John Tierney has an interesting op ed piece in The New York Times today. It seems he already wrote an essay previously, where he suggested that the retirement age be raised as one way to cut Social Security benefits by simply delaying the payment of benefits for a few years. I'm not sure of the dollar amount, but most experts who write about saving Social Security, even some liberals, cite raising the retirement age as a way to save money for the system.
In fact, John Tierney points out that, except in the case of blue collar workers whose physical labor would legimately qualify them for retirement by 65, most workers today use brain power and skills that don't require hard physical labor. He points out that John Quincy Adams, when he retired from the presidency at 63, went on to serve as a senator until he was in his 80s. That's why Tierney called today's op ed piece The Adams Principle.
Well, Tierney may be right but he got an interesting response to his first article, which is what led to his writing this new essay. Many seniors wrote him to say they would be willing to work but no employer will hire them. Age discrimination is very real and it actually starts at about age 50.
As Tierney recognizes, in this article, why would an employer hire somebody older who is more expensive than an inexperienced and younger employee. And if a 35 year old proves to be incompetent, he could be fired much more easily than an older worker who might try to sue for age discrimination. It's much harder to prove age discrimination at time of hiring than when an employer tries to fire a worker. So employers tend to avoid the whole problem by bypassing the older job applicant in the first place.
I've personally witnessed age discrimination with several of my older friends who are out looking for jobs. So, I can vouch for its existence.
However, there's another reason I don't agree with Tierney.
I think that many pro-businesess writers who are suggesting raising the retirement age, whether it's deliberate or not, are shilling for businesses who want to glut the job market. Right now, because of record productivity and outsourcing, the job market has been sluggish. Wages have remained flat even as profits in some industries are soaring.
As long as there are workers out there who need jobs, wages will remain low no matter how high profits go. In the past, productivity ultimately benefitted both worker and employer because as the business became more profitable, it grew and added more workers. Hence, the demand for labor grew and pushed wages up. But that dynamic no longer seems to operate. Record profits and record growth have not produced greater demand for American labor.
Instead, skyrocketing growth has created greater demand to move overseas to hire cheaper labor or to replace labor altogether with machines. The aim seems to be to keep driving the cost of labor down and squeezing expenses lower to drive profits still higher.
Many forward looking businesses, however, are worried about the looming retirement of the baby boomers. It's not just because payroll taxes may go up and there may be a strain on the Social Security system as all those baby boomers begin to cash in on their retirement benefits. Businesses are also very worried that all these retirees will, for the first time in years, create a genuine worker shortage.
If that happens, labor will indeed become more expensive. Companies that got by on the cheap will actually have to begin handing out raises to loyal employees. They will have to start once again offering benefits including health insurance, competitive pension plans and even perks like child care and gyms, which were so popular in the 90s, the last time there was a labor shortage.
The ramifications of such a situation will be felt across corporate America. Greedy CEOs and top executives who have been routinely bleeding their companies by voting themselves huge bonuses and extravagant contracts will have to once again begin sharing the wealth and profits with those on the front line who actually earned the profits for them. Investors, too, will have to learn to share and play nice with those who made their investments pay off so handsomely, that is the workers whose toil built the company.
But if the retirement age can be raised, it could keep the labor glut going and lower the demand for workers just enough to keep all employees scared of losing their jobs. In a scarce job market, people are grateful to have employment, any employment, even a job cleaning bathrooms at Wal Mart.
But if corporate America loses the baby boomers as a captive workforce, they might have to pay the rest of us what we're really worth. It's called the law of supply and demand.
That's also a principle worth considering. I think the law of supply and demand trumps the Adams Principle every time.