Actually, The Retirement Age is Too High

Actually, The Retirement Age is Too High
by James K. Galbraith

Published on Wednesday, January 19, 2011 by Foreign Policy
https://www.commondreams.org/view/2011/01/19-8

The most dangerous conventional wisdom in the world today
is the idea that with an older population, people must
work longer and retire with less.

This idea is being used to rationalize cuts in old-age
benefits in numerous advanced countries -- most recently
in France, and soon in the United States. The cuts are
disguised as increases in the minimum retirement age or as
increases in the age at which full pensions will be paid.

Such cuts have a perversely powerful logic: "We" are
living longer. There are fewer workers to support each
elderly person. Therefore "we" should work longer.

But in the first place, "we" are not living longer.
Wealthier elderly are; the non-wealthy not so much.
Raising the retirement age cuts benefits for those who
can't wait to retire and who often won't live long.
Meanwhile, richer people with soft jobs work on: For them,
it's an easy call.

Second, many workers retire because they can't find jobs.
They're unemployed -- or expect to become so. Extending
the retirement age for them just means a longer job
search, a futile waste of time and effort.

Third, we don't need the workers. Productivity gains and
cheap imports mean that we can and do enjoy far more farm
and factory goods than our forebears, with much less
effort. Only a small fraction of today's workers make
things. Our problem is finding worthwhile work for people
to do, not finding workers to produce the goods we
consume.

In the United States, the financial crisis has left the
country with 11 million fewer jobs than Americans need
now. No matter how aggressive the policy, we are not going
to find 11 million new jobs soon. So common sense suggests
we should make some decisions about who should have the
first crack: older people, who have already worked three
or four decades at hard jobs? Or younger people, many just
out of school, with fresh skills and ambitions?

The answer is obvious. Older people who would like to
retire and would do so if they could afford it should get
some help. The right step is to reduce, not increase, the
full-benefits retirement age. As a rough cut, why not
enact a three-year window during which the age for
receiving full Social Security benefits would drop to 62
-- providing a voluntary, one-time, grab-it-now bonus for
leaving work? Let them go home! With a secure pension and
medical care, they will be happier. Young people who need
work will be happier. And there will also be more jobs.
With pension security, older people will consume services
until the end of their lives. They will become, each and
every one, an employer.

A proposal like this could transform a miserable jobs
picture into a tolerable one, at a single stroke.

© 2011 Foreign Policy
James K. Galbraith teaches at UT-Austin and is the author
of The Predator State: How Conservatives Abandoned the
Free Market and Why Liberals Should Too.