Over 70 and Back to Work?
Posted Monday, February 4th, 2013| Comments (4)
The following blog is reposted with permission from Squared Away: Financial Behavior: Work, Save, Retire. Sponsored by the Center for Retirement Research at Boston College, Squared Away is a blog is for individuals, as well as practitioners in the field of financial literacy, including financial advisers, educators, employers, government and foundation officials, and researchers.
For Vita Needle Company’s elderly employees, work is the essence of the fulfillment they feel in their lives.
Howard Ring, a 78-year-old engineer – like many of his coworkers – initially went back to work after retiring, because he needed more money. And Vita Needle would hire him.
“What I found there was more than just a job,” he says. In the video below, Ring and his elderly coworkers talked about what they derive from work during an October panel discussion at the Newton (Mass.) Free Library.
Is Vita Needle a window into the future? Will growing ranks of retired but still-vigorous boomers return to work after a couple of years, when they grow bored with golf or bridge?
Returning to work – or remaining employed – has proved extremely difficult in the wake of the 2008-2009 stock and housing market collapses. More late-career workers lost their jobs in the Great Recession than in previous downturns, and their jobless spells lasted longer, according to a forthcoming study by the Center for Retirement Research, which funds this blog. Now that the economy is growing, it isn’t generating enough jobs to employ the elderly who do want to work, the study found.
Vita Needle’s heavy reliance on older employees is “unique,” said Marcie Pitt-Catsouphes, director of the Sloan Center on Aging & Work, which is also at Boston College.
Older workers make excellent employees, she said – they demonstrate a strong work ethic and great attention to detail, whether safety concerns or a customer’s precise product specifications. But a future of workplaces bustling with aging boomers “is not coming unless there is more labor market demand,” she said.
Vita Needle employees like Rosa Finnegan – age 100 – are such an anomaly they have become virtual celebrities. They were featured on a German documentary and public television and studied by Olin College professor Caitrin Lynch in her book, “Retirement on the Line: Age, Work, and Value in an American Factory.”
But Squared Away can’t help wondering whether baby boomers, who have put their stamp on so many other aspects of American life, may also redefine the meaning of retirement.
Sustaining an Aging Workforce
Posted Wednesday, January 23rd, 2013| Comments (2)
Trends in labor demographics in Europe vary widely from one country to another
The European Union reports increasing rates of participation in the labor force by people between the ages of 55 and 64. Given the advancing median age of the European population, this trend is welcome. It is not yet time to pop the champagne bottle, though, because among the 27 members of the European Union, the workforce participation rates of older people vary significantly (see Figure 1). In Sweden, for example, participation by those who are 55 to 64 years old is relatively high and trending up: rising from 67.3 percent in 1992 to 72.3 percent in 2011. In Belgium, participation by this age group is on an upswing, too, but the benchmarks are low: from 22.2 percent in 1992 to 38.7 percent in 2011.
Notwithstanding the progress of European countries generally in enabling aging workers to stay active in the labor force, some countries face serious challenges. These have repercussions for the European Union as a whole, compromising its economic prowess. As Figure 1 shows, 47.4 percent of the European Union population between the ages of 55 and 64 are working, but this means that 52.6 percent are not—a serious loss of human capital.
Fig 1: Percentages of people between the ages of 55 and 64 participating in the European workforce, from 1992 to 2011 (Eurostat, 2012)*.
The Dutch example
Finding sustainable ways to retain older people in the workforce is drawing increasing attention across Europe. My country—the Netherlands—has responded with changes in law and policy. For example, the official retirement age—now 65—will rise gradually to 66 by 2019. New financial incentives have been adopted, as well. For example, an employer who hires someone who is 50 or older receives a €7,000 government bonus. A major topic of political conversation centers on who is ultimately responsible for sustaining the capacity of older workers to stay in their jobs: the employer or the individual worker?
In research to be published in The Netherlands later this year (De Lange, Schalk, Van der Heijden, 2013), we discuss negative “push” factors that make it hard for aging workers to stay in their jobs. Figure 2 shows that the push factors operate on multiple levels: individual; job; organization; macroeconomic. One may therefore argue that responsibility for sustaining the capacity of older people to keep working belongs at all of these levels, and primarily with the individual worker, his or her employer, the organization, and the national government.
Sustaining an older workforce in a global economy requires crossing international borders of knowledge. The Sloan Center on Aging & Work at Boston College understands this need, and has invited international research fellows to connect with researchers in the United States to examine topics on aging in the workplace. For example, the Sloan Center and other partners have started collaborating with researchers from the Behavioural Science Institute of Radboud University Nijmegen, who have organized a Dutch knowledge platform on sustainable systems of support for aging workers (www.nkdi.nl). The platform connects government agencies, companies, universities, and unions for online exchanges of relevant information on best practices and evidence-based interventions.
The Web site (www.nkdi.nl) is in Dutch, but translation software is readily available in English. Later this year the site will be updated with links to material in English as well as Dutch. I invite you to visit and share your ideas on sustaining the older workforces on both sides of the Atlantic!
Figure 2: Negative “push” factors that make it hard for aging workers to stay in their jobs.
*The employment rate of older workers was calculated by dividing the number of employed people between the ages of 55 and 64 by the total population of the same age. The percentages were derived from the European Union Labour Force Survey (EU LFS), which covers the entire population living in private households. It excludes people living in collective households (boarding houses, halls, hospitals). The employed population consists of those who, during the reference week for an hour at least, did any paid work or who had jobs from which they were temporarily absent.
Workplaces for the Ages
Posted Wednesday, January 9th, 2013| Comments (7)
Here’s to a clearer picture of an age-friendly company
Since 2005, when the oldest Baby Boomers turned 60, business leaders have been having interesting conversations about how to leverage the talent of today’s multigenerational workforce. In the course of these conversations, many business leaders say they want their organizations to become more “age-friendly.” However, when they attempt to describe how their newly age-friendly organizations will look, the picture is often fuzzy.
Let’s ring in the new year with some clarity about what it means for a company to be age-friendly and how best to get there. A good place to start is with the following three strategies:
- Age-specific. The needs and priorities of employees vary with age, generation, life stage, and career stage. Companies can develop resources or programs to suit. For example, employees who are middle-aged and older may be caring for family members who have Alzheimer’s disease. Organizing brown-bag lunches where these employees can share information and support one another could be an appropriate corporate service.
- Age-neutral. A number of employee supports are appropriate across age groups. For instance, employees of virtually all ages and career stages want access to flexible work options. Their reasons may vary with age, however (just as people have a variety of reasons for needing sidewalk ramps).
- Valuing age diversity. Recognizing that work groups are likely to include people of various ages, employers may take steps to ensure that age diversity within the work culture is viewed as an asset. Posting features about employees of different ages on an internal company Web site can break down stereotypes and promote constructive business interactions.
It’s up to employers to decide which strategies fit their organizations best. Employers should then design programs and policies to affirm (or make more visible) their commitment to an age-friendly workplace. One example is a bidirectional mentoring program, in which junior and senior employees are equally likely to serve as mentors. Another example is a creative approach to phased retirement.
Now that we have sketched a roadmap to an age-friendly workplace, we can envision the destination. What do we want to see if our workplaces become age-friendly? What will such workplaces look like?
The Sloan Center on Aging & Work at Boston College promotes the quality of employment for people of all ages, across their careers. We also pay attention to the interaction between people’s experience of work and the quality of their lives at home. Thus we want to help employers create and sustain workplaces that offer:
- fair compensation and benefits (to employees of all ages and specifically for employees at different ages)
- meaningful work assignments (to employees of all ages and all career stages)
- constructive relationships (with people of all ages)
- choices that create flexibility in the time and place of work (for employees of all ages and at all life stages)
- a welcoming and inclusive workplace culture (for employees of all ages and all generations)
- appropriate opportunities for learning and career development (to employees at all career stages)
- support for health and wellness (for employees of all ages)
- resources that enhance engagement in work (for employees at all ages and career stages)
Does this picture match the destination you have in mind for your organization?
Older Workers, Adult Children and Working Longer
Posted Wednesday, December 12th, 2012| Comments (3)
The tenth annual National Work and Family Month comes at a time when issues of work-life balance are enjoying unprecedented attention. Anne-Marie Slaughter’s provocative Atlantic essay on “having it all” has been read and discussed by millions over the past few months; new Yahoo! CEO Marissa Meyer’s pregnancy has drawn a renewed focus to moms in management; and the need for workplace flexibility was even a presidential debate topic. While I am delighted by each of these developments, I still feel that we need to expand the conversation around work and family. I don’t just mean make it louder — although that’s important — I mean expand it to include all of the different people who want and need flexibility in order to manage both their work and family lives.
When we talk about work and family or workplace flexibility, we still almost always talk about working mothers. Sometimes working dads make it into the conversation, and now we often include those with elder care responsibilities as well. But there are many others who also stand to benefit from increased workplace flexibility. One group we almost never talk about is older parents with growing responsibilities for adult children.
As a recent National Academy of Science report outlined, the United States is in the midst of a major demographic shift, with people aged 65 and older encompassing an increasingly large portion of the population. As the NAS study notes, this shift will soon demand major policy changes. Of course, we have all heard about how this means more people will be enrolling in Social Security in coming years, but it also means a greater number of seniors in other realms. More older American are remaining in the workplace, and more are playing primary roles as caregivers to children, grandchildren, spouses and others — often while they’re still working. There’s another thing many older Americans are doing that they may not talk about so much: providing financially for grown children.
A forthcoming UCLA research study funded by the Alfred P. Sloan Foundation’s Working Longer program seeks to improve our understanding of such financial transfers and how they influence older Americans’ decisions about working later in life. While this field of research is in a nascent stage, several studies have already show that middle age and older parents are increasingly called upon to provide financial support to their grown children. A number of trends have contributed to this reality, including the fact that people are having children later in life, and that young adults are taking longer to establish their own financial independence.
As the population continues to age, I suspect this trend will grow as well. Surely, this will affect many older adults’ decisions about how long to remain in the workplace.
We already know that Americans are working later into life than in previous generations, and that older workers want something different than a conventional, full-time job, with options like job-sharing, part-time work, and extended time off increasingly in-demand among this demographic of workers — and a huge body of research showing that such options provide business benefits to employers.
As the family roles that older Americans play continue to evolve, so too will the roles they play in the workplace. While the data on this subject is still in development, I’m curious to know what experiences those of you out there in the working world have already had.
Parents: Do you provide financial support to your adult children? If so, does this mean you forsee yourself having to work later into life? And for the many of us who are working longer — for whatever reasons — what could your employer do that would help you to succeed while working longer?
Waves of Change or Challenge?
Posted Wednesday, November 28th, 2012| Comments Off
The global context of gender roles
Rucha Bhate
Doctoral Research Assistant
Sloan Center on Aging & Work, Boston College
Phone: 617.552.6954
Email: bhate@bc.edu
- Across the globe, women’s labor force participation has witnessed a dramatic surge in the past few decades. At the same time, the number of people regardless of gender who advocate equality of gender roles at home and at work is increasing.
- Nevertheless, despite constituting more than half of the world’s population, women own 1 percent of the world’s wealth and continue to lag behind men in terms of income, career advancement and access to credit (2012 World Development Report on Gender Equality and Development). Moreover, still today, women shoulder most of the domestic responsibilities and spend significantly more time in unpaid work than men in many countries.
These statements represent two facets of gender equality: how far women have come and how far they still have to go. The contradictions between them are striking. However, an analysis of responses to a 2010 survey conducted by the Sloan Center on Aging and Work at Boston College suggests that they mask more subtle differences in perception of the gender-based division of work and family responsibilities across nations. The survey involved 11 countries and 11,000 respondents—all employees of multinational companies. We aggregated the survey results by country and specifically focused on gender roles. We wanted to know, how globally prevalent is the traditional gender-based division of roles that keeps women at home and encourages men to earn money and advance their careers?
To answer this question, we viewed the survey responses through the lens of a paradigm devised by the organizational scientist Geert Hofstede, which expresses cross-national differences by the gender dimension(masculinity versus femininity) to assess how different cultures assign traditional gender roles. We found that sociocultural influences do indeed shape perspectives about gender equality. According to the survey results, societies deemed to be relatively feminine by Hofstede’s paradigm—such as the United States, the United Kingdom, The Netherlands, and Brazil— are much more attuned to the necessity of gender role equality at home and at work. In contrast, for relatively masculine societies—like Japan and China—embracing gender equality in all spheres is a struggle. Instead, many Asian employees surveyed seem to cling to deep-rooted patriarchal beliefs indicating that women should be submissive and concentrate on domestic duties and childrearing.
Here’s one example of this pattern. Almost 90 percent of all respondents (men and women) in the United States disagreed with the gender-based stratification of work and family life— an encouraging sign for advocates of gender equality here. In contrast, only about half of the male respondents in Japan disagreed with this notion.
It should, however, be noted that these national belief systems are not permanent. The socioeconomic and cultural landscapes of countries change, and therefore questions about gender roles should be duly revisited and evaluated across the globe.
Gender equality is not simply a matter of intellectual curiosity or even social justice. Many studies have shown that economies improve when women have access to education, employment, and financial resources and can claim equal footing with men in key domains of decision making. For gender equality to become a global reality, the gender biases ingrained in male-dominated cultures will have to be identified and constantly challenged.
The Older Entrepreneur
Posted Wednesday, November 14th, 2012| Comments (16)
Why employers should embrace this trend
Imagine Silicon Valley in the 1980s with its entrepreneurial, brilliant, and creative 22-year olds working 20 hours a day and eating pizza at 3 a.m. on paper plates. That scene may still exist, but entrepreneurship is not just for kids. In fact, a recent study shows that the age group accounting for the sharpest growth in entrepreneurship as a percentage of all entrepreneurs is the cohort between the ages of 55 and 64. In 1996, 14.3 percent of all entrepreneurs were in this age group. In 2011, the share had grown to 20.9 percent. The percentages actually declined for those 44 years old and younger—most sharply for the 20- to 34-year-old cohort.
The demographic picture of entrepreneurship is changing. One question is, why now? In my work as a consultant on entrepreneurship for older workers, I have come across a variety of motives: unemployment, job insecurity, a burning idea, a desire for freedom, frustration with age discrimination, a wish to make a difference, and economic opportunities.
At three recent conferences on entrepreneurship for Baby Boomers sponsored by the Center for Productive Longevity, attendees came for these reasons and others, but they had one trait in common: passion. Their passion often emanated from personal experiences such as divorce, serving as a hospice volunteer, readiness to depart from a practical career path and take a risk, a love of cooking, or noticing the broken porches of elderly neighbors and wanting to help.
People who consider entrepreneurship later in life are not without fear, but some of their fears are based on myths. At one of the conferences, Len Schlesinger, the president of Babson College, in Wellesley, Massachusetts, outlined a few:
- Myth #1: Entrepreneurship is a solo profession. False. Entrepreneurs engage with friends and networks.
- Myth #2: Entrepreneurs are born, not made. False. One can acquire the knowledge and skills needed to become an entrepreneur. Many university business programs (including Babson’s) offer this training. Conferences, workshops, and online resources do, too.
- Myth #3: Entrepreneurship requires big and new ideas. False. Most entrepreneurial launches spring from small ideas. Moreover, seven out of eight businesses are extensions of old ideas, according to Schlesinger.
- Myth #4: Entrepreneurship is about money. Not always. Many become social entrepreneurs as an encore career to combine their purpose and passion with a paycheck.”
The growth in entrepreneurship among older adults sends at least two messages to employers:
- If you want to retain high performing mature workers who have a yen for entrepreneurship and creativity, identify opportunities within your company where the entrepreneurial spirit can be expressed. Examples: Google engineers have one day a week to work on their own. Within the organization these activities are referred to as “20 percent projects.” Gmail was one. Microsoft launched the Microsoft Pioneer Studios, a skunkworks operation that attracts the company’s entrepreneurial employees.
- Include some coaching on entrepreneurship in your company’s retirement planning services. By doing so, you will demonstrate relevance, provide a service, and embrace the core of a successful American economy. You might also incubate an idea that will one day become part of your company’s portfolio.
Helen Dennis is a consultant on aging, employment, and the new retirement based in Los Angeles.
A 20-Year View of the Labor Force
Posted Wednesday, October 31st, 2012| Comments (2)
Why the job market may be warming up to older workers
Some broad trends in work and the workforce are emerging that could influence the fate of older workers years down the line. Now would be a good time for American employers and policy makers to notice and start talking about them.
Trend 1: Older workers 20 years from now will have lived and breathed the career gospel of their time: Continuous self-improvement. Stability in a single job is yesterday’s religion. The next generation of older workers will have spent their careers keeping their skills fresh, seeking continual education and training, and going after jobs that offer—in addition to intrinsic satisfaction and pecuniary rewards—a chance for personal growth. Even if today’s quick pace of technological change speeds up even more over the next two decades, future cohorts of older workers won’t be taken by surprise.
Trend 2: Older workers in the future will be used to changing jobs and employers. If today’s veteran workers once envisioned a gold watch, tomorrow’s aging workers might not even get that reference. Figures released in September by the Bureau of Labor Statistics show that the average job tenure is 5.4 years among workers ages 25 and over and 10.3 years among workers ages 55 to 64.
Tomorrow’s older workers will be well-versed in negotiating job instability. (Call it career dynamism if you want a more positive term.) Their job search skills will stay sharp, they will keep their networks strong, and they will continually keep an eye on what’s happening in the labor market. If you can check the time on your smart phone, who needs a gold watch?
Shorter job tenure is related to the pace of technological change driving Trend 1, but it is distinct for two reasons. First, people switch companies for reasons other than technological change. Second, technological change might force workers to acquire new skills or change their job descriptions—but that could happen without switching employers.
Short job tenure matters for another reason. One reason why employers shy away from older workers is the fear that these workers will soon be lost to retirement. This disadvantage becomes moot if the projected tenures of workers across age groups are short.
Trend 3: Social media supercharge our social networking capabilities. They strengthen our connections and make our extended networks much more transparent, by revealing information about our friends’ friends’ friends in high places. This should have an equalizing effect on the social networks that people can exploit to move from one job to another. At the same time, the use of social networks by employers to identify job candidates will make it easier for older workers to compete for jobs, because it weakens the link between age (and other demographic characteristics) and the chance that hiring managers will see a resume.
Trend 4: Trends both positive and negative in health and well-being will also matter. For highly educated older workers who enjoy better access to health care, health issues will be less likely to result in even the perception of a compromise in job performance. Developments in preventing mental degeneration will also keep the members of this cohort working as they age. The picture is not entirely rosy, however. A recent study reported declines in life expectancy among less educated Americans. If this trend holds, less educated workers could experience a decline in their fortunes as health setbacks interfere with their careers.
Trend 5: The mix of jobs in terms of quality (high-skilled and high-paying; low-skilled and low-paying; temporary, contract, or otherwise marginalized) is always changing in response to such factors as occupational structure, technology, global competition, and policy changes. Trends in this realm are difficult to project, and even current realities are complex. But I mention job mix here because if, in 20 years, the job market is skewed to low-paying, low-skilled jobs, employers may be less discriminating—in both the objective and pejorative senses of the word. Therefore, developments that might reduce aggregate age inequality are quite bad for other reasons. Age discrimination is a metric that must coexist with others. To reverse a political aphorism, a sinking tide lowers all boats.
Cultural factors: The trends discussed above are largely structural, in that they affect worker skills and worker networks. Structural factors that make older workers more competitive will also alter cultural views and expectations in a way that helps aging workers. Cultural changes might also affect older workers’ self-image, which would influence the jobs they go for, their performance in interviews, and how they do on the job.
Even so, it would be naïve to think that negative stereotypes of aging workers will go away. To the extent that real differences between older and younger workers continue to exist, they will prop these stereotypes up. Of course, sometimes stereotypes persist well past the point where any real differences between groups have vanished.
Work Longer – But How?
Posted Friday, October 19th, 2012| Comments (2)
How one company is responding to the exit of older workers
Seventy-five percent of Americans who are 50 and older expect to work well into the traditional period of retirement: many because they must; others by choice. Will they be able to do so?
Frank McVay, a registered nurse with WellStar Health Systems in Marrietta, Georgia, thought he would work into his seventies. Nursing, his second career, was his dream. Injured on the job four years ago, Frank called it quits earlier this year when twelve-hour shifts and lifting and moving heavy patients became too much. “I just couldn’t keep up with the demands of the job,” he says. He was 58 years old.
We, at Vital Pictures—a Boston-based film company —met Frank while researching our latest project: Coming of Age in Aging America, a multimedia, multiplatform PBS project slated for early 2014 .
Working longer sounds like a no-brainer for the active and educated new crop of retirees, but Frank’s story proves nothing is easy. Despite expectations, people continue to retire early – at age 64 for men; 62 for women. For occupations involving work that is physically demanding and mentally taxing, it’s even earlier: most nurses, for example, retire at age 55. A 2012 MetLife Mature Market reveals almost 40% of retirees cited health reasons for retiring sooner than anticipated.
Karen Mathews, the Director of Work Life Services for WellStar’s 12,000 employees, says she sees too many Franks: “Some of our best people are aging out of the jobs we rely on for quality service.” That impacts the bottom line, according to LeeAnna Spiva, WellStar’s Director of Nursing Research. WellStar’s nurses average 42 years of age —a big group heading into retirement at the same time that an aging population will increase demand for health services. According to Spiva, the company estimates that replacing an experienced nurse costs between $75,000 and $100,000. “So yes,” she says, “we’re highly motivated to hang on to the older worker.”
Since 2007, WellStar has been an incubator for ways to attract and keep the best talent all along the span of a career; a special focus is the older worker. WellStar’s initiatives include work/life programs and services that allow workers to ramp up or scale back on their work commitments in ways that fit their stage in life. One innovative program is the Nurse Research Fellowship program, which teams experienced nurses and scientists to conduct bedside research. Designed to engage nurses with new opportunities, the program also taps into the wisdom and knowledge of the experienced nurse.
Frank McVay was one of the first nurse research fellows. The results of the study he originated , “Discovering Ways That Influence the Older Nurse to Continue Bedside Practice,” were published last year in the journal Nurse Research and Practice. They confirmed his own nursing experience: The nurses surveyed were tired and stressed, but they still cared and they wanted and needed to work longer. Frank says, “We asked them what changes would make that possible. And they told us.”
The study’s findings led WellStar to take concrete actions to extend nurses’ tenure in their jobs:
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Nurses participated in the design of a new hospital tower, suggesting features to make work more efficient and less physically taxing.
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Nurse/patient ratios were lowered in some units.
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WellStar is instituting a new electronic records system to streamline paperwork.
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WellStar is investigating the purchase of ergonomically friendly equipment to lift and move patients.
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Shorter shifts—four and eight hours—rather than 12, which is the industry standard, are on trial.
Today many companies across American business are aware of the mass exit of experience and talent that attends early retirement. WellStar is one of only a few that are taking on the hard task of rethinking work in order to extend the span of their employees’ careers.
Meanwhile, Frank continues working on his legacy. No longer a paid employee, he now volunteers his time to continue WellStar’s nurse research.
Over 50 and Out of Work
Posted Wednesday, October 3rd, 2012| Comments (8)
I thought I was set for life is the most common phrase I heard in interviews with older Americans who lost their jobs as a result of the recent recession. Over their careers, they had received promotions, praise, and bonuses from companies such as AT&T, Panasonic, Pfizer, and Weirton Steel. Then one day, sometime after the economic downturn began in 2008, they were told they were no longer needed and ushered out the door of the company where they had worked for more than 20 years.
They were shocked. They had children who depended on them, elderly parents who needed their support, and bills and mortgages to pay. Compounding the impact of sudden unemployment, they found that their homes were underwater and their hard-earned savings were plummeting in value as the U.S. housing and financial markets tumbled downward. One more blow: When they lost their jobs they also lost their health insurance.
In early 2010, inspired by Studs Terkel’s masterpieces Working and The Good War, filmmaker Sam Newman and I began conducting video interviews with these unemployed workers, born during the era of general economic prosperity and optimism in the years between 1946 and 1964. We posted 100 of the interviews on our website, Over 50 and Out of Work. The site is also a repository of video interviews with economists, psychologists, and researchers who give the individual stories a national perspective and context.
Our conversations led us to make a documentary—Set for Life—that follows three of the unemployed workers over a period of two years. We hope it will gain a wide audience, because our mission— with the website as well as the documentary—is to help unemployed older workers get back into the labor force, by improving the cultural perception of older workers and by influencing public policy.
Joe Price, a third-generation steelworker from Weirton, West Virginia, has been laid off seven times over the course of his 25-year career in the mill, but his most recent two-year layoff, which began in 2009, appears to be permanent. Joe’s plight raises many issues: the decline in U.S. manufacturing that was accelerated by the Great Recession, the role of unions in a highly competitive global economy, as well as the relationship between educational attainment and employment.
Deborah Salim, of Conway, South Carolina, worked for 15 years in the records department at a local community college until she lost her job in 2008 due to government budget cutbacks. Deborah’s saga illustrates that the recent recession affected not only private-sector employment but also employment in the public sector. It also reveals how the downturn squeezed out many low- or mid-level white-collar workers whose tasks were distributed to other employees or whose jobs were eliminated by technology, resulting in a “hollowing out” of the workforce with fewer opportunities for that stratum of workers.
George Ross, a Vietnam veteran and an information technology project manager in Livermore, California, lost his job in 2008. He searched for work until he was notified that his son, Jason, a Marine, had stepped on a buried mine in Afghanistan while on patrol. George’s story portrays the timeless burden that families bear when their sons and daughters go to war and return home injured, but George’s joblessness adds immeasurably to the problems he and his family are facing during Jason’s rehabilitation.
While the three main characters in Set for Life search for work in today’s daunting job market for older workers, they suffer financial woes, self-doubt, and health concerns. Thrust by the recession into a quest they never expected to face late in life, they ponder deeper questions that are relevant to everyone: What defines my self-worth? What is my definition of happiness? Can I reinvent myself? Can I prepare for and accept change?
As the U.S. economy continues to falter, the themes and issues explored in Set for Life remain timely and topical not only for boomers, but for all Americans.
Susan M. Sipprelle is a writer, journalist, and founder of Tree of Life Productions. She adapted this post from a column published in September by StayThirsty Media. “Set for Life” is an official selection of this year’s Massachusetts Independent Film Festival and Louisville’s International Festival of Film.
Should You Be Counting on the Social Security Trust Fund?
Posted Wednesday, September 19th, 2012| Comments (3)
The Social Security Trust Fund does not contain “real economic assets.” This reality will make retirement not only more distant but also more difficult for most of us.
The three pillars of retirement income – Social Security, private pensions, and savings – are shaky these days.
- The Trustees of the Social Security program report that, as of 2033, the trust fund will run dry and system revenues will not be sufficient to pay 100 percent of promised benefits under current law.
- Traditional defined-benefit plans — ones that pay predetermined monthly benefits throughout retirement — have been largely usurped by 401(k) plans, leaving individuals exposed to investment risk and, for those who do not convert to annuities, longevity risk.
- Savings offer no real buffer either, because the typical older household has less than $100,000 in non-pension, non-housing assets— hardly sufficient to support 20 years of leisure later in life. Today, one in three older Americans relies not on savings but on Social Security benefits for the bulk (80 percent or more) of their family income.
Given the status of these traditional sources of retirement income and the precarious prospects for the future, most of us are going to need to work beyond traditional retirement ages if we want to mitigate any loss in our standard of living.
Maybe that’s not news to you. Well, get ready: the situation is even bleaker.
In 2012, the Social Security administration reported that tax contributions were insufficient to cover costs, or benefits paid. The red ink in the near term is rarely reported, however, because the Social Security Administration plans to tap into its trust fund assets for benefit payments. Those assets are invested in U.S. bonds, and while they are “backed by the full faith and credit of the U.S. government,” that just means we taxpayers will not default on our commitment to the Social Security Administration. In fact, the fiscal 2000 U.S. Budget explains that “these funds are not set up to be pension funds … they do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”
Any one of these options — or all three — will negatively impact today’s retirees, tomorrow’s retirees, or both, and the situation is unavoidable. Why? Because, quite simply, our contributions to the trust fund have already been spent.
Until very recently, as contributions from the Social Security program exceeded costs, the Treasury department complemented its general revenues with Social Security contributions, and spent them on a myriad of government activities (as the graphic shows). In return, the Treasury issued IOUs to the Social Security Administration, with the intention that further down the road the Treasury would repay the IOUs with income taxes and/or borrowings. Further down the road means now, though, and, with a deficit in 2012 exceeding $1.2 trillion, the Treasury has no choice but to borrow to repay the Social Security Administration.
We take no stance as to the wisdom of the Treasury’s choices in the past. We would, however, like to comment on two explanations that we have come across to justify these actions.
The first argument is that the excess contributions from the Social Security program were not spent but, rather, “invested.” The excess contributions have been put toward roads, bridges, and any number of government-backed initiatives over the years — money that would have otherwise required borrowing at the time the resources were spent. So, while there are no hard assets in the trust fund, our government has claims on public goods that were made possible through the trust fund dollars. While this argument may sound legitimate, it is highly suspect. Can you imagine how people would react if the leadership at Ford announced it was going to “invest” Ford’s pension assets on a new plant in Michigan? Or worse, that Ford was going to “invest” pension fund assets on Super Bowl ads? Or a company picnic or even executive salaries?
The other argument is that the Treasury has already accounted for the fact that it will need to borrow to replenish the trust fund. The only difference from an accounting perspective is the fraction of total government debt that is held by the public, which increases as the Treasury actually starts borrowing to replenish the trust fund. While this is a truism, the fact that the Treasury has planned to borrow, and thus further obligate the very taxpayers who receive Social Security benefits, does not in any way mean retirees will receive the benefits originally promised.
One thing is clear – the Social Security program did not cause this mess, and it would be wrong to label the Social Security program a failure because of this situation. Quite the contrary, the Social Security program has been an enormous success in lifting older Americans out of poverty. The problem with the trust fund has very little to do with the Social Security program itself and a lot to do with the way our government functions generally.
So, what to do? We could begin by at least acknowledging our current predicament. The mainstream view in both academia and the media is that the Social Security program is solvent to pay full benefits through 2033, as the program draws down the trust fund. We disagree. The relevant date was 2010. The year 2010 is when contributions into the system were insufficient to cover current outlays — a discrepancy that is projected to occur every year throughout Social Security’s forward-looking 75-year budget window.
For the past two years – and every year going forward under current law – the Social Security benefits paid to older Americans have been and will be financed in part with borrowed funds. This arrangement is unsustainable. Regardless of what our government does about it, we should all start preparing accordingly as we think about how long we plan to work later in life.
The views expressed in this article are those of the authors and do not necessarily reflect the views of Analysis Group or ECONorthwest.
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