Here's an appropriate sentiment on Labor Day, from Ezra on Social Security:
The system . . . is not that generous, and it's becoming less so every year. The age at which you can begin collecting full Social Security benefits is moving from 65 to 67, as part of a deal struck in the 1980s to ensure the system's solvency. And all this at a time when employers are getting rid of defined-benefit pensions, which means that most workers will have no guaranteed retirement income except for Social Security.
Which brings us to Social Security's financial "crisis." The issue isn't that Social Security is spending too much or that we're living too long. It's that we're not having enough children (or letting in enough immigrants). As Stephen C. Goss, the system's chief actuary, has written, Social Security projects an imbalance "because birth rates dropped from three to two children per woman." That means there are relatively fewer young people paying for the old people. "Importantly," Goss continues, "this shortfall is basically stable after 2035." In other words, we only have to fix Social Security once....
Start with the basic rationale for raising the retirement age. As Rep. Paul D. Ryan (R-Wis.) has argued, when Social Security was signed into law, the retirement age was 65 and life expectancy was 63. "The numbers added up pretty well back then," he said on Fox News. But that's misleading. That figure was driven by high infant mortality. If you were a white male who'd made it to age 60 in 1935, you could expect 15 more years going forward. If you're a white male who lives to 60 today, you can expect 20 more years going forward.
Moreover, those averages conceal a lot of inequality. In 1972, a 60-year-old male worker who made less than the median income had a life expectancy of 78 years. By 2001, he had a life expectancy of 80 years. Meanwhile, workers in the top half of the income distribution shot to 85 years from 79. Insofar as the argument for raising the retirement age is that "Social Security beneficiaries live a lot longer today than they did in 1935," it should be restated as: "Social Security beneficiaries tend to live somewhat longer today than they did in 1935, and that's much more true of rich beneficiaries than poor beneficiaries."
And so what? Lurking beneath this conversation is an unquestioned assumption: We live longer, so we should work longer. That's pretty intuitive to members of Congress, who seem to like their jobs and don't seem to like the idea of retiring. It's also pretty intuitive to blogger/columnists, who spend their time in air-conditioned rooms opining about pension programs. But most people don't work in Congress or in the media. They work on their feet. They strain their backs. They're bored silly at the end of the day. By the time they're in their 60s, they want to retire....
Reforming Social Security will be politically difficult and result in worse policy. That's the good thing about putting everything on the table. It allows you to think more clearly about what should be taken off.
Many of the nation's workers simply can't physically do their jobs when they get into their 60s, an obvious fact most of the working world that seems to have escaped too policy-makers, in both parties. Hopefully, as they're out and about at Labor Day picnics and parades today, they're hearing that fact from their constituents.
