Somehow we have let governments all over the world
divide our lives into discrete segments that are convenient for governments to
administer. Never mind if they have
nothing to do with the real world.
Nowhere is this more apparent than with retirement. To governments, life seems divided into:
work, work, work, then don’t work, don’t work, don’t work. Allow minor adjustments for education if
done early on, and of course weekends, holidays, and vacations in order to
accommodate the insanity of the ridged segmentation. Even allow early Social Security enrollment
for individuals where the phony segmenting does a "crash and burn." If you really screw up, try to bridge the gap
with unemployment insurance and lax administration of other social safety net
programs. Of course amply provide
resources to make the segmentation work for government employees.
The truth is aging is a continuous
process. It happens one day at a
time. From the perspective of twenty-first
century life expectancies, someone who is 64 years and 364 days old is the same
age as someone 65 years old. In fact, the life expectancy of the 64 plus
individual isn’t that different from that of a 69 year old.
There is an inconvenient truth about a realistic
view of aging. It devastates a lot of
fictions that have grown up around the work, work, work, don’t work
nonsense. That is the notion that in
1935 Social Security was set up so that people could retire. The truth is poverty among older Americans
was the problem. The combination of a stock
market crash, an agriculture depression, and bank failures had wiped out most
peoples’ savings. It was disgraceful
that people who had worked and saved all their life were left destitute.
Many older Americans would have continued to work if
they could find employment. Stories of
“retirees” coming back to work to support the war effort illustrate the
point. If there was a job older
Americans could do, we as a nation welcomed their contribution. It is no accident that it is an “old age and
disability” program. In 1935 old age and
disability meant reduced productivity; a reduction that, in 1935, precluded the
person from completing in the labor market.
To illustrate how much the fictions confuse people,
consider this quote from the Browning article.
When talking about 55 to 64 year olds it states: “At an age when they
should be generating peak incomes and savings, many unemployed and
underemployed Americans are applying for early Social Security benefits and
spending what's left in their retirement accounts.” Note the ridiculous assumption that
productivity, the basis for wages, increases throughout the pre-65 magic
age. Then at 65 it disappears. The productivity of post-65 workers is
ignored.
Now it may seem like these postings are picking on
Browning. That’s not the case. Browning addresses the issue so much better
and thoroughly than most reports. It
covers more aspects of the issue and thus better illustrates the realities even
when focusing on other issues. Thus,
this posting draws heavily on it even when highlighting issues the article
ignores.
The article screams for the realization that
productivity grows with age and experience for some period of time, then it
declines. There is no magic age where
this happens. Both the increased
productivity and the decline happen one day at a time. But, at some point, the reality is productivity drops with age. One isn’t as
strong. Ones skills become old, perhaps
obsolete. Ones interest in acquiring new
skills or knowledge may shift from job related to a personal passion. Ones command of “modern technology” requires
larger investments as more and more of ones accumulated technical skills
age. Ones increased skills become more
and more tailored to a specific employer and thus increasing vulnerable to
changes at a specific employer or in a specific industry. This happens at different rates for different
occupation and even for different people in the same occupation, but it
happens.
All of these
factors contribute to a massive misunderstanding of the realities Social
Security must address. For example, from
the Browning article addressing 55 to 64 year olds, “That
doesn't count the lost wages of people who have taken salary cuts to get new
jobs.” The pay cuts reflect the
abandonment or obsolescing of skills tailored to a specific employer. Consider
this quote from a discussion of one individual’s situation: “The older he gets,
the more trouble he has finding jobs in computer mainframes, his specialty,
amid changing technologies.” One
wonders how Browning, sitting there writing on his or her PC, missed the point.
Interpretations
can get totally turned around by ignoring reality. Consider this quote cited in part in another
context: “Older people hang on to jobs or, out of desperation,
take lower-level jobs for which they are over-qualified. Either way, they
displace younger workers.” Older workers
“hang on to their jobs” because they’re productive in those specific jobs at
that employer. If so, younger workers
couldn’t possibly be displaced unless they too have acquired the employer-specific
skills and knowledge that allow the older worker to keep the job. That will happen eventually as the relative
importance of old skills and newer skills shifts. But displacement? What nonsense.
As to older workers taking jobs “for which they are
over-qualified,” one is always best qualified for one’s last job. After all,
one has done it. In that sense we are
all over qualified for any new job.
Every new job requires the acquisition of new skills and knowledge. Who gets a job depends on who has less to
learn and looks most interested in acquiring the new skills and knowledge
required.
To me, nothing makes the point more clearly than
this quote: “Older people have
more trouble finding new jobs. Among unemployed workers older than 55, more
than half have been looking for more than two years, compared with 31% of
younger workers, according to the Heldrich Center. Among older workers who
found a new job, 72% took a pay cut, often a big one, the Rutgers data show.” The obvious explanation is skills have become specialized. Thus, it takes longer to find an employer
where they are relevant. Since the
general productivity drop is accompanied by a move that makes many employer-specific
skills irrelevant, the wage income implications can be dramatic. The chances of
finding a job where the value of the new skills is larger than that of the
obsolete or abandoned skills decrease with age.
It’s only in
government that the idea of a new program to address these realities would seem
more reasonable than fixing the existing programs for older workers. Why not reforming
Social Security to address the reality that at some point productivity declines
with age? We don’t need a new program. Fix Social Security.
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