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Despite the economic boom an increasing number of older Americans are finding themselves in severe debt. The New York Times’ Tara Bernard Siegel wrote about bankruptcies among the elderly that took a steep rise to the top of the most read stories of the week. Stories of older people shamefully filing for Chapter 11 were heart breakers. A retired carpenter who filed for bankruptcy in Siegal’s story was Mr. Sedita, who has Parkinson’s disease. “A medication that helps reduce his shaking, a symptom of Parkinson’s, rose to $1,100 every three months from $70, Mr. Sedita said. “I haven’t taken my medicine in three months since I can’t afford it,” he added. He said he and his wife, who has cancer, filed for bankruptcy in June after living off their credit cards for a time. Their financial difficulty, he said, “has drained everything out of me.”

The system has not worked and that some retirees feel drained is no surprise.

The erosion of retirement income security started decades ago. When in 1983, Congress and the President [Reagan] decided to restore Social Security solvency by cutting benefits and raising revenues equally. The FICA tax [Federal Insurance Contributions Act tax] was raised slightly and benefits were cut by raising the age people can collect full benefits from 65 to 70, which is actually a benefit cut. People can collect Social Security at age 62 and for every year they wait until 70, benefits increase on an average 6.34% per year. Therefore, those who can wait get a large boost and those who have to collect before 70 have a lifetime cut of over 11%.

This change and an increase in Medicare premiums and the rising cost of health care was enough to cause financial fragility  among retirees, though the erosion of the voluntary, occupational, pension system contributed to the stratification and inequity of retirement wealth, prospects, and security.

Also, all the signs that private plans would fail were right. Instead of employers making pensions more available, generous, and widespread, more and more companies shifted financial risks of retirement savings to workers through a cheaper and less generous kind of pension - the 401(k).

And despite the hope that the do-it-yourself retirement accounts  — 401(k)-type plans and individual retirement account IRA — would mean more workers would have some source of income besides Social Security, the retirement plan coverage rates of prime- aged workers has fallen from about 70% to close to 50%.

The median account balance of all people – whether they have account from their current job, a past job, and no account at all on the eve of retirement (age 55-64) and who worked a full career under the defined-contribution employer pension revolution with ever-increasing tax breaks is only $15,000. The low median account balance is because half of older workers have no retirement account balances at all, no 401(k) – type plan or an Individual Retirement Account (IRA). Let me repeat that almost half of all workers nearing retirement age will have nothing but Social Security to rely on.

For the lucky half who have some account balance in a 401(k) type plan or IRA, their median balance is $92,000. Spread that amount over a person’s retirement life and it will pay for a cheap dinner and a movie once a month.

If we do nothing to reform the current retirement system, the number of poor or near-poor people over the age of 62 will increase by 25% between 2018 and 2045, from 17.5 million to 21.8 million, and middle class workers will become downwardly mobile. Inadequate retirement accounts will cause 8.5 million middle-class older workers – a whopping 40% of all middle class older workers (aged 55-64) and their spouses to be downwardly mobile, falling into poverty or near poverty in their old age. Boomer and G-xers will do worse than their parents and grandparents in retirement.

Worse, since the current system is voluntary and used more by high income people in stable jobs the tax breaks go disproportionately go to the top 20 percent of workers. The system creates hardship and inequality!

Many employers may be afraid to offer a retirement plan if their competitors don’t – a classic collective action problem. Unfortunately, unions are too weak to help employers coordinate and universally provide pensions, so pensions should be mandated.

My co-author and I, Tony James, propose a fairly straightforward plan in our 2018 book Rescuing Retirement: a Guaranteed Retirement Account (GRAs) that is a retirement-plan-for-all plan. It is a federal plan that mandates a prefunded layer on top of Social Security, which needs more revenue (which is another subject).

A universal public option for retirement saving. The idea is to enhance the best features of the decentralized system while making up for its deficits.

Ostrich thinking is rampant – ignoring a future problem is a basic human reaction – but not responding as a nation to patch up the system that has failed in the last 38 years is folly. Senator Cory Booker, a Democrat, and Senator Todd Young, a Republican, have proposed a Commission to examine solutions to the nation’s failed private pension system. Congress forms the commission and I agree with and second -- with two hands waving -- long time analyst Chris Farrell, “We can’t wait any longer."

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Some Democratic candidates are running (and occasionally winning) as Democratic Socialists. Socialism? In America? Would Karl Marx recognize a rising up of workers to control the means of production in something more radical than an ESOP (employee stock ownership plan)? This primer looks past labels and spotlights the modern-day American socialist candidate and where the Democratic Socialists of America (DSA) platform is both in line and out of step with voters’ preferences.

Disclosure: When I was a new faculty member at the University of Notre Dame in 1985, a group of earnest students asked me to be their “faculty advisor” so they could schedule campus meeting rooms. They were both the Student Democrats and the Student Democratic Socialists. In the 1980s the Notre Dame Democrats and Socialists were the same kids.

An upset win in a New York City Democratic House primary has put Democratic Socialists on the national stage. Alexandria Ocasio-Cortez, 28 years old and a member of DSA, defeated longtime incumbent Joseph Crowley, the fourth-highest-ranking Democrat in the party’s House leadership this summer. She campaigned in the district for 19 months and found a weakened target: Crowley hadn’t faced a primary in 14 years while his district had become majority non-white.

Ocasio-Cortez’s win caused some pundits to wonder if a center-left fight was about to break out among Democrats. But Ocasio-Cortez's program of economic policy is fairly mainstream Democrat, including restoring stronger regulations on banks and the financial sector, comprehensive health insurance (Medicare for All), expanding Social Security, a federal jobs guarantee and higher taxes on corporations and wealthy Americans.

When Americans are polled, many aspects of Ocasio-Cortez’s “socialist” economic agenda often have a majority or close-to-majority support. Within the past year, polls have found majority support for the federal government ensuring health care for all, for free college tuition at public universities, and for the proposition that upper-income people and corporations pay too little in taxes. Even a federal jobs guarantee received 46% approval in an April poll.

Of course, polls can be unreliable reads of what people want; when the price tags are fleshed out, support for expensive programs often drops. But, several polls have found that policy ideas seen as too-far “left” by pundits command substantial support from voters like raising the federal minimum wage. Ocasio-Cortez and others also advocate ideas that do not command majority support and can be divisive, like abolishing ICE, but her economic policy ideas resonate with many voters.

Bottom line: On economic policies, many voters aren't hostile to a lot of democratic socialist ideas, although they surely shun the label “socialist.” And Ocasio-Cortez herself is not a purist, but rather someone looking to get these ideas into the national dialogue, perhaps like the Tea Party introduced extreme right-wing ideas such as privatizing Social Security.  She calls Democrats a big tent party: “You know, I’m not trying to impose an ideology on all several hundred members of Congress…”  She views her campaign not as “selling an -ism or an ideology,” but about “selling our values.”

Record-low unemployment – less than four percent – isn’t relieving Americans’ insecurity about health care, retirement security and their own as well as their children’s future. A majority of voters don’t view Republican tax cuts as helping people other than the rich. Calls for higher wages, lower costs for college, more health care and retirement security – sometimes mislabelled “left” or “socialist” – will doubtless persist. Some candidates and parties may wish to advocate these ideas and label them as centrist.

A candidate calling for higher pay, reduced inequality and economic security may not be too far left. Calls for higher minimum wages, stronger labor unions, fair housing and equal pay policies were all part of Harry Truman’s policies and his 1948 winning platform.  Was “give ‘em hell, Harry” a Democratic Socialist?  No, but he was seeking practical solutions to real problems. (When once urged by a bystander to “give ‘em hell,” Truman replied, “I just tell the truth on them and they think it’s hell.”)  President Truman, coming after World War II and facing political unrest and economic uncertainty, was as practical a politician as many on the scene today, seeking solutions for economic inequality and insecurity. That seems to be Ocasio-Cortez’s goal, along with many candidates campaigning in the November elections. Stay tuned.

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A couple times a week middle-aged and older people come to my office or email me asking for advice about what to do with their work, finances, retirement. They ask what their life plans should be. I love it. Whether you're transitioning to a new job or going into retirement, taking stock is a special moment in people’s lives. Doctors, psychologists, sociologists and writers (anyone better than Phillip Roth?) are more eloquent than economists on the human condition. See Michele Silver’s new book about how people feel about retirement. But, still, my conversations are as poetic as they are practical.

Life course stories share the same basic issues, though every person’s fascinating peculiarity is a challenge. Yesterday, a person in their early 50s wanted me to sit with their papers and plans. Am I invested in the right things? Do I have enough money? Basic. I asked the question I learned from an emergency room doctor who asks patients who come to the ER with a chronic complaint: why are you coming to me now? The answer I got was “I want to get my retirement plan in shape because I want to quit my job to work full-time on my side business.”

And, wow, was their “side business” interesting. I won't reveal the person’s identity, but the business was skilled and esoteric. Not unlike finding rare letters and artifacts, like “find me the original commission of Alexander Hamilton to Major General.” Cool things like that. This person‘s clients are mainly wealthy individuals. Some people in this business, but not my visitor, work for museums or libraries.

I shifted gears as I got a bit alarmed.

First, I was on firm ground. We cleaned up the easy stuff. Most people have junk in their portfolios, like expensive mutual fund products. I advise moving to an index fund manager like Vanguard. Recently, Fidelity is offering a free index fund in order to attract new business. That one can raise investment returns by lowering costs is not hard to understand and most people make the switch. Good first step.

Next, we look at the number. Luckily my visitor was on track with almost $500,000.

But the tricky question was whether my visitor should quit their part-time job they have held for 20 years to work full-time on their side business. The part-time job pays full health care and contributes 10% of pay (their wage is $40,000 per year). My visitor looked exhausted, stress lines, hollow cheeks, and was in desperate need of time off because their side jobs took nights, weekends, and all vacation days.

I suddenly got really nervous and didn’t have an easy answer. And I really like having the answers.

Stop before you read any further. What would you advise?

I could definitely see my visitor’s relief imagining getting caught-up on their side business. Business was booming and each task completed meant a juicy check was on its way.

I worry the boom in activity in my visitor’s side business was because of the asset boom and tax cut -- wealthy people had extra money to buy luxury goods like Hamilton’s commission letter. In a downturn, that side business would dry up and so would the chances my visitor could get a part-time job that paid benefits. I became all caution, all nerves and conducted a mini-lesson on business cycles.

Recessions often give self-employed workers a triple whammy : your own business shrinks at the same time your job prospects shrink and the value of your retirement plans falls by 20 to 25% less. A retirement off-ramp is more difficult just when you need the off ramp.

This individual story reminds me that retirement planning depends crucially on where we are in the business cycle – being at the peak or trough – completely changes your perception of the world.

Most economists expect a downturn in the next one or two years and when that happens my visitor’s financial picture and forecasts will change. I advise not quitting the job and drinking more coffee to do the side business. But I am uneasy because the worker needed a break. What would you advise?

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July 2018 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics reported an unemployment rate of 3.1% for workers age 55 and older for the month of July, which represents no change from June.

While the headline unemployment rate for older workers is at an historic low, an increasing share of older workers are in bad jobs with low and stagnant wages. Without access to jobs that allow older workers to save, inadequate savings will condemn many to poverty in retirement.
We have a choice to make. If we do nothing, the number of poor* people over the age of 62 will increase by 25% between 2018 and 2045, from 17.5 million people to 21.8 million. If we implement Guaranteed Retirement Accounts (GRAs), the number of poor elderly will decrease by 22% between 2018 and 2045. 8.1 million seniors would be saved from poverty by 2045.click

GRAs (proposed in the book, Rescuing Retirement) are universal, individual accounts funded throughout a worker’s career by matching 1.5% contributions from employers and employees and a revenue-neutral $600 refundable tax credit. Contributions would be professionally managed and guaranteed against loss of principal.

Since 1935, Social Security has safeguarded those who worked all their lives from old-age poverty. To fulfill that commitment, Congress and the President need to act quickly to expand Social Security and enact Guaranteed Retirement Accounts.

*Poverty is defined as incomes below 200% of the 2018 Federal Poverty Level, or $24,280 for individuals and $32,960 for couples.

**Arrows next to "Older Workers at a Glance" statistics reflect the change from the previous month's data for the U-3 and U-7 unemployment rate and the last quarter's data for the median real weekly earnings and low-paying jobs.

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A single mother holds her son while she waits to receive her diploma during her graduation ceremony from college. (Getty Images)

We love our kids, but they can ruin retirement. As we face the consequences of a systemic failure of our retirement savings system, near-retirees have an average savings of only $15,000. When you couple parents’ inadequate savings with their children’s increasing costs for tuition and housing, you have a dangerous cocktail. [tweet_quote display="Raiding your retirement funds for adult children can leave you dependent on them in old age.

Housing is one area where older people are likely to provide their children with help financially. If you have millions saved, it may not matter. But if you are like most people with less than $2-3 million saved for retirement, taking money out of these funds to help an adult child may be bad for you both down the line. Adult children’s financial dependency on elderly parents can even come with the fault lines of regret and tension.

The Bank of Mom and Dad study by the for-profit online rental company Apartment List found in a  nonscientific sample that 8% of non-student millennials (the 70 million+ American adults born between 1982 – 2000) have family members pay for their monthly rent. In addition, 17% expect financial help from family towards a down payment. Those numbers aren't large, and the poll isn't scientific, but I worry from other research that retirement accounts are tapped for family needs to the peril of the retiree. But, I stress it is the system at fault here, not the saver. Prices of homes where the jobs for young people are out of sight. Facing high housing costs is not the fault of the victim.

High housing costs is not the fault of the victim who can't afford to buy a house like some argue. For example, a millionaire Australian started a meme in May 2017 excoriating millennial adults for their profligacy. Avocado toast was the stand-in product, implying an entire generation sacrifices home investment for short-term luxuries. The meme was quickly disabused a few days later. The BBC calculated the avocado toast index, counting the avocado toasts equal to a down payment for a starter house located outside various city centers. In Johannesburg, it was 3,700 avocado toasts. 11,000 in San Franciso. You get the picture.

Most observers do not blame the low rate of home purchases on millennial spending. Rather, they point the finger at a combo of the current state of home ownership with the state of the labor market for millennials. For example, since 2000, home and rent prices increased by an average of 67%, while millennial’s income increased only 31%.

Nicole, an employee of Apartment List, told me she works hard and is a cautious spender. But recently, she asked her parents for the first time for the deposit and down payment she needed for a small room in a big house in San Francisco. Economists advise young people to move to find a better job but moving is tough. Nicole said her move from Boston required upfront expenses she couldn’t afford: first month’s rent ($1,200), the deposit ($1,250 each), the broker fee ($1,250), on top of the $3,000 for the move itself. And a door for the room, since it wasn’t really a room. Her parents gave her $5,000, which came out of their savings for a trip to Hawaii for their 25th wedding anniversary. Nicole’s parents were lucky. They just delayed their trip. But some parents are sacrificing their finances in old age by giving money to their adult kids.

Nerd Wallet, a for-profit personal finance website, found parent’s retirement savings could be $227,000 higher if they chose to save the money that would otherwise go to their child’s living expenses and tuition. Given the median retirement balance for older (age 55-64), upper-middle-class Americans (in the 60 – 90% of the income distribution) only have $100,000 in their retirement accounts, $227,000 makes up a big chunk. Nerd Wallet also found 28% of parents of children 18+ are paying or have paid for their adult children’s tuition or student loans. “The average parent takes out $21,000 in loans for their child’s college education.” The hit to their retirement savings is almost $80,000. Many parents of children 18 and older are paying or have paid for their adult children’s basic living costs, including groceries (56%), health insurance (40%), and rent or housing outside the family home (21%). About 39% cover or have covered their adult child’s cell phone bill and 34% of their car insurance.

The rise of individual retirement accounts makes it easy to spend retirement money on adult kids. You can’t drain your defined benefit, Social Security, or Medicare accruals for your adult child’s cell phone bill. But you can take out money – after paying a penalty – from a 401(k) or IRA. And there are hardship withdrawals as large as a remodeled kitchen after the popcorn burns in the microwave. Sometimes hardships are for home repair, which allows people to use retirement accounts like any another checking account.

Kids and parents should know they will both pay high costs over time if retirement accounts are drained now to pay for expenses like college tuition. Parents who give to adult children often expect a payback in old age. Sometimes the expectation is said in jest, as in, “if I send my kid to an expensive college then she will be a doctor; I can live in the back bedroom.” The imagined deal covers up the anxiety of an uncertain future.

Not many people become doctors. In fact, only 68% percent of college freshman finish with a college degree. A program that lends money to parents for college tuition, called PLUS loans, can trigger the garnishment of parent’s Social Security checks, tax refunds, and wages if they experience a financial shock. Even some college graduates regret taking out so many loans for an expensive college.

The increasing costs of housing and college, changes in pension plan design from accrued annuities to lump sums, and easy loans play a big part in draining on older parent’s finances. But parents also financially provide for their adult children as an act of love. Please do help your children with college expenses and supplement a rent check or coinsurance payment. But rob your vacation and your red quinoa or steak dinner budget instead of taking from your future livelihood. One of the best things you can do for your kids is take care of yourself.

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Some economic laws are not political: markets won’t work if prices are distorted. A group of farsighted Republicans is making the case that carbon prices are artificially low, and a big carbon tax would set them right. No, it is not April Fools Day (it’s July, after all).

In 2017, the bipartisan Climate Leadership Council endorsed a carbon tax that would collect over $200 billion annually, with increasing rates and revenue over time. The group includes older Republican leaders who served Ronald Reagan in high-level positions: James Baker, as Secretary of the Treasury; George Shultz, as Secretary of State; and Martin Feldstein, as Chairman of the Council of Economic Advisers; as well as Janet Yellen and other Democrats. And last week active Republicans, led by Florida Congressman Carlos Curbelo, Republican co-chair of the bipartisan House Climate Solutions Caucus, outlined a significant carbon tax that hasn’t been costed out yet. The tax would likely generate billions in annual federal revenue.

A carbon tax adds a fee to carbon-based fuels such as coal, oil, and gas. Every economist predicts a carbon tax would reduce the use of fossil fuels by raising its price. The market price of carbon is lower than the full price of carbon because other people and future generations who do not enjoy the immediate benefit of using carbon fuel nonetheless pay the cost of released carbon dioxide (CO2) into the atmosphere. Paying the full price of carbon motivates consumers to switch to non-carbon fuels and, most importantly, to reduce energy use.

The chemistry is straightforward. The amount of CO2 released when fossil fuels are burned is proportional to the fuel’s carbon content, which means the carbon tax can be levied on the fuel when extracted or imported.

Bipartisan movement on carbon tax proposals has moved away from the divisive goals of raising revenue toward its core efficiency: to correct market failures. The bipartisan Climate Leadership Council’s proposal aims to be revenue neutral by rebating the tax revenue to households.

Curbelo's proposal may be revenue-positive when it is eventually scored by Congress’s Joint Tax Committee, but he may want the revenue used to replace the federal gasoline tax. The form of the carbon tax is irrelevant; raising the price will correct the market failure of underpriced carbon.

While long-term efficiency matters, so do short-term politics. Curbelo is under electoral pressure in his south Florida district in part because rising sea levels and the Trump Administration’s anti-climate change actions have caused his 2018 poll numbers to fall. Democrats are targeting Curbelo’s district as one of their “red to blue” opportunities.

But House Republicans are divided. The House Republican Party leadership opposed Curbelo on July 19 by voting on a non-binding resolution rejecting carbon taxes. Six Republicans, including conservatives like Curbelo’s Florida colleague Rep. Francis Rooney, bucked their leadership and voted against the resolution.

On the deep blue side of the aisle, progressive Democratic carbon tax proposals go for the gold and would raise revenues to pay for projects and job creation. The progressives aim to boost economic growth, job creation and training for workers who might lose their carbon-based jobs. But although Democratic proposals might use carbon tax revenue in different ways, the news here is not the differences between Republicans and Democrats but the startling similarities. Both the red and blue carbon tax proposals recognize that carbon is underpriced for the environmental and economic damage it causes.

A bedrock principle of economics is that prices should reflect total costs as closely as possible, and carbon pricing totally fails that basic standard. Whether it’s burning petroleum in transportation or coal for electricity, or carbon emissions from chemicals and cement industries, underpricing carbon hurts the economy in the long run.

Burning underpriced carbon steers investment away from market-priced alternative energy, absorbs tax revenue through large federal and state carbon subsidies (over $20 billion annually in the US), and creates long-term costs paid by the public. Experts associate burning carbon with problems such as rising sea levels and increasing wildfires that will require more taxes and private resources to fix and mitigate.

Republican and Democratic carbon tax proposals differ and there is not much chance the Trump administration will advance the carbon tax. But the bottom line is bipartisan recognition of the problem, and a broad spectrum of economists who encourage passing the tax to reduce the economic costs of human-caused climate change.

That Republican politicians are brave enough to start recognizing the true costs of carbon and propose serious solutions is the best political news of July 2018.

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Economists are pinching themselves. When demand runs ahead of supply, prices are supposed to go up. Then how can the labor market be so tight and wage growth so flat? The 4% unemployment rate we have now is about as tight a labor market as you can get, but the “prices” of workers, their wages, are not rising as once predicted in a relationship called the Phillips curve.

Real wages have been practically flat during this expansion. Wages rose 2.7% from a year earlier in June, below the 2.8% increase economists had expected. Over the last 30 years, executive and professional pay for the top 1% more than doubled. The bottom 90% of workers only got a 15% raise.

The typical worker received less than one half of one percent annual increase in real wages since the 1970s. And, no, increasing health care costs aren’t the reason. Heath and pensions are substitutes. Total labor compensation including health insurance has not kept up with labor productivity.

After being stable for decades, the share of national income received by workers fell from about 65 percent in 1974 to about 57 percent in 2017. Labor share has been falling in the Euro Zone also, but the decline is worse in the U.S.

A few months ago, the New York Times posted six reasons and the Brookings Institution had 13 why wages weren’t increasing despite the drop in the unemployment rate. In the interests of simplification,  I have reduced these to two. One reason is about measurement; the second reason is about power.

The first possible reason wages are not increasing is superficial and bypasses the capital-labor conflict. The puzzling wage stagnation could be no puzzle at all. Labor market tightness could be mismeasured and many people who want jobs are not counted. The claim is weak, though. The unemployment rate has always underreported people looking for work and we have no reason to think the mismeasurement is any worse.

The second reason is more profound: labor lost, capital won. Proof: Productivity has been running ahead of wages, which put little pressure on prices but boosted profits. Consumers and shareholders won, workers lost. From 1973 to 2013, hourly compensation of a typical worker rose just 9 percent while productivity increased 74 percent.

So, why is capital stronger than labor? Four reasons.

First, labor’s bargaining power falls as unions weaken. Between 1979 and 2013, the share of private sector workers in a union fell from about 34 percent to 10 percent among men, and from 16 percent to 6 percent among women. A 60-year-old so-called “Right to Work” movement has won policies that weaken labor bargaining power in states across the nation. The movement lobbies states to ban voluntary union security clauses, which reduces union revenue, making it harder to organize and even function. This strategy also attacked public sector unions. Last month the Supreme Court, in Janus v AFSCME, voted 5 to 4 to hobble those unions as well.

Unions also help pass minimum wage laws. The real minimum wage of $7.25 today has lost real value since the 1968s when it would have been over $10.90 today.

Second, worker fear is on the rise, even with a very low unemployment rate. Former Fed chief Alan Greenspan keenly watched for labor power indicators – he knew about the fear factor. He believed surveys about work insecurity and fear of leaving jobs to get better ones was a good barometer of actual worker sentiment. In 1997, he reassured Congress that fear was on the rise so Fed policy would not create inflation because workers were too afraid to ask for a raise.

Quit rates are up since the recession – FT columnist Sarah O’Conner calls it “the take the job and shove it” rate – but quit rates were higher in 2002 after the tech bubble recession. 67% of Americans answer that this is a good time to find a quality job, which is the highest since first polled in 2002. But, people feel just as likely to lose their jobs now, when the unemployment rate is 4%, as they did in 1991 when the unemployment rate was over 7%.

Third, super firms are achieving more and more market power. Consumers may get lower prices, but employees get lower wages. The gap is widest in the information sector where FAANG – Facebook, Apple, Amazon, Netflix, and Google—dominate. Large firms simply have more control of markets than they did before: profits rise and prices fall. When consumers and shareholders win, workers lose. The Obama Council of Economic Advisors first pointed to the rise in monopsony labor markets, a situation where workers are tied to employers and have less choice about moving to another employer. Economist Kate Bahn explains how monopsony works to lower wages.

Fourth, new jobs in demand are low-wage jobs. Low-paying jobs will dominate job growth in the next decade.  Projections are for 1.2 million new openings for personal care aides and home health aides where the average annual wage is under $24,000. Demand for health care services means the new labor supply in demand is female and older. Not the groups with lots of bargaining power to begin with. Among the ten occupations with the most employment growth, only three will pay above average: software developers, registered nurses, and managers.

All job growth is gray: employment increased by 17 million from 2000 to 2017 and the number of workers over age 50 grew by 17 million. More older workers don’t automatically mean wages fall. But, older people are getting worse jobs as they stay and enter the market in the face of weak retirement income security.

Between 2005 and 2015, the growth in older workers' unstable and low-wage jobs outpaced growth in jobs offering decent pay or stable employment. By 2015, nearly 1 in 4 older workers were in bad jobs. Bad jobs include the alternative work arrangements of on-call, temp/contract, and gig jobs (excluding independent contractors) and low-wage traditional jobs (paying less than $15,000).

Bottom line: economics is not a science of ethics and justice, but we have opinions about economic growth and fairness and justice. The justice proposition is that “inputs,” including management and labor, should get their share in the production process for markets to work efficiently. Economists are pretty much convinced that worker productivity has delinked from worker pay and that government policies tilted in favor of capital over labor. How the pay and productivity gap, growing since the 1980s, might ignite outrage and political reform is an open question.

Economics of Retirement

Labor Economics