Tuesday, January 04, 2011
Earlier, Not Later Retirement
In the United States, the financial crisis has left the country with 11 million fewer jobs than Americans need now. No matter how aggressive the policy, we are not going to find 11 million new jobs soon. So common sense suggests we should make some decisions about who should have the first crack: older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?
The answer is obvious. Older people who would like to retire and would do so if they could afford it should get some help. The right step is to reduce, not increase, the full-benefits retirement age. As a rough cut, why not enact a three-year window during which the age for receiving full Social Security benefits would drop to 62 -- providing a voluntary, one-time, grab-it-now bonus for leaving work? Let them go home! With a secure pension and medical care, they will be happier. Young people who need work will be happier. And there will also be more jobs. With pension security, older people will consume services until the end of their lives. They will become, each and every one, an employer.
A proposal like this could transform a miserable jobs picture into a tolerable one, at a single stroke.
Employers are already looking for ways to cut older, higher paid employees from their rolls, and replace them with younger, cheaper workers. Allowing older workers to retire a little earlier(rather than firing them) looks like it could a achieve a better outcome rather than laying off older workers, who then scramble to find work to carry them to "retirement age." Older workers who can retire with dignity also aren't in competition with younger workers for entry level jobs in an effort to avoid resorting to Friskies for meals.