This is a transcipt of a keynote orignally presented at the Association of Social Economic's 2020 ASSA Reception.


(Photo by: Martha Susana Jaimes)



The Gray New Deal: General Theory of Employment, Retirement, and Money

Teresa Ghilarducci

Keynote for the Association Social Economics’ ASSA Reception

January 2 6:30 pm

San Diego ASSA


Over the last thirty years, we have witnessed a doomsday for pensions. The vast majority of the ten thousand baby boomers turning 65 every day do not have enough income to maintain their standard of living. For the first time in modern history, the American elderly will be relatively worse off than their parents and grandparents. If nothing happens, almost half of middle-class workers over 50 will be poor or near-poor retirees by 2030. Many will turn to work—any kind of work. The failing do-it-yourself American pension system is causing the coming humanitarian and political crises and a deep disturbance in labor markets.  

There are two policy tracks addressing the coming old-age income crises. One track fights age discrimination, promotes job retraining, extolls the benefits of paid work and does not prioritize securing retirement income.

The other track is a Gray New Deal. A Gray New Deal recognizes that civilized democratic societies provide adequate pensions, allowing people to retire in dignity.

A Gray New Deal competes with what I call the “working longer consensus.” Doubtless members of the Association of Social Economics remember the 1980s global economic policy framework, the Washington Consensus, which promoted pro-market, pro-austerity policies. The Washington Consensus was so named because it came from Washington, D.C.-based institutions such as the International Monetary Fund (IMF), World Bank, and the U.S. Treasury and was supported by academics.

Of course, the Association for Social Economics was founded on the recognition that economic behavior is the result of complex social interactions with ethical consequences. We have seen complex problems shaped by economic forces and institutions treated solely with individualistic solutions. The Washington Consensus was a good example of that – it was a set of technocratic, market-based policies to fix sluggish economies caused by too much government.

The “working longer consensus” comes from American consulting firms, the World Bank, the European-based OECD, the press and academic work.  Like the Washington consensus, the “working longer consensus” promotes a set of technocratic, market-based policies to, again, fix sluggish economies this time caused by aging populations.  The “working longer consensus” aims to cut pensions and lengthen working lives.

The promise is that older workers will be healthier by working more. The promise of the “working longer consensus” is that economies will be richer when older people work more. Children will be better off when governments spend more on them and less on the elderly. Making older people work longer is the ultimate “free lunch” policy solution – all winners, no losers. But there is no free lunch. Making older people work longer creates a number of specific losers.

Today, we see more and more advocacy on behalf of the “Working longer consensus.” The Economist [1] lionized a new OECD report, “Working Better with Age,” concluding that the “employment of older workers is vital if prosperity is to be maintained.”

All we need is “silver surfers,” the Economist wrote. Elders need to modernize and learn to “surf” computer technology. Calls for retraining the elderly are often paired with shaming messages, such as  “if you don’t have enough money to retir,e it is your fault,” or, “fighting for  pensions means you will you hurt future generations.” Urban Institute Economist Gene Steurele’s 2014 book, Dead Men Ruling, describes a “gerontocracy” that persistently chooses  pensions over children.

In 2019, the World Economic Forum and the consulting firm Mercer recommended that most nations cut benefits by raising the retirement age, even in Japan and the United States. Japanese and American workers already work longer than others in the OECD and have the highest rates of elderly poverty -- 19 percent in Japan and 21 percent in the U.S.

However, there is pushback. In September 2019, a Bank of Japan (BOJ) official argued that  Japan’s economy is suffering because the country’s dearth of pensions caused too-high savings rates and too many elderly workers are toiling in low productivity, part-time jobs. What the Japanese economy needs, says the Bank of Japan, are higher pensions and better jobs for the elderly. The BOJ is hinting at the core of a Gray New Deal.[2]

There is more pushback. Pension tensions cause political instability. Consider France.  Yesterday, the leader of the General Federation of Labor dismissed a bid for compromise on Macron’s plan to consolidate French pension plans by calling for, well, “strikes everywhere.” Take Italy. The Five Star and National Front movements owed much of their popularity to their resistance of the previous Italian government’s increase in the retirement age in 2011.

But the “working longer consensus” advocates also push back. Just last year, Italian economist Edoardo Campanella wrote in Project Syndicate that the underfunded Italian pension system was overly generous and the only solution was older Italians working more. Meanwhile, the Italian economy can’t fully employ prime-aged adults, much less any more elders seeking work. No wonder there is political dissonance.

Here are the facts. Populations are aging. The median age of OECD residents has risen from 40 to 45 since 2008 due to low fertility rates, better health care, and improvements in baseline sanitation. But while these factors contribute to an aging population, they don’t lead to an iron-clad conclusion that older people should work more. In fact, economic progress in democratic countries means the opposite. Leisure is a normal good. In the United States after World War II, almost every demographic group lived longer and children and older men worked less. Workers and unions struggled to get the weekend. But universal public education for children under 16 became standard, as did paid vacations and now – finally- paid family leave. But retirement, the ultimate paid time off, is now contested. 

FDR and Congress established Social Security in 1935. Back then, most working men died in their boots. They never retired. Instead, they lived alone as they aged or in township poor houses reserved for the mentally insane and poor. The elderly did not generally live in the bosoms of extended families. Then, as now, poor elderly likely had adult children with their own financial problems who don’t have extra bedrooms. In 1934, one year before Social Security was passed, the pressure was on. Twenty-eight states had some sort of plan to cover the aged. The states moved before the federal government.

Social Security now provides over 50 percent of income for over 50 percent of aged households and almost all income for over 13 percent.

I hope you walk away tonight forever banning the wrong-headed image that the United States has a three-legged stool to support the aged, where the elderly receive income in equal parts from Social Security, employer–based pensions, and personal assets. The reality is far different. The Urban Institute predicts middle-class Gen Xers, those ages 45-55 today, will get over a third of their income from Social Security and about 22  percent each from working, employer pensions and assets (mainly from imputed rent of owning houses) when they are age 67.

Earnings are fast becoming the new pensions. And working is the new retirement.

The liberal interpretation of the welfare state is that it substitutes for kin – the welfare state redistributes resources between families to help the unemployed older parents, children, disabled persons, etc. A political economy interpretation of the welfare state is that it regulates the size of the labor force whose time is commodified. It is the political economy interpretation I am invoking today. When a person can legitimately lay claim to income without working, that is at the heart of the “working longer consensus.”

The “working longer consensus” rests on three false assumptions about longevity, public finance, and economic growth.

The truth is:

1. Increasing longevity and pension wealth are not equally distributed, and time in retirement is becoming more unequal.

2. Nations with good pensions do not spend less on the young. Nations with good pensions spend more on children, especially on education.

3. Far from benefiting both firms and workers equally, adding more elders to the labor market disproportionately benefits employers.

Let’s turn to the first myth, the false claim that increasing longevity leads to increased workability. The truth is there is a growing inequality in longevity, pension wealth and retirement time.

I trace some seeds of the “working longer consensus” to Malcolm Lovell, President Ronald Reagan’s deputy labor secretary, who warned Congress in 1982 that eroding workplace pensions and cuts in Social Security would mean the elderly would have to work longer into their lives. He advocated for aggressive anti-age discrimination laws and the elimination of mandatory retirement. The U.S. Congress passed the “Freedom to Work Act” in 2000 that penalized retirement before age 70. The United States still stands apart from the EU and OECD by banning mandatory retirement and making the age to collect full benefits at such an advanced age - age 70.  Congress gave generous terms for delaying claiming Social Security – a guaranteed 6.75 percent per year for every year past age 62.

How many people here plan to delay collecting Social Security until age 70? Hold up your hand.

Indeed, privileged older workers delay and reap Social Security’s generous rate of return. Delaying is a good investment decision! But there is no evidence that the delayed retirement credit helps anyone be better prepared for retirement, and it encourages people to work longer.

Our team’s new research by Tony Webb and Mike Papadopolous finds that older workers collect Social Security WHILE they are working. No scholar has thought to investigate that. Most established scholars assume older workers delay claiming.

We find evidence they likely do so to supplement their low pay. Most workers never get the delayed retirement credit. The delayed retirement credit goes to those who are well-off in retirement or those who are working who can wait until 70 to collect their benefit. Half of retirees retired BEFORE they wanted to, reflecting that many seniors can’t work even if they wanted a job.

Worse is the growing inequality in something even more precious - time in retirement. It is worse because of the combination of unequal longevity gains and unequal wealth.

In 1950, life expectancy at age 65 for for black and white men was equal - about 12.8 years. Now, there is a two-year difference.[3] In the last 20 years, all longevity gains for Americans have gone to those in the upper half of the income distribution. Almost all of the gains in retirement wealth have gone to the top 20 percent.

Older women[4] at the bottom end of educational attainment can expect almost 16 years of retirement time, but more than a third of that time will be spent with significant impairment.[5] Women with the highest levels of education can expect 19 years of life expectancy after age 65. These women will likely experience a fifth of those years with some impairment. Older men have a less pronounced class pattern. At age 65, men of lower socioeconomic status have about 12.6 years of retirement time with 27 percent of those years spent in impaired health. Like highly-educated women, high socioeconomic status men can expect almost two more years of life with a little less time (20 percent) experiencing impairment.

Making American workers work more is especially harsh given that American men and women work more hours per day, more days per year and more years per lifetime than any men and women in any other country in the G7. On average, American and Japanese retirement time is 20 years.  People in France get 28 years, 25 years in Italy, and 23 years in Canada.

Now, let’s turn to second myth, the myth of the greedy geezer. 

There is no evidence that “the old eat the young.” My research found that in 63 nations over 40 years, nations with high levels of education spending generosity – GDP spent per child on education -- also spend more GDP per old-person on pensions.

As nations become richer, the ability to retire becomes accepted by society. At the same time, economic prosperity causes aging populations. It might look like pension generosity is increasing because the old are getting politically stronger, but pension generosity is increasing because a nation is getting richer.

My research, controlling for aging populations, finds a 10 percent increase in education spending accompanies a 7.3 percent increase in pension generosity. Among the G-7 countries, Canada has the highest spending per child on education and has one of the highest rates of spending per elderly. The U.S. is the lowest in both.[6] But the positive correlation between education and pension spending still holds up in the U.S.

American children receive a substantial amount of Social Security income. In 2017, over 8 percent of American children lived in families that received Social Security income. Social Security income lifted one million children out of poverty, which is about a third of how many children [7] received payments from the program aimed at poor children, Temporary Aid for Needy Families. In 2018, the Social Security Survivors and Disability benefits paid $21 billion to children compared to the Earned Income Tax Credit that paid out $58 billion. Though old-age programs are not means tested, disability and early death are more common among lower income groups and so Social Security disproportionately helps low-income children.[8]

Axel Boersch-Supan examined 16 countries and also concluded social expenditures for programs targeting the elderly does not reduce the share of total social expenditures for programs targeting youth. Economists Bommier, Lee, Miller and Zuber’s 2004 study of U.S. education, Social Security, and Medicare concluded people continually get higher returns on their taxes than cohorts before them. There are detractors. Rochester’s Robert Novy-Marx and Trump-CEA member Josh Rauh argue that the underfunding of state and local government pensions will increase debt burdens for future taxpayers. But in the late 1990s, New Jersey underfunded state pensions to increase education spending. Those future taxpayers had more human capital. In 2019, Economist Charles Steindal found that pension debt had no association with state economic growth.

There is little evidence for a gerontocracy, or a Greedy Geezer effect. Education and pension spending go together because of what political scientists John Williamson and Frank Pampel call the social democratic effect. I quote them, “pensions are the outcome of a struggle between organizations and political parties representing the interests of capital and those representing the interests of labor.” Political coalitions to boost workers’ pensions are political coalitions that boost public education.  The evidence points to solidarity among generations of working class people, not strong-armed generational politics.

Now let’s turn to the third and last myth. The false claim that a larger number of older people working will add to GDP and benefit workers and firms. The truth is that employers, not labor, disproportionately benefit from tens of millions of older people needing paid work.

The sheer size of the boomer cohort coupled with their insecure pensions means over half of the 11.4 million jobs expected to be added to the U.S. economy by 2026 will be filled by workers over 55. Our project at The New School examines the impact on bargaining power. We predict power will continue to shift to employers when millions of older adults lacking basic retirement income are forced to stay or enter the labor market. Bad pensions means weaker worker bargaining power because old-age financial insecurity causes older workers’ reservation wages to drop. As a result, predictably, older workers’ wages and job quality have eroded.

Since 1991, older men’s wages started to fall relative to younger workers’ wages and have lagged behind ever since. At all education levels, older workers experienced almost no real wage growth since 2007 while weekly earnings for prime-age workers (ages 35 to 54) grew 4.7 percent. In prior business cycles, older workers’ earnings grew at similar or higher rates than prime-age workers’ earnings. Over the longer term, 1990 to 2019, for full-time men with bachelor’s degrees, the real median weekly earnings for older men decreased by almost 3 percent, while wages increased almost 9 percent for prime-age male workers with bachelor’s degrees.

And the jobs older workers have are arguably worse, not better. Older workers jobs are increasingly likely to require stooping and bending. Think warehouse and care work.  Next time you get an Amazon package from a fulfillment center, thank a granny. Writer Jessica Bruder found Amazon recruits “workampers” – elders living in trailers –to work in rural warehouses. And because of the computer, a larger number of older people have jobs demanding keen eyesight and intense concentration. Older black men are more likely to have to do physical labor than in the 1990s.

Older workers are increasingly employed in low-wage traditional jobs and in alternative work arrangements. In the next ten years, the occupations with the most job growth will be the 1.3 million personal and home health care aides. Three-fourths of these new jobs will go to women over age 55. This means older women will be taking care of even older women. Just 7 percent of personal and home health care aides are union members, and 24 percent earn less than $15 per hour.

Without secure pensions, older people are forced to accept wages, hours, and working conditions based on employer’s terms. An increase in the supply of labor invariably redistributes income away from wages and toward profits. The “working longer consensus” helps tame pressures for higher pay and improved working conditions and incentives to increase worker productivity. This is similar to what the Bank of Japan predicted.

Other sources of the “working longer consensus” come from Harvard economists Johnathon Gruber and David Wise. In 1999, they found a negative 75 percent correlation between the labor force participation of those over age 65 and the age in which people can collect their full Social Security benefits. This paper is the go-to footnote for calls to cut pensions.

But what drives what? Do nations with high unemployment expand pension benefits or do generous pension benefits drive people to retire? Gruber and Wise emphasize the supply side. They proffer that older workers decrease their work effort when they get pensions earlier. On the other hand, nations with chronically high rates of unemployment may adopt early pension ages. I find weak support for the supply side argument. If Gruber and Wise are right, pension generosity should be correlated with more time in retirement. There is virtually no relationship.  Among 42 OECD nations, the correlation between pension generosity – the amount of money spent per old person - and the average time a person spends in retirement was 12 percent in 2005 and 16 percent in 2015.

In closing (two words said by John Kenneth Galbraith that brought relief and gratitude to an audience), the “working longer consensus” should be replaced by a Gray New Deal. 

I predict we will have our chance to replace the “working longer Consensus” in the next recession and election. The policy window – when ideas, politics, and a pressing problem all come together – may be open for a Gray New Deal!

Note what happened in the last recession. The value of older workers’ retirement accounts fell. Some, instead of exiting the labor force with secure pensions, stayed on and cut spending. The recession was made worse by financialized pensions. We destabilized our automatic stabilizers. And retirement income security soared to the top of polls that asked American families about their deepest fears.

Republicans have been careful not to discuss retirement security, with the exception of a slip by Senate leader Mitch McConnell early in the Trump administration on a Sunday TV talk show  about wanting to cut entitlement spending after cutting taxes. Right now, the executive branch is cutting Social Security field office spending and getting tough on disability insurance awards. Worse, the 2017 Republican tax cuts reduced fiscal capacity to expand Social Security. But worse of all is the dead silence from the administration and the Senate majority. By not moving to bring more revenue to Social Security, only three fourths of benefits will be paid around 2034. And because the system is progressive, the cuts will increase U.S. elderly poverty rates, when we are already a leader in the number of poor elederly among rich nations. Inaction in getting new revenue into Social Security is deadly action. But in politics, regression is possible. Policies to hurt workers are politically possible.

The good news is that unlike the2016 election, when neither Clinton nor Sanders, Trump, or Cruz had any plans for retirement,[9] most all the 2020 Democratic candidates have a retirement income security plan and ALL are talking about power and unions.

The plan I know best is Buttigieg's, which expands Social Security as well as fixes our voluntary, employer system. The plan is similar to the plan I devised with EPI in 2008 and recently relaunched, called the Guaranteed Retirement Account (GRA). Guaranteed Retirement Plans are portable retirement accounts, and the money is taken out only at retirement.

Buttigieg and the GRA make employers pay 3 percent into a portable workplace plan (The GRA plan is a 1.5% shared cost between employers and employees, which is functionally the same.) The self-employed also are required to have a GRA, similar to the way they are required to contribute to Social Security.  The Gray New Deal expands Social Security and layers on top of it an advanced, funded retirement system like workers have in public employment, unionized workplaces and large firms.

Elizabeth Warren‘s plan expands Social Security. It raises all benefits $200 per month. And Bernie Sanders also expands Social Security. Joe Biden expands the employer-based pension system through a voluntary method.

Another sign the policy window for a Gray New Deal is opening is that over 34 states, like the time before Social Security passed, have employer mandates for employers to offer -- but sadly not to pay for -- a retirement plan.

A personal finance end-of-the-year article posed 12 reasons one should work past age 65. Every reason was an assertion with no proof and some falsehoods. One was that leisure might be boring. The article was every inch the “working longer consensus.” There is no evidence that having adequate income and control over pace and content of your time is detrimental. On the contrary, control over your time and adequate finances promote well-being. There is also no evidence that working longer improves financial preparedness for retirement. Jobs are low paid and people collect their Social Security while working.

The only evidence that is unassailable about working longer is that it recommodifies older people’s time, makes workers worse off, shrinks retirement time, and makes retirement time more unequal. Now may be time for a Gray New Deal.

Retirement time is the new contested struggle for paid time-off. A Gray New Deal that mandates pensions, expands Social Security, and finances long-term care will increase worker bargaining power, strengthen labor markets, and make workers better off.



1. Economist blog Bartleby September 7 – 13th 2019 (page 54)

2. (Murkami, 2019).

3. (81 percent of white men make it to 65 compared to 70 percent of black men.) 

4. in the lowest third in SES

5. (with one or more ADLs)

6. Because two-way correlations do not establish causal relations, we isolated the effect of pension generosity on education generosity by controlling for the wealth and age profiles of the nations.

7. Romig 2019

8. National Academies of Sciences, 2019

9. 68% of American workers in 2016, surveyed by the Financial Services Roundtable, said the candidates haven’t talked enough about ensuring Americans have a secure retirement (according to Forbes) and Charles Schwab survey found 77% of respondents considered the ability to save enough for retirement to be a “major public policy issue.”

Medical Monitor with different rates and curves.

I spend a bit of time each month looking at death tables. I don't really like it, but I have to—it’s my job as a pension scholar to understand which demographic traits are associated with higher mortality. Recently I came across a report from the Social Security Administration actuary’s office comparing differences in death rates among people with different incomes. Bottom line finding: Low income workers still die sooner—a lot sooner—than high income people.

As you might expect, higher incomes are associated with lower mortality rates and lower incomes are associated with higher mortality rates. More surprising, however, is the finding that social class-based longevity gaps have not really budged over the past two decades. Though we are all the same at birth, the cumulative effects of social division on the human lifespan causes low income workers to die sooner. These effects have not improved much since the longevity gap among retirees was highlighted by the Social Security Administration 12 years ago. The class gap in lifespan is not new—but its persistence is.

The report is pretty technical, and it spends a lot of time trying to figure out which Social Security beneficiaries are poor, middle class, and high income. This is more complicated than you would think. Actuaries have to make sure they don’t classify people who are in and out of Social Security as a life-long low-wage workers—for example, teachers who live in states that don't include them in Social Security, and whose official Social Security earnings are low from some non-teaching job they had as teenager.

Researchers express differences in life expectancy using “relative mortality ratios.” Males in the lowest group, with earnings of about $12,000 per year, have a relative mortality ratio of 1.30, meaning their odds of dying in the next year are 30% higher than the average male retired worker.

On the other hand, someone in the maximum earning group, with about average income over $250,000*, has a ratio of 0.70, meaning their chance of death in the next year is 30% less than average and less than half that of the lowest income group. Not only do CEOs earn more than 361 times the average worker in their firm earns, they also live longer just because they have income.

The good news (I am being wry) is that at older ages, there is less of a difference in relative mortality ratios among the income groups, because the healthiest individuals in each group live longer and the advantages associated with higher earnings diminish over time. At age 118 we are totally equal—we're all dead! And that's how long we have to wait to close the socioeconomic life expectancy gap.

Relative Mortality Ratios for Retired Men:

How much more likely a member of the group dies than the average retired man (minus 100)

Earnings group and estimated average annual pay Death rate relative to the average
Very low earner ($12,000) 130%
Low earner ($36,000) 123%
Medium earner ($68,000) 111%
High earner ($84,000)  92%
Maximum earner (about $250,00)  70%

Source: Table 13—2015 Relative Mortality Ratios by Age Group for Retired-Worker Beneficiaries Percentages; page 22 from SSA study, "Mortality by Career-Average Earnings Level" by Tiffany Bosley, Michael Morris, and Karen Glenn.

*Note: Maximum earners earn more than the Social Security cap; in 2017, the maximum wage subject to the Social Security tax was $127,200. The Social Security Administration wage statistics show that about 6% of earners earn more than $125,000, with incomes rising exponentially after that, so I pegged the average salary at about $250,000. 

2019 Q1 Status of Older Workers Report

Screen Shot 2020 01 09 at 4.26.03 PM

  • Lagging Wages: Older-worker wage growth is minimal and lags behind prime-age wage growth.
  • Loss of Bargaining Power: Older workers increasingly resort to precarious alternative work, eroding their bargaining power and impacting other older workers' wages. 
  • Policy Recommendations: Congress and the President should create an Older Workers' Bureau, Guaranteed Retirement Accounts, and expanded Social Security to protect older workers.

Download the full report here
*Arrows next to "Older Workers at a Glance" statistics reflect the change from the previous quarter's data. 
Stagnant Wages

Alternative Work Suppresses Wages

One development suppressing wage growth for older workers is the proliferation of alternative work arrangements [AWAs], including on-call work, employment in contract firms, temporary agency work, independent contracting, and gig work (classified as “electronically mediated employment”). The share of workers ages 55 to 75 who reported working in an AWA increased from 15.4% in 2005 to 24.4% in 2015. And from 2005 to 2015, 94% of net employment growth took place in alternative work arrangements (Katz and Kreuger 2016).

Both Katz and Krueger (2016) and an equivalent Bureau of Labor Statistics survey conducted in 2017 show that workers over 55 are three times more likely than workers under 35, and twice as likely as workers ages 35-54, to be in AWAs.

The common image of alternative work is of independent contractors: successful, self-employed workers who control their own work schedules and intensity levels. However, independent contractors comprise a shrinking minority of people in AWAs.

Most workers in alternative arrangements lack the ability to bargain over the terms of their employment. Gig workers often find their jobs through electronically mediated platforms which explicitly prevent bargaining over wages. On-call workers have limited control over their schedules. Moreover, a quarter of on-call workers are on zero-hours contracts, meaning they must be ready to come to work at any time but are not guaranteed any hours - and thus not guaranteed to earn a wage. In addition, the Economic Policy Institute estimates that between 10-20% of employers skirt labor protections to cut costs by misclassifying traditional employees as independent contractors.

Independent contractors, on-call, gig, temp agency and contract firm jobs all share the lack of an internal labor market. In the past, firms promoted from within and provided on-the-job training to their employees. Unions supported internal labor markets to lessen the number of entry-level jobs, ensuring that promotion ladders and training programs continued to provide workers with a path to regular raises and promotions. With the erosion of unions, internal labor markets and training programs have disintegrated. Instead of using entry-level jobs as a tool to find future prime talent, firms now hire top talent from outside, expecting workers to acquire necessary skills on their own. A growing share of low-skilled jobs are handled by contract firms and temp agencies. With no path to promotion or wage increases, labor economists call these trends the fissuring of the workplace.

While some older workers cite flexibility and autonomy as reasons for taking on alternative work, they are outnumbered 2-to-1 by those who cite financial or labor market reasons. Four in 10 older workers have no retirement savings, including one-third of workers in the top 10% of earners. Inability to retire erodes workers’ bargaining power (see ReLab's working paper, "Why American Older Workers Have Lost Bargaining Power"). Moreover, older workers face age discrimination in the labor market; older workers who are fired or laid off spend twice as long looking for work as their younger counterparts. The fissuring of the workplace permits firms to exploit older workers’ desperation through lower wage offers. Bottom line: Eroding bargaining power among some older workers can impact other older workers’ wages. Older workers’ willingness to take on precarious alternative work is a signal to employers that they do not have to raise wages.

Policy Recommendations

1. Older Workers Bureau:
The time has come to devote special attention to the increasing vulnerability of older workers. To protect older workers from exploitation, the U.S. Department of Labor should create an Older Worker’s Bureau, similar to the creation of the Women’s Bureau in 1920 to protect women in the labor market.

2. Guaranteed Retirement Accounts and Social Security Expansion:
Working longer is not an antidote to inadequate retirement savings for most workers, especially those in low-paying AWAs. While a small number – 2% – of older workers cite alternative work as a way of making ends meet until they can retire, low wages and lack of access to retirement plan coverage on the job mean older workers taking on these jobs have little ability to save.

All workers deserve to have a choice between work and retirement at older ages. Increased Social Security benefits and the creation of Guaranteed Retirement Accounts (GRAs) would allow all Americans access to a secure retirement. GRAs are a proposal for universal individual accounts funded by employer and employee contributions throughout a worker’s career and a refundable tax credit. With GRAs, workers can accumulate the savings they need to retire, rather than be forced into precarious, low-paying, alternative arrangements. Moreover, if older workers could choose retirement over bad jobs, employers would be compelled to offer better pay and offer traditional employment to those choosing to extend their careers.

Unemployment Rates

The headline unemployment rate (U-3) for workers ages 55 remained at 2.9% this quarter (from January to March), which represents no change from last quarter. ReLab’s U-7 figure includes everyone in headline unemployment, plus marginally attached and discouraged workers, involuntary part-time workers, and the involuntarily retired (those who say they want a job but have not looked in over a year). U-7 increased from 6.5% to 6.8% in the last three months. The share of jobless older workers who reported spending more than 39 weeks looking for work in the first quarter was 42%.

Low-Paying Jobs

Older workers are increasingly employed in low-wage jobs. If nothing changes, Bureau of Labor Statistics projections indicate older women will be disproportionately working low-wage personal and home health care jobs (1.3 million jobs projected to be added between 2016 and 2026). Older women are predicted to constitute 37% of these care jobs and only 14% of the entire labor force in 2026. Just 7% of personal and home health care aides are union members, and 24% earn less than $15/hour. Overall, 13% of college-educated, full-time older workers reported earnings of less than $15/hour in the last quarter, down one percentage point from the previous quarter.

Retirement Coverage

Workplace retirement plan coverage remained low in 2018 at just 44%. Growth in alternative work arrangements is partly to blame, since AWAs almost never offer retirement coverage.


Suggested Citation: Retirement Equity Lab. (2019). “10+ Years of No Wage Growth: The Role of Alternative Jobs and Gig Work.” Status of Older Workers Report Series. New York, NY. Schwartz Center for Economic Policy Analysis at The New School for Social Research.

This is a repost from Forbes. 
Voters by Ages from the Census Department

Voters by Ages from the Census Department - US CENSUS

A recent poll spells bad news for Joe Biden (76), Bernie Sanders (77), and even Donald Trump (72), and very bad news for those hoping to stamp out age bigotry. Fewer voters want someone over 75 compared to candidates with other characteristics, such as being black, or gay, or a woman, or a Muslim. Being a "socialist" is the most undesirable characteristic listed.

The NBC/WSJ poll tested 11 different presidential characteristics and their acceptability in a presidential candidate. The most popular: an African American (a combined 87 percent of all voters said they were “enthusiastic” or “comfortable” with that characteristic), a white man (86%), a woman (84%), and someone who is gay or lesbian (68% compared to 43% in 2006). The least popular: a Muslim (49%, though up from 32% in 2015), someone over the age of 75 (37%) and a socialist (25%). Those polled may be overstating their tolerance for African Americans and women; they don’t want to look bad to the pollster. But it's notable that, for many Americans, saying 75 is too old is not viewed as bigotry or an act of discriminatory prejudgment.

As I wrote in March, many Americans view prejudgment based on age legitimate. We don’t see widespread public arguments that Kamala Harris and Cory Booker are too black to run. Nor are Elizabeth Warren, Amy Klobuchar, and Kirsten Gillibrand too female to run. Every hire (and an election is a hiring decision) is a judgement about the potential productivity of a candidate. The relevant question in every hire is whether the candidate will be engaged and competent for the job at hand. Does the candidate have the knowledge and talent to do the work?

Age Discrimination is Harmful

The harm of age discrimination on the campaign trail is trivial compared to the widespread pain and damage that lies beneath the ageism. Though illegal, age discrimination in employment, pay, training, and promotion persists. Ageism makes it a struggle for older workers to get raises and jobs. A recent study illustrated widespread employer bias against older workers. A majority of employers surveyed by Transamerica Center for Retirement Studies answered that age 64 was too old to be considered for employment (this was the median age given by employers, though most refused to give an age—wisely, since it's against the law to consider age in hiring and promotion and pay). On the other hand, the median age that workers gave as being too old to work was 75. The workers’ answer still makes it complicated for the candidates over age 75.

Who is too old to be President?

I am an expert in labor economics and the economics of aging. The range of opinions from my colleagues who are professionals in the field fascinates me. Duke history professor James Chappel and English professor Sari Edelstein of University of Massachusetts, Boston, wrote last week in the Washington Post that no one is too old to be president. They argued firmly that while older people are much more healthy than in the past, they are falsely viewed as having cognitive decline that affects their capacity to do a job in the real world. Modern cognitive tests of capacity continually show that older people do not significantly differ in overall scores; some older people perform as well as, or better than, most younger people.

Chappel and Edelstein report disapprovingly on comedic poop jokes directed at Bernie Sanders, age 77; the insulting bigotry masquerading as a “joke” is that Senator Sanders is sponsored by Metamucil and was present for the signing of the American Constitution.

My colleagues are divided. One writes (and I will report their comments anonymously because they were privately made on a listserv): “At some point something is a risk and a greater risk for some demographic categories than for others. As any insurance company could tell you. So it's reasonable to worry about Biden, without making that a determining factor.”

Another wrote: “Age can also be associated with experience and wisdom and perspective.” Another wrote that so-called signs of aging could be just an ageless characteristic of someone. It is just “Biden Being Biden.”

The experts seem to be about split between those fighting back against the ageism and defending it. Here is a defense: “Suggesting that someone who would be well into his ninth decade if he served two terms is too old to run for president is not ageism.” This comment was met by a practical response: “The obvious solution, as it always is with candidates of any age, is to make sure there's a good succession in place (i.e., a proper VP pick). It certainly isn't to avoid elevating an otherwise good or preferable candidate because of what might happen in the future—'cause, well, it's the future.”

Margaret Morganroth Gullette, author of Ending Ageism, or How Not to Shoot Old People, sums up the ageism debate with common sense. Gullette argues the rigors of campaigning are a good screen for the bottom-line qualifications necessary to be president: “Weathering a presidential campaign proves the contestant has far better health and stamina than anyone of any age who hasn't done it. A presidential candidate should be judged on verbal agility, reasoning power, historical knowledge, and vision of the common good.”

This is a repost from Forbes. 

The federal debt limit expired on March 1. Why does it matter? Markets didn’t move and the holders of the $22 trillion in national debt didn’t utter a peep of worry that the U.S. government wouldn’t pay its interest or redeem its bonds. The government is now taking temporary measures to pay its bills—delaying intragovernmental transfers and probably looking for coins in the couch cushions. The U.S. loses its legal authority to pay out cash in fall 2019.

Not many nations can announce they legally can’t pay all of their debts and yet avoid a wiggle in the credit risk of their bonds. Imagine a nation, say Argentina or Italy, signals the government can’t legally pay debt; their interest rates would soar. When the limit is reached, the U.S. Treasury can’t borrow any more, which one would think would cause a crisis of confidence, severely impacting the real economy for fear the government would default on our debt. But the risk premium on U.S. Treasuries did not budge much.

That Americans own most of the debt helps calm markets, but interest rate increases can trigger recessions.  

The Federal government, Social Security, Medicare, Military and the Federal Retirement system own 27% of the debt. Social Security, Medicare, the Military and the Federal Retirement System, all government agencies, hold a surplus and invest in U.S. government bonds. Foreign governments and investors hold 30 percent of it. Individuals, banks and investors hold 15 percent. The Federal Reserve holds 12 percent. Mutual funds hold 9 percent. State and local governments own 5 percent. The rest is held by workers through pension funds, insurance companies, and savings bonds.

Unlike virtually all other countries, the U.S. needs congressional approval to raise the debt limit, a self-imposed brake on spending imposed in 1917 during the rapid spending under World War 1. The mechanics of lifting it will become, again, a pitched political battle between President Trump and a passive Republican Senate versus House Democrats in the fall.

Interest rates, already one of the fastest rising costs in the federal budget, will rise as the political crisis builds, because foreign borrowers will demand an additional risk premium. And rising interest rates will impact U.S. Treasuries, mortgages, credit cards, car loans, student debt, and corporate debt. If workers, households, students, and corporations can’t pay their bills because of the interest rate shocks, the economy could go into recession.

Not raising the debt ceiling can lead to a shutdown. Punting on the debt limit has led to frequent government shutdowns, as government takes even more drastic action to slow down spending. Non-essential government spending stops, hitting a wide range of programs and agencies.

In December we endured a government shutdown and after 6 weeks Congress and the President agreed to a budget bill that included paying its debt. You might remember that bill hammered out in February only extended the debt limit to—you guessed it—March 1, 2019. As with all debt limits, the Treasury Department can take “extraordinary measures” (which actually now are virtually standard operating procedure) to put off the day of reckoning, but most budget experts think that will only get us to about September.

In the background of the micro politics is the macro issue of the government running unprecedented deficits in good economic times. Though the economy is doing well the federal deficit is soaring, mainly driven by the Trump tax cuts. The bipartisan Congressional Budget Office predicts the annual deficit will be over $900 billion this fiscal year and keep rising to over $1 trillion annually starting in 2022.

Annual deficits add to debt so that the ratio of debt to GDP will hit 78 percent this fiscal year—twice its average over the past 50 years. Debt to GDP could eventually reach 90 percent or higher, the same as it was at the end of World War II.

Debt can be good. There is no magic ratio that will suddenly tank the economy. But persistent debt increases during an economic expansion leave fiscal policy with very little power to fight a recession. Even the Federal Reserve’s ability to lower interest rates will fight against risk premiums generated by more debt.

Since 1917 Congress has had to solve the politics around fiscal hygiene.  House Democrats have reinstated the “Gephardt Rule,” named for former Majority Leader Dick Gephardt (D-MO), which automatically increases the debt limit when Congress enacts spending bills.  (This is what most countries do rather than taking separate votes on debt limits.) Makes sense to me—if you’re going to authorize spending, then pay for it. And if tax revenue isn’t high enough, then you have to borrow the funds. But Senate Republicans won’t enact the rule—despite support from a scholar at the conservative American Enterprise Institute and elsewhere—as a way to depoliticize a task of a functioning government.

The paradox of Washington (and other places with contentious negotiations) is that dangerous situations can increase brinkmanship, not lead to safer bipartisan solutions. Gephardt got the rule passed because Ds and Rs both wanted to avoid a default. But the very taboo of a default encourages some legislators to proposed adding controversial legislation to the debt bill. Gaming the crisis can force divisive proposals through that would otherwise fail.

September is the end of the federal fiscal year so we face a potential shutdown and the expiration of the federal budget. Some Democrat and Republicans want to raise the debt limit sooner than the fall, but if the recent past is any guide, that won’t happen. There is little, if any, trust between congressional Democrats and the Trump Administration.

Debt and the threat of default extract little, if any, political cost

It is a cliché to say that the budget process has broken down. Indeed, it actually works the way some of the most partisan actors want. As Stan Collender, one of the best budget commentators we have, has observed: “Congress is very willing to bend or completely ignore its own budget rules whenever leaders want, especially because members don't fear any political retribution for doing so.” Last November, he predicted “more budget cliffhanger endings in the future, and we shouldn’t count on the congressional leadership to push changes to stop them from happening.” And that’s where we are now, and where we seem to be stuck for the foreseeable future.

This is a repost from Forbes. 
'Los Angeles, California, USA - November 22nd 2011:

Los Angeles, California, USA - November 22nd 2011 - GETTY

President Trump has two seats to fill on the Federal Reserve Board of Governors—those people who (along with a rotating cast of regional Federal Reserve Bank presidents) set interest rate policy, target inflation rates and supervise banks in the US. Trump had been considering nominees for two seats, which carry a 14-year term: conservative commentator Stephen Moore and former Republican presidential candidate and ex-CEO of the Godfather pizza chain Herman Cain. Both have criticized the Fed—and Trump’s own choice for chairman, Jerome Powell—for keeping interest rates too high.

On Monday, after weeks of criticism, Cain “withdrew” his name from consideration, reportedly over concerns that sexual harassment charges that arose during his presidential campaign would resurface in confirmation hearings. Many observers think the withdrawal was engineered by the White House, as at least four Republican senators had announced their opposition, enough to defeat Cain if no Democrats voted for him.

Moore, for now, seems to be hanging in there, although a series of controversial past statements about women may sink him as well. CNN has reported older comments where Moore said women tennis players seeking equal prize money wanted “higher pay than an equally skilled man…the opposite of what is meant by pay equity." He also wrote that men’s college basketball should have “no more women refs, no women announcers, no women beer vendors, no women anything" unless they were physically attractive, and that one female announcer should wear a halter top on air. (Moore now claims he was joking.)

Moore has vocal supporters, including Forbes commentator John Tamny, who think Moore’s economic views are important and should be represented on the Fed. Tamny writes that professional economists oppose his nomination based on “pathetic theories...rooted in the view that central planning actually works.”

But professional economists from widely different political camps disagree. New York Times columnist and Nobel prizewinner Paul Krugman said Moore is “manifestly, flamboyantly unqualified for the position.” And Harvard economist and former Chairman of the Council of Economic Advisers under George W. Bush Greg Mankiw calls Moore a “rah-rah partisan” who does not have “the intellectual gravitas for this important job.”

Although some conservatives are digging in to support Moore, Cain may actually have been better qualified for the Fed (although I would not support either nominee.) As economist Brad DeLong pointed out, Cain has business experience and served as chairman of the board for the Kansas City Federal Reserve Bank (although DeLong thinks there would be many better choices from the business community). Meanwhile Moore, in DeLong’s view, has been “willing to dump whatever of his previous policy positions (free trade? TPP? gold standard? anything else?) over the side whenever his political masters demand.”

Trump’s previous Fed nominees have been non-controversial and easily confirmed, including both the Chairman and the Vice-Chairman positions. But Moore represents a sharp turn, with a public record attacking the Fed. In January, Moore told the Washington Post that “Trump, who is not an economist, has more sense of the economy than these 500 overpaid economists at the Federal Reserve,” one of several pointed criticisms of the institution and its policies.

So why is Trump nominating political ideologues for the Federal Reserve Board and not well-established professionals? Forbes commentator Kenneth Rapoza thinks Trump is “stacking the bench” at the Fed, trying to keep interest rates down in the face of a weakening economy that could hurt his 2020 re-election campaign. And as I recently argued here, the Fed may lack adequate tools to fight the next recession. So trying to keep it from happening in the first place may be Trump's best bet, and “stacking the bench” at the Fed with Moore and others like him may be part of his strategy.

This is a repost from Forbes. 

Nobel Prize-winning economist Richard Thaler made a splash on Thursday at the Brookings Institution, slamming 401(k)s and promoting Social Security. It was a bit surprising given Thaler's conservative bent. He proposed that the Social Security Administration should get into the annuity business by allowing retirees to direct some of their retirement savings toward their Social Security balances to beef up their monthly payments.

Thaler wants to solve a problem that all Americans with 401(k) and IRA plan balances face. How do you take $92,000—the median level of holdings for workers approaching retirement age—and make it last a lifetime? That is, how do you avoid outliving your money? This is not a problem for Social Security or a defined benefit plan because they are paid out in lifelong income—they are annuities.

Annuities are helpful. They allow families to convert lump sums to lifetime income. Yet as New School research economist Anthony Webb argues, while annuities are attractive in theory—people like their Social Security and defined benefit plans—few households actually purchase annuities. Part of the reason is that people think they will die sooner than the actuarial tables predict. But this behavioral bias is less important than the simple fact that voluntary, private annuities are not good deals.

Annuities are a bad bargain not because of the rapacious profits of insurance companies—well, that is part of the problem—but because people who volunteer to buy annuities run a higher risk of living a long time. Insurance companies know that only healthy retirees are likely to buy annuities, so they must charge prices that reflect the low mortality rates of those who actually buy their product. The exorbitant prices of annuities and other insurance products—think individual health care plans—are a result of what the industry calls adverse selection.

Thaler wants to alleviate that issue by allowing retirees to essentially purchase annuities through Social Security. He suggests that savers could devote between $100,000 and $250,000 of their 401(k) or IRA wealth to the government annuities, whose prices would reflect a fairer actuarial value—not the lower mortality of people who currently buy annuities, but the higher mortality rate of the population as a whole.

As Thaler explained Thursday, “I’d much rather do this than have the fly-by-night insurance company in Mississippi offering some private version of the same thing.”

But there are three problems with Thaler’s proposal, and they are fatal. First, we believe this proposal would do little to encourage annuitization. Second, it would weaken the Social Security Trust Fund. Finally, it would favor high-income people at the expense of lower earners.

To address the first point, Thaler’s proposal would do little to overcome the behavioral biases against annuitization. All that would likely happen is that people who currently buy annuities from insurance companies would now buy them from the Social Security Administration.

But as insurance companies have found over the years, annuity purchasers have lower-than-average mortality. So the Social Security Administration would make a loss if it priced those annuities in reference to the average mortality of the population. The loss from adverse selection would ultimately be borne by the Trust Fund. The winners would be the wealthy, who currently buy annuities from insurance companies, and in the future would get better prices from the Social Security Administration.

At the Retirement Equity Lab at The New School for Social Research, we have a better way of increasing lifetime income in retirement: Social Security Catch-Up contributions. This plan wouldn’t hurt Social Security’s finances and its benefits wouldn’t accrue mainly to the rich. The catch-up plan represents a better way to get more annuities from Social Security.

Here’s the plan at a glance: At age 50, workers would be defaulted into catch-up contributions of 3.1 percent of salary, a 50 percent increase on current employee contributions. Participants would be credited with a 50 percent bonus in their contribution record, so that a worker making $50,000 would be credited with a contribution of $75,000.

The catch-up plan has two good outcomes. First, the proposal uses the power of defaults to achieve widespread participation—more of a shove than a nudge. It also uses the progressivity of the Social Security benefit formula to protect against adverse selection. Although our calculations show that catch-up contributions would be attractive to higher earners, the wealthy would receive a lower rate of return on contributions than lower earners due to the progressive nature of the Social Security benefit formula.*

We hope Richard Thaler can formalize his idea and embrace the catch-up proposal. On one crucial point, at least, we are on the same page: strengthening and expanding the popular and efficient Social Security system.



*Higher earners have lower mortality than lower earners, so adverse selection on the basis of mortality will be offset by the lower returns higher earners will receive on their contributions.