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View Diary: NELP: 1.5 Million to Exhaust Unemployment by December. (32 comments)

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  •  One of the things that I've wanted to look at (5+ / 0-)

    is what the effect of drawing the 55 plus crowd out of the labor market would be.

    Many in this age group would like to retire, and have the money to be comfortable, but can't get private insurance.  A "public option" that could be paid down on to cover between age of retirement and 67 would draw older workers out of the market.  That would help improve the lack of job openings relative to the unemployed.  The second thing would be how much it would cost to have a stimulus were the government offered to allow early retirement starting at 55 or 60, but paying out regular Social security benefits.

    There are just over 14 million working Americans over the the age of 60.  That's roughly the same number as Americans of all ages who are unemployed.  Now, if we could arrange for this group to exit the workforce, opening those jobs to younger unemployed workers.  Each 11% reduction in this group would lead to a 1% drop in the unemployment rate.

    For example if a third could be persuaded to exit the workforce, we could drop the unemployment rate from 9.5% to 6.5%.

    At the least it seems worthy of consideration.

    http://www.economicpopulist.org

    by ManfromMiddletown on Mon Jul 20, 2009 at 05:51:44 AM PDT

    [ Parent ]

    •  Interesting Idea, BUT (1+ / 0-)
      Recommended by:
      ManfromMiddletown

      If you live to 80, would you really want to retire at 55?

      For most people, 55+ is when they are the most productive and their earnings are the highest.

      Plus, at 55 many people will still have kids in college and their mortgages would not be paid off yet.

      IOW, at 55, people still have substantial expenses, expenses that would not be covered by social security  alone.

      In my case, when I turn 55, my youngest only will be 11.

      And, even with conservative estimates for future raises, if I retire at 55, instead of 65, my family would lose out on over 2 million in my income. My GF makes about the same. So double that.  

      Finally, even if you receive the maximum SS payout and do not have kids in college or a mortgage to pay, SS alone is not nearly enough to live on.

      •  I think that it depends (1+ / 0-)
        Recommended by:
        bakenjuddy

        greatly on your situation.  

        What I see happening now is that people want to retire but can't, because they have no access to affordable health insurance.

        Which suggests that there is a hidden stimulus that would exist if a public option passed.

        $1300 a month for private health insurance essentially compels people to work against their will.

        Now if a public option can drop that to something more reasonable, many will voluntarily exit the workforce.

        Something else to consider is that on the lower end, many people can't retire because the amount of benefits that they would receive at 62 is not enough to survive on.  So they have to keep working until 65 at low wages. This expands the labor force, and drives down wages.

        We should be asking whether the amount of money that accrues in wages to those forced to work between 62-65, is more than the amount of income lost because wages are driven down.

        Wages are set at the margin, which means that any increase of unemployment from 5% to 10% is a doubling, but relative to the number of open positions, it is an increase from 2-1 to nearly 6-1.  That has a dramatic effect on wages.

        Finally, I really think that the whole idea of a cap on social security contributions at $106,000 (that's roughly the 2009 number) needs to be revisited.

        We aren't going to reduce labor force participation to 0% past 62, but we can match people who want to retire with the means to do so and do this at a gain for society.

        In the end, this is one of several ways in which there's been downward pressure on wages.  The question is how to address that.  And I think that there's an honest conversation to be had about the best way to do that.

        http://www.economicpopulist.org

        by ManfromMiddletown on Tue Jul 21, 2009 at 02:38:34 AM PDT

        [ Parent ]

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