Friday, June 4, 2010
Should the US raise the age of retirement?
When President Franklin Roosevelt created the Social Security Administration as part of the New Deal, his goal was to create a safety net for poor elderly Americans. Retirement age was set at 65, when life expectancy was age 63. In other words, the benevolent federal government was willing to take care of the folks who made it that far-- realizing that most wouldn't.
At the onset of Social Security, there were 40 workers contributing to the Social Security fund for each retiree. Fast forward to 2010, when the US life expectancy is 77.7 years, there are now 3.1 workers for each retiree drawing benefits. As Baby Boomers continue to retire, the ratio of workers to retirees will become more lopsided.
Baby Boomer retirements also will contributed to a future labor shortage. Although the US is currently in a recession and unemployment is at 9.7 percent, by 2018 a US labor shortage has been projected by the Bureau of Labor Statistics. According to government figures, there will be 15.3 million new jobs in 2018. With work force participation among Baby Boomers decreasing, only 9.6 million of these jobs will be filled, reports the Wall Street Journal. Depending upon retirement rates and how many people hold multiple jobs, this could leave 3-5 million jobs vacant. Along with creation of new jobs, the US workforce will become much more diverse with a 33.1 percent increase in workers of Hispanic origin vs a 4 percent increase of workers of non-Hispanic origin. Rates of Asian and African American workers also will increase.
To solve the labor shortage and the Social Security's looming financial problems, some are calling for raising the full retirement age to 70 and tying it to life expectancy. (If this happens, there may be a mass exodus of Baby Boomers moving to Europe where the retirement age is 60! Time to brush up your foreign language skills.)
What's a country to do? Personally, I don't support raising the retirement age to 70. Yes, many people are physically capable of working at age 70, but will they have the skills for these newly created jobs? I see a skills disparity among workers now. As an employer, when I have a task that requires high level computer skills, I give it to my 20-something employee, not my 60-something employee because I know he can get it done more efficiently, and if he doesn't know how to do that particular task, he knows how to seek web-based resources to accomplish it.
Since the US will need young, capable, industrious workers in this decade, why is there such an outcry against the DREAM Act and a path to citizenship for undocumented people currently living in the US?
Why is are there calls for checking papers at K-12 schools and denying education to children who live in the US?
Why? Because it is politically expedient.
In this era of partisan-fueled xenophobia, I believe that our country-- and particularly our state-- should take a pragmatic look to the future, discard the racist rhetoric, welcome people to this land of immigrants, and offer them an education. We're going to need them.
This article originally appeared in my Baby Boomer Examiner column. (In the photo above-- my parents.)