Cash for Geezers? Lower the Retirement Age to 55 Now!

One 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, 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, albeit modestly, on Social Security).

The right-wing reaction to this, of course, will be to say that with fewer people working and more people drawing benefits, it would bankrupt Social Security and destroy the economy. But history shows the exact reverse.

Instead, it would eliminate the problem of unemployment in the United States. 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.

If enough Boomers left the job market, it would even flip the current dynamic of too-many-people-chasing-too-few-jobs upside down, and create a tight labor markets. Tight labor markets drive up wages.

And as wages go up, tax revenues – which are paying for Social Security (among other things) – would increase.

Additionally, these new-into-the-workforce people can then pay off student loans, buy new houses and cars, and otherwise drive the economy from the bottom up. Which will further increase tax revenues further strengthening the Social Security system.

To further tighten the job market and drive up wages (and tax revenues), modify the Fair Labor Standards Act of 1938 – which tightened the labor market and reduced unemployment by establishing the 40-hour work week – to include all hours worked by a person. We could also, like in France, drop the 40-hour maximum-workweek threshold to 35 hours (used by the Mitterrand government to successfully lower unemployment and stimulate the French economy). 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.

In Uganda, Joseph Okwakoi gets it. He’s the president of the National Youth Council in that nation, a group that has considerable political power (and an affiliated Member of Parliament, the Central Youth Party’s Joseph Kasozi).

Earlier this month, 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. This single act would instantly create about 15,000 job openings in the country, which could be filled by currently unemployed young people.

President Museveni replied that he’d consider it seriously, pointing out that, “The retirement age was actually 55 when we came but because of manpower shortage we put it at 60.” Now that the manpower shortage has eased, wages are falling, and unemployment is rising, he noted, “We shall study it.”

What Joseph Okwakoi understands is that there is a marketplace for labor. When the supply of labor exceeds demand, the price of labor (“wages”) falls. On the other hand, when the demand for labor is at or greater than the supply of labor, the price of labor – wages – increases.

This is the main reason why the labor movements of the 18th and 19th centuries fought so hard against child labor; they knew that if children were removed from the labor marketplace, then the supply of labor (the number of people available to work) would decrease and the price of labor (wages) would increase. And, sure enough, that’s exactly what happened – and it began the creation of a blue-collar middle class.

It’s also why the labor movement pushed for an 8-hour day and a 40-hour maximum workweek. By reducing the amount of labor available from each worker from the average 60 hours a week or so people were working before 1938, the labor market tightened up, increasing the number of people who could be employed and raising wages.

Of course, this is the exact opposite of American labor policy ever since the Reagan/Bush/Clinton/Bush era. Reagan drove down wages by busting unions (which tighten a labor marketplace); 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); and began the process (completed in a big way by Bill Clinton with NAFTA and GATT/WTO) of dismantling tariffs, taxes, and laws that made it expensive or illegal to export American jobs.

Reagan also put into the chairmanship of the Fed Alan Greenspan, 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. Greenspan is still preaching that now-discredited and anti-American philosophy he learned from Ayn Rand, in fact.

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, Greenspan now wants to go after white-collar workers by eliminating limits on H1B visas for skilled workers ranging from computer programmers to physicians to scientists. The investor class would always be protected, in the Greenspan world, but the working class – regardless of skill level – should always be the working poor.

In September of 2007, in an interview on C-SPAN for Book TV, Greenspan said:
“We pay the highest skilled labor wages in the world. If we would open up our borders to skilled labor far more than we do, we would attract a very substantial quantity of skilled labor which would suppress the wage levels of the skilled, because the skilled are essentially being subsidized by the government, meaning our competition is being kept outside the country.”

It’s shocking that ideologues like Greenspan, Reagan, and Clinton believe this, but they do. And the only way to reverse the past 29 years of Reaganomics/Clintonomics is to tighten up the labor market again. While a great start would be to pull out of our insane trade treaties and begin again protecting American manufacturers, 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.

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. Then we can begin to bring our manufacturing jobs back home from China and 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.

9 Responses to “Cash for Geezers? Lower the Retirement Age to 55 Now!”

Bob August 26th, 2009, 6:24 pm

Really excellent idea. Not sure I would go all the way to 55, but certainly 60 would be a good start. In addition, I’d like to see Vietnam era veterans who served either 2, 3 or 4 years during the war get additional credit, perhaps another 2 years.

I haven’t done the math, but I suspect that eliminating the current cap on Social Security taxes would more than pay for the changes. We need more people like Thom in Congress!!

Bob
Chris August 26th, 2009, 7:12 pm

Another idea for lowering unemployment would be to institute a required minimum vacation time, just like the countries in Europe. If you work in the US, then employers would not only be required give you 4 weeks off a year, but be penalized if you do not actually use it. All that time off would require employers to hire more people to cover the vacation time. It would pump more money into the economy from people going on vacation and spending. Further, it would not require one cent in government money to institute.
Matt August 26th, 2009, 7:56 pm

What about creating incentives for one parent to stay home to care for kids? That would tighten the labor market and we’d get the advantages of a fulltime parent.
GOPsmacker August 27th, 2009, 9:06 am

What a freaking brilliant idea! And I’m not just saying that because I am 55 and completely burned out from working for corporate greed monkeys.

In order for this economy to ever come back, working people need more disposable income. High unemployment (which is expected for years by most economists) will allow corporations to continue to reduce benefits and stiffle wage increases. Where as, low unemployment will cause compitition for employees, which will increase both benefits and wages.

Of course, this makes too much sense to ever happen and because it benefits real people instead of corporations, there will be no lobbyists supporting it and endless lobbyists and cash to defeat it.

Still, at least mentally, I am sailing in the Keys instead of leaving in fear of my job being outsourced, and I thank you for that.
MS August 27th, 2009, 1:52 pm

Matt’s idea is great!!!
Kevin August 27th, 2009, 3:46 pm

Great ideas for the overall advancement of modern life.

Unfortunately, the multi-national corporation behemoths are working toward opposite ends. They can (and do) legally flood American labor markets if any labor “shortage” exists that “drives up” their labor costs through a two pronged approach.

One is to offshore work to India and other low standard of living areas that Americans can not compete against. This is done by US corporations who do little or no business in India or other offshoring nations, so in effect they’re flooding our labor market here.

The other method is to have high profile greed meisters like Bill Gates cry the blues to Congress that there is a shortage of highly skilled and highly educated workers in the US. Congress then allows literally hundreds of thousands of H1B visas each year to bring in these workers which floods the market as well.

As a note, in my 20+ years of working in hi-tech in the US I’ve yet to see any shortages, and even worse I have never seen a hi-tech job that a reasonably intelligent and motivated person couldn’t learn.
Bud Fuzzyman September 1st, 2009, 1:27 pm

Great idea, Thom! I’ll diseminate it.

One criticism in your article, though, about tariffs…

According to the chart at http://home.netcom.com/~rdavis2/tariffs.html , tariffs were dismantled before Reagan. Tariffs have remained virtually unchanged since the mid-70’s.
suburubu September 1st, 2009, 1:43 pm

Thom! Talk about lousy branding! Can we call it something other than Cash for Geezers? Jeez, that rivals Public Option for lack of appeal. How about Senior Incentives, or Senior Choice…
jdmdetroit September 1st, 2009, 2:16 pm

Next year, it’ll be 75 years since the U.S. followed the lead of 34 other countries and adopted Social Security. Some people thought at the time that it’d be part of a quick slide toward totalitarianism. It wasn’t. FDR, the “tyrant” who passed it, was elected 4 times and is revered even now.

One of the effects of Social Security was that it allowed people to retire who faced the choice of either work themselves to death — or just die of destitution.

http://www.ssa.gov/history/briefhistory3.html

The experience with Social Securty Kinda puts the whole “universal health care will lead to Stalinism” meme into context, I think. Just sayin’.