Consequences Of Discouraging Older Workers
September 10, 1999
When Ronald Reagan reached age 73, he was fighting his second presidential election campaign. Federal Reserve chairman Alan Greenspan is now also 73. They could afford to work past the age for Social Security to kick in. But millions of Americans are out of work because of age or lured out of a job because Social Security reduces their benefits if they continue to work.
- Only half of men aged 60 to 64 are still in the labor force.
- Because of immigration -- which adds younger people to the work force -- the number of people between 25 and 50 will continue to grow until 2020, but only by 3 percent over the whole period.
- Since the old of the next half century have been born already, the world's most productive countries are becoming its oldest.
- According to estimates by the Organization for Economic Cooperation and Development, the rise in dependent oldsters will reduce America's living standard by 10 percent below what it might have been by 2050.
While older people seem to be healthier than ever before, the benefits of retirement have risen relative to costs -- not only for Americans, but for workers in European economies. Just when the old are most needed in the work force, government policies encourage early retirement.
In some countries, it is illegal to work while drawing a pension. In others, workers can only draw a pension after leaving their current job.
In the U.S., those eligible for Social Security lose $1 for every $2 in benefits after they make over $9,600. Add in payroll taxes and income tax, and that is the equivalent of a marginal tax rate of up to 80 percent.
Source: "Ageing Workers," and "Let Old Folk Work," both in Economist, September 4, 1999.
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