In our "Need to Know" news today, President Nicolas Sarkozy may be facing the biggest challenge of his presidency as the month-old protest against so-called pension reform intensifies. An astounding 3 million demonstrators – one in 20 of all French people – marched yesterday against the President's plans to hike up the retirement age from 60 to 62. Tens of thousands of students joined the marches for the first time and Rail and air services were severely disrupted yesterday. Many schools and government offices, and even the Eiffel Tower were closed. Eleven out of the nation's 12 oil refineries were wholly or partially closed and local union branches are threatening an indefinite stoppage, "to topple the pension reform".
The state railway company, the SNCF, warned last night that it expected more widespread cancellations today. Close to 3.5 million people were estimated by unions to have joined the protest marches in more than 300 French towns and cities yesterday. Tens of thousands of university students have joined the marches for the first time, concerned that raising the retirement age will mean fewer jobs for them. There's a simple math here, that Europeans - who are nearly all unionionized, and who study in high school how labor supply and demand affects wages - understand and that Americans generally are clueless about. It's that the more workers there are, the lower wages will go, and the fewer workers there are, the higher wages will go. It's simple supply and demand.
That's why American unions fought for restrictions on child labor and immigrant labor - to drive up their own wages by making labor scarce so employers had to compete for workers by paying more. And the French know that if everybody in the country has to work two extra years, there will be an increase in people competing for jobs thus driving wages down.
Here in the US we could use this simple math to get us out of our unemployment crisis and raise the standard of living of all working people. I call it "Cash For Geezers," and it's a chapter in my book "Rebooting the American Dream." Simply lower the optional US retirement age - the age at which a person can opt to stop working and begin drawing medicare and social security - from 67 to 55. Probably about half the people in that group would opt to retire, freeing up as many as ten million jobs for young people entering the labor force. And because it would causes wages to go up, it would pay for itself because increased wages means increased taxes that pay for the Medicare and Social Security.