the dole - my sister, who retired two years ago, has published 3 books since she retired. A great many retirees take their savings and put it into what they've been wanting to do for decades, but were unable to pursue because of their work. It's always been that way. When my father took early retirement three decades ago, after 25 years teaching in the dependent school system, he pursued his dream and went to Hollywood, where he spent several years working in rep companies and got one (very minor, but speaking) movie role.

You are making a grave error in simply counting bodies. Just because it involves numbers that does not make it a simple accounting problem where you can equate Column A with Column B.

And I had to laugh at this: "unemployed younger workers may take public assistance/UI but those are temporary whereas retirement is a permanent expense." Trust me, retirement is NOT permanent. EVERYBODY DIES. Most, sooner than later.

[Nuclear Unicorn]

60. urm

You make an assumption that retirement is equivalent to unemployment. It is not. When you are 25 and unemployed you have no fall-back - you have no savings, no 401k, no SS. All you have is unemployment for a period of time. When you retire you DO have savings, pensions, 401ks, SS. As retirees draw down those resources they pump up the economy, at the same time that the paychecks to their replacements do the same.

All that money for savings, SS benefits, 401ks, UI etc has to come from someplace. That someplace has to be individual productivity, whether self-employed or not.

If income-tax revenues possibly decline, so does business cost. Businesses get more bang for their buck from younger workers, making the businesses more profitable and (with a proper tax structure) generating more tax revenue.

Sounds like an argument in favor of Reaganomics but employers can do that just by depressing wages. In the end though, the government has to pay for the permanent retirement of the retiree. To do that they take taxes from the younger ones who are earning less and have less money saved. Taxes take money out of the economy. That means the lower-paid younger tax payers have even less spending power and their contributions to demand go down.

Finally, retirees don't just sit around and collect the dole...

All well and good but if self-employment was the key then there would be no need to ask people to take early retirement. They could employ themselves, pay taxes, and lower overall joblessness without the need for government benefits being paid-out.

Trust me, retirement is NOT permanent. EVERYBODY DIES. Most, sooner than later.

My point was -- UI is a short-term expense with an expectation of a return to job-holding whereas retirement can be decades long as a budget outlay by the government.

[bemildred]

2. And Medicare too, that would make older workers more desibable. nt

[wryter2000]

3. Social Security is not "government assistance."

It's a retirement system everyone pays into. Furthermore, it's more likely to be something someone can live on or live on with some supplement. The newly employeed would create demand for goods and services while also paying the retirement of the newly rettired (which is how the system works). The newly retired would continue to create demand for goods and services.

Desipte what the RWers would have you believe, demand creates jobs and prosperity.

[jtown1123]

4. +1

[matmar]

25. My bad. Didn't mean it that way._

Social Security is actually insurance not a retirement system per say although that is what it has become for many sadly.

[sad sally]

38. Except the amount everyone pays into has been reduced with the

"holiday" this year, and if all goes the way the President wants, will be reduced even further in 2012 - especially if employers get their 50-100% reduction. Another retirement system gone like so many in America...

[wryter2000]

61. The "holiday" was a bad idea in many ways

Well-meant, but a big mistake, imho.

[ejpoeta]

5. if those 55 to 65 were no longer in the employment race then you would have

an easing of the problems related to unemployment. I am in support of this idea because people in that age range are having a difficult time getting jobs because employers don't want to hire older workers. they increase the cost of insurance to the company and employers seem to prefer younger workers. If you lower the age for social security then you are going to have to do the same with medicare. I think it would be a good investment in the long run.

[matmar]

27. I like the idea also. But how would it work?

[ejpoeta]

31. you lower the age to qualify. this takes most of those folks out of the

workforce/looking for work pool. These folks will be able to pay bills, spend money therefore helping the economy. The same way food stamps and other forms money to people have an exponential effect, so too will this. You might ask about the strain on the money available... I say that when the economy improves and people are making money to pay into social security, then this will help the stress effect. More people working is more money going into the system. If they make a decent wage, then they will be paying more in. We need to make the government pay back the money they have borrowed or whatever the hell else they did with that trust fund.

[matmar]

33. It's invested in Treasury Bonds.

[Nuclear Unicorn]

41. Not quite

The money SS pays-out must first be taken out of the economy and by economy I mean the 99%'s pocket. They endure reduced buying power during their working years in order to have more buying power in later years but even then SS requires more people to pay-in than it pays-out (otherwise people could pay for their own retirements, obviating the need for SS).

Since it takes more people to pay-in to SS than receive its benefits that means one retiree may create $1.84 of economic activity for every dollar they spend -- BUT -- the money everyone else pays into the system to buttress their benefits is $1.84 of economic activity they lose. Multiply that by the number of people paying to support each retiree and you see that it is actually a negative cash flow.

In fact, SS is less efficient than personal spending as SS has admin costs, which you do not incur when you spend your paycheck yourself. So your personal spending has more economic power than just $1.84/dollar during your productive years.

[MADem]

6. If you think SS is a meager sustenance at 62 or 65 or more, I imagine it would

be "Homeless, living under a bridge" sustenance at the 55 year mark.

[RC]

15. BINGO!

The jobs situation would be a bonus of the employer because he would not have to pay as much for the younger worker.
Those taking early retirement would not get very much, so only the better well off could afford to retire in the first place.
The net effect would be LESS money circulating in the economy, making things worse.

This sounds a whole lot like a Republican based Heritage Center think tank idea.

I retired at 67 and it was only in the last few years before retirement did I make any real money. If I had retired at 55, I would have to work for the rest of my life to survive. As it is now, I don't.

Let's fix the real problems and stop diddling with the symptoms.

[DavidDvorkin]

7. Add Medicare to that, and I think a lot of people

would quit their jobs and start their own businesses. That would make their current slots available to younger workers and would also create new jobs.

People who retire don't stop spending. If they can afford it, they travel more and go out for meals and entertainment more.

[razorman]

8. It might give me some hope for my own future. I realize this is selfish, but

I am now 55, and self-employed. I have a (very)small business that I operate alone. It is barely hanging on, with the economy being as it is. I have some health issues, as well. I am only saying this to illustrate that, if my business goes down, I will be ineligible for unemployment, and would have virtually no hope of finding another job. Even in good times, no one wants to talk to you if you are over 40. Thankfully, I am able to work, as long as my business is still viable, and I have no health emergencies.
If I were eligible for SS, that would at least be something, and might prevent us from losing our home. It probably would not be good for society in general,though, over the long term, to lower the age for SS. I tell ya, it's a bitch when your retirement plan is scratch tickets.

[flamingdem]

10. It's a good idea, not selfish, but human nature and politics

make it unlikely that anyone would pass it!

Envy of those who didn't benefit, envy of the youth who feel they have to pay for it and might not get it.
Ugly repuke destroy govt. agenda.

But we should try ..

[dtexdem]

11. Social Security is something beneficiaries have paid into.

The issue should be, rather, that if the aim is to allow benefits at age 55 in order to open up jobs, those 55 to 62 who take early benefits would need to not work for pay.

Far better to set SS eligibility based on when people need to stop working, not on opening up jobs for others.

[Matariki]

12. Social Security isn't "government assistance"

[matmar]

28. I know. My mistake

[dkf]

13. For every year under the full retirement age you get a cut in benefits.

If retiring at 62 instead of 65 cuts your benefits by 20% I can't imagine what 55 would look like.

[RaleighNCDUer]

21. You do NOT get a cut in benefits. The benefits are calculated to be

the same over the years of retirement, so later retirement means fewer years with higher monthly payments, early retirement means more years with smaller monthly payments; i.e., $100,000 over ten years vs $100,000 over 15 years. Either way, it is still $100,000.

Early retirement can be a good thing, with proper planning, particularly for those whose family histories indicate they will not live beyond their 70s. I could work until 67, and take home half-again what I would if I retired at 62, but what good does it do me when I kick of at 71? Work until I die does not sound like a plan, to me. I'm already exhausted - I can't imagine how I'd do what I'm doing for another 10 years.

If I could retire today, I'd jump at the chance. I'm just hanging on for another 3.5 years until I'm eligible for SS. And you know what? My work shows it. My employer would be much better off if they could replace me with somebody who gave a damn.

[dkf]

24. Well you get a smaller monthly benefit. To many here that is a "cut".

I would venture that the amount you would get at 55 is pretty minimal. If you can retire on that, with the rest of your assets you are in pretty good shape anyway.

[RaleighNCDUer]

16. More expensive older workers would be replaced by less expensive

younger workers, for one thing. The medical expenses of older workers falling on their employers would be replaced on those expenses falling on Medicare, drastically reducing the overhead for the companies while giving those older retirees the cost breaks of Medicare.

Also, Social Security is NOT government assistance. It is a government sponsored insurance program which is fully funded for the next 27 years at a minimum. Unemployment insurance is also insurance, of course, but the unemployed also draw on any number of other government programs which ARE government assistance - so getting them off those programs would be a net benefit.

[madfloridian]

17. Calling SS "government assistance" gives you away per motive.

[matmar]

29. Bad choice of words.

Typing on cell phone at work constrained for time sometimes does that. I can see how it could be taken as a right wing talking point

[NorthCarolina]

18. Unrec. Social Security is not "Government Assistance".

I would be interested in hearing what makes you believe it to BE government assistance though.

[kestrel91316]

19. Social Security is NOT "government assistance". It is a pension benefit

that we all pay into when we work, in many cases for 5 decades. I have paid into my pension aka SS since 1974. It damned well better be there as promised when I retire in another 10 or 15 years, and I don't want some RW quisling telling me I am a freeloader for taking what is mine.

AFDC is "government assistance".

Oh, and enjoy your stay.

[jtown1123]

20. +1

[matmar]

30. Oh for Christs sake it was an honest mistake

Don't be so sensitive. These types of communication forums aren't perfect and I'm certainly not. I understand that Social Security is not government assistance, it's insurance against poverty in old age

[ItNerd4life]

22. Economics 101 - It's a horrible and stupid idea

SS is funded by workers, right now I believe it's 6 workers pay for 1 retiree. In the next 20 years it's supposed to drop to 2.3 workers paying for each retiree.
What would happen is we would suddenly have a lot more people collecting SS so people would have to pay a lot more into SS.

And yes SS is government assistance, unlike all the people posting that it's not. 401k is not government assistance. When you collect SS, you are NOT collecting
from the money you put into the system. You are collecting from other people, just like welfare, food stamps, etc.

[JoePhilly]

23. You PAY into social security and they calculate your benefit based on what you paid in.

It's NOT government assistance ... and it is an ENTITLEMENT ... you are ENTITLED to it, you PAID into it.

[matmar]

32. I disagree.

You pay into it your entire working life you are entitled to collect from it. Your worker to beneficiary ratio is meaningless because that calculation was taken into consideration back in the 1980's with the Moynihan/Greenspan commission. As Thom Hartmann says, they saw the rabbit going through the python - a metaphor for the baby boom demographic - and raised the payroll taxes on them to the point where not only would they be paying for current retirees but they would pay for their own retirement thus the Social Security Trust Fund was born

[eridani]

36. If you were figuring in productivity gains over the last 50 years--

--the ideal would be 0.5 workers for each retiree. Of course that assumes takting the productivity gains from the 1% to give to those who really created them.

[FarLeftFist]

37. Yes, it's called 'Pay It Forward' and happens to be a remarkably genius way to run a society.

[lumberjack_jeff]

46. SS is insurance, funded by the membership.

It is government assistance in the same sense that my medical insurance is Blue Cross assistance.

There are still the same amount of jobs regardless of the retirement age. Decreasing the supply of labor will drive up wages for those still working. As that disposable income gets injected into the economy, many of the retired would return to work (provided there wasn't a penalty).

[TBF]

35. Unrec for the right wing meme ... nt

[mmonk]

39. The businesses would hire them. They wouldn't have to offer benefits.

[lumberjack_jeff]

42. It would drive up costs.

With unemployment rates where they are, it might not drive down revenues though.

It would require higher ss taxes on those who work, but salaries would probably be higher because of the restricted pool of labor.

On balance, I think it would be a good thing.
a) lower unemployment
b) higher wages
c) better health
d) it allows men, and particularly men of color (who die before current SS age), to have a meaningful retirement.

But be aware of the downsides
a) increased SS taxes
b) inflation

[backtoblue]

43. It would just make more people out looking for jobs, but not

necessarily providing those jobs. The theory: get people off "benefits" and back into the work force. Loads of crap.

[lumberjack_jeff]

44. So more people looking for jobs... creates jobs?

Is that what you're saying?

[backtoblue]

45. That's what I'm saying that they're saying...

[lumberjack_jeff]

48. Still not following

Lowering the retirement age decreases the size of the workforce (and constrains the supply of labor) driving wages up.

Increasing the number of SS retired raises costs for SS, so presumably SS taxes would rise.

On balance, is it a good idea or a bad one?

[backtoblue]

49. It's a VERY bad idea

I was using a "haha" swipe at the possible reasoning behind lowering the retirement age. We know it's a horrible idea and nothing possitive can come of it.nt

[mainer]

47. Who says 55 year olds don't NEED those jobs?

I'm not sure half of them would want to move aside to let younger workers take over. Social Security isn't going to pay enough.

[RaleighNCDUer]

51. Nobody is talking about mandatory retirement at 55.

It's about making retirement a viable option at 55.

Right now, I'm SUPPOSED to retire at 66.8 - call it 67 - for full benefits. I can take early retirement at 62. With the family history of Alzheimers, I don't expect to live past 74. So, I can retire with full benefits at 67, enjoy retirement for about six months, then get shipped off to a facility with an Alzheimers wing. I could retire with reduced benefits at 62, and enjoy a few years of functional retirement before that happens. What I cannot do is retire this year, or next year, and expect to have a decade or more of retirement, of being able to travel, to savor the end of life which I've spent 40+ years working toward.

Is that REALLY why we exist? To work all our lives, then die?

Fuck that. Might as well put one in the brainpan today, if that's what it is.

Could I retire today? No. I've worked at crap jobs all my life and couldn't make it on what my SS would be able to give me at this age. When I DO retire, at 62, it will be close, a tight thing, but barring a full-on disaster I can do it - and a full-on disaster would wipe me out just as easily if I took late retirement at 70.

There are, however, a great many people who CAN retire at 55 or 60. My sister retired from teaching at 60 because she is fortunate enough to have a second income through her partner, as well as her state pension - she can start collecting SS next year. A great many more could do the same if they could access SS at 55 or 60, making room for younger workers. If they can, why should they be denied the opportunity?

[newportdadde]

53. Many/Most of those companies would NOT replace those workers.

They would ask two people to do four people's work or outsource it. Productivity would go up for sure, just as it has during this recession but they would not hire anyone ever if at all possible.

[lumberjack_jeff]

58. Employers hire enough people to fill orders, and no more.

Sometimes they hire less, but that's not a good long term strategy.

They already maximize productivity and outsourcing. The chamber of commerce's extortion threats ring hollow.