CEO idiocy

A good chunk of the CEOs of America want to raise the retirement age of Social Security, Medicare, and want to privatize Medicare (see here).  Here’s why this is crazy:

All told, the cost to the system of raising the Medicare age to 67 would be $11.4 billion in 2014, which is a high price to pay for $5.7 billion in federal savings.


For generations of Americans, it was a given that children would live longer than their parents. But there is now mounting evidence that this enduring trend has reversed itself for the country’s least-educated whites, an increasingly troubled group whose life expectancy has fallen by four years since 1990.


I want to make it crystal clear what this means, using further data from Waldren’s paper combined with the increase in retirement age that’s already scheduled to take effect. This is for workers in the bottom half of the income distribution:

  • If you retired in 1977 at age 65, your life expectancy was 14.8 years.
  • If you retired in 2006 at age 65 years and 8 months, your life expectancy was 15.4 years.
  • Using a simple linear extrapolation, if you retire in 2025 at age 67, your life expectancy will be 14.9 years.


The percent of people who support or oppose raising the Medicare age

Democrats 27-71

Republicans 30-68

Independents 34-62


Unfortunately, there is a commonly-held belief that the physical and mental demands of older workers’ jobs have improved. The evidence, however shows that belief to be wrong. The truth is the exact opposite; the physical and mental demands of older workers’ jobs have increased since 1992.

Anthony Bonen, a graduate research assistant in our Schwartz Center for Economic Policy Analysis at The New School, recently presented numbers from the University of Michigan’s Health and Retirement Study to show the degradation in job quality for older Americans from 1992-2008. The shocking fact is that jobs for older Americans have gotten more mentally and physically difficult. This is actually quite consistent, however, with a gradual decline in older workers’ bargaining power, as evidenced by falling older worker pay and increasing long-term unemployment rates.

Raising the retirement age is just a really bad idea, but it’s simple to state which is why people who like simple solutions like it.

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