Over the last 20 or so years we've heard more talk from politicians, businesspeople and the media about how longer lives are causing too large a part of our society to be retired and collecting retirement benefits. They often argue the retirement age should be raised to compensate for this. The age at which one can collect Social Security benefits was already raised a number of years ago, and some people talk about raising the age further. What are the options?
For working people who labor for decades in jobs which can be unpleasant, it may not always seem clear that working even more years is a good solution. We should have a full, open discussion of alternatives and let the people who work so many years supplying society with all its goods and services vote to choice which they prefer.
Unpleasant Work
The truth is that lots of people would rather have the freedom to choose how they spend their days after retiring. But that's not the only reason why many people are anxious to retire. Many people find themselves in jobs that are more unpleasant than they have to be. They work for nasty, unappreciative bosses. Their bosses take credit for what they do. The boss cuts corners on safety measures. The boss blames the employees for the consequences of the boss' poor decisions. The boss is always looking for ways to skimp on employee pay and benefits. When bosses make terrible mistakes, as in the financial crisis of 2008, the boss expects a bonus for himself and cuts the pay of other employees. And so on. Better treatment of employees won't mean that everyone wants to work more years, but it would make workers less fervently opposed to more work years. If society genuinely believes we need more work years, it needs to address this issue.
According to scientific studies, those nasty bosses may literally be psychopaths. See my diary. Let's fix that.
Other Ideas
Employment
If it is essential that Americans work more years before retirement (and in the process contribute more to the Social Security fund during their lives), how can we afford to have unemployed people? Whether it’s a recession with relatively high unemployment or better times with relatively low unemployment, there are always Americans who have worked in the past and are willing to work now, but are between jobs. If we eliminated joblessness, that would increase the average number of years Americans actually worked and contribute to the fund.
Suppose a person starts working at age 21 and retires at age 65 - that's 44 possible years of work. But 44 years is enough time for about 6 recessions and for a person's employer to have other problems at other times. So, this worker may be unemployed for a couple months here, several months there. Maybe even over a year during an economic crisis like the current one. As a result, this worker was actually only getting a paycheck and contributing to Social Security for 42 or 43 years out of that 44 year period.
Today, it's not only workers between jobs. Because of the economic crisis, there have been large numbers of young people just getting out of school who have had trouble getting their first jobs.
Whether it's young people choosing their first occupation, or someone in a shrinking occupation who goes back to school to find a new line of work, they may be talked into studying for an occupation which has too few openings or is unsuitable for the individual. For-profit training schools want to sign up students whether or not the student will be able to find a good job. The result is more time Americans spend not working or contributing to the fund.
Eliminate all this unnecessary time Americans aren't working and it will be the equivalent of working more years while not raising the retirement age.
Older Workers Denied Jobs
Even if in a sense it were reasonable to expect working people to retire at a later age, we have to make a distinction between it being desirable to work more years, and never receiving benefits before the person reaches a higher age. In practice in our society, companies sometimes cut their costs by laying off employees in their 50's and 60's (because those employees tend to be earning higher wages than younger workers). Once a worker in his 50's or 60's is out of one job it's often very difficult for that person to get hired at another job. (And getting hired often means accepting lower pay.) Add this to the unnecessary unemployment discussed above.
The result is that older workers may be denied the opportunity to work those extra years, and be denied retirement benefits during those years. The higher the retirement age, the more employees that could be subject to this issue. Denying retirement benefits to those who were laid off because of their age and can't get another job is unfair.
When these older workers do find another job - but which pays less - will this mean lower benefits when they do retire? Even if not, it will mean they are giving less to Social Security. That's bad for the Social Security system. Putting older workers into lower paying jobs is wrong for society.
Automation
The long-term goal of society should be to free people from labor as much as possible - not to make us work more years. One day, machines and robots should be able to do most of the work society needs. That won't happen this year, but during the last 15 years automation has clearly begun to replace human workers faster than new jobs are created. Society needs to plan how we can use automation to produce more of our goods and services, while keeping working people affluent and give them more leisure. Currently, automation is benefiting the 1%, while wages stagnate and more people are facing unemployed poverty. That must be changed
Automation could mean less years of labor for working people, but our current economy makes it potentially harmful. See my diary
Money Issues
Social Security Revenue
First, Americans are living longer on average, but how much longer an American is likely to live depends on the individual’s occupation and income. Those with higher incomes are getting most of the increase in life expectancy, those with lower incomes are only living a little longer. Since the cost of longer retirements is primarily coming from those with upper incomes, it might be appropriate to end the cap on Social Security payroll deductions for high income individuals. Social Security deductions are only calculated on income up to a certain level – if one’s salary is above that level, deductions aren’t computed on their full income. If we calculated Social Security contributions on the full salaries of the most affluent, the Social Security fund would have more assets.
This last option leaves something to be desired. Currently, Social Security retirement benefits are not treated as what a person deserves for working for decades. Rather, it's more like a mandatory investment program. In order to be able to collect benefits during retirement, the person must contribute to Social Security for years. (The employer must also pay into Social Security for the employee, which means it indirectly comes out of the employee's pocket.) The Social Security deductions from employee paychecks goes into a fund for Social Security - and those attacking Social Security would like to limit Social Security to that money. It doesn't have to be that way. Social Security benefits could be paid for from the federal budget based on collecting money through the progressive income tax system - the way everything else is paid for. In that way, the wealthy could contribute a larger share of the cost of retirement benefits, allowing somewhat longer retirements without the need of more work years. Perhaps, that might not entirely eliminate the question of number of work years and number of retirement years - but it could at least make a contribution. It's not unreasonable to ask wealthy people who have always been “retired” to help the rest of us only have to work 45 years rather than 50 years.
Some people are uncomfortable not having a separate pool of money just for Social Security. It's possible for the IRS to view the progressive revenues calculated on our annual forms to be a combination feeding two separate pools - one for the general budget and one for the Social Security fund. The IRS would simply have to have an easy formula to send part of the money it gets to one place and part of the money to another place. Whichever approach we use, it's clear corporate politicians will be trying to cut Social Security and we'll be fighting to protect it. However, giving Social Security more sources of income will reduce their excuses.
What puts money in the Social Security fund isn't the fact a person has a job at an employer, but the fact revenue is collected based on income. When they ask us to work more years, they're asking us to pay more money. If the problem is Americans aren't paying enough to the government, why does capital gains (income from not working) have a top tax rate half that of an equal amount of wages?
Stay Affluent With Less Money
If the average person works the same number of years they do now, lives more years in retirement and society changes nothing else, that working person will have to spread the monetary value of his work over more years – perhaps, his life will be less affluent. However, there is another way we can influence this. If that person spends less money on items he doesn’t really use or on items that turn out to be of less value than he was told they were, he will have the things he really wants and more money left over without working more years. Our society spends untold billions of dollars on advertising and other forms of marketing in order to trick consumers into buying items they would not otherwise purchase and to mislead consumers into believing products are more valuable than they are. If our society cannot afford to have its people own these unneeded items or pay more than the true worth of a product throughout longer lives, society could restrict those advertising practices and otherwise help consumers avoid making those costly purchases. Once that is done, we might have fewer possessions, but we would have the ones we really wanted, needed and use – and at reasonable prices. For meaningful purposes, we’d be as affluent as we had been without needing to work the extra years to buy the unneeded items. Of course, big business would prefer to profit by selling us those items we only buy when manipulated by ads – and then expect us to give up years of retirement. But we don’t have to accept that.
Can we afford to let corporations use advertising campaigns to promote unhealthy foods - when the end result is more people needing medical care that costs Medicare and Medicaid billions?
Similarly, if we reduce the amount of disposable products, we would be both benefiting the environment and investing fewer man-hours on essentially making the same thing over and over again. (And we’d be using less of our labor force handling the discarded disposable products.) Businesses like disposable products because that allows them to keep selling you replacements on a regular and frequent basis. Business promotes disposables for that reason. Some disposables might be the best solution for a particular type of product. But if we’re looking for ways to stop wasting work years so we can have our current standard of living without increasing the number of years we work, we need to identify disposable products that aren’t really beneficial and stop spending valuable work time making and disposing of them.
After working for over 40 years, it's reasonable for working people to expect a reward. One way society might reward those who served it for so long would be to provide their food, clothing, shelter and medical care on a purely not-for-profit basis. That would considerably reduce retiree's expenses. If retiree expenses were that much lower, Social Security benefit payments could be less while still maintaining the same standard of living. If Social Security was sending out less cash to recipients each month, it could provide benefits for more years from the same amount of fund money.