Washington wants you to work longer
It's Labor Day, so I'm spending the day doing rather less labor. But my Sunday column fits the theme of the day nicely.
Raising the Social Security retirement age has become as close to a consensus position as exists in American politics. House Minority Leader John A. Boehner (R-Ohio) supports it. House Majority Leader Steny H. Hoyer (D-Md.) has said that "we could and should consider a higher retirement age." And for a while, I agreed with them, too. It seemed obvious: People live longer today, and so they should work later into life. But as I've looked at the issue, I've decided that I was wrong. So let me be the skunk at the party. We should leave the retirement age alone. In fact, we should leave Social Security alone -- unless we're making it more, rather than less, generous.
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 gained two years. Meanwhile, workers in the top half of the income distribution had gained six more years. 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.
You see that reflected in Social Security. Age 66 is when you get full benefits. But most people begin taking Social Security at age 62. They get less, but they can retire earlier. To them, the trade-off is worth it. And remember, the country is much richer than it was in 1935. Adjusting for inflation, our gross domestic product in 1935 was $865 billion. In 2009, it was more than $12 trillion. We have more than enough money to buy ourselves some leisure time at the end of our lives. At least if that's one of our priorities.
Polling suggests that it is. An August survey from Greenberg Quinlan Rosner Research tested reactions to a variety of Social Security fixes. One of the options was raising the retirement age to 70. Two-thirds of respondents opposed it. Another option was eliminating the cap on payroll taxes so that well-off workers pay the tax on their full income, just as middle-income workers do now. A solid 61 percent supported it.
That's almost the reverse of the conversation in Washington, where affluent people who like their jobs propose cutting benefits for the poor (which is, after all, what raising the retirement age would do) rather than lowering benefits or increasing the payroll tax on, well, themselves.
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