The new tax plan and budget: a tipping point for respectful retirement
This year portends not more of the same for older workers, but a classic “tipping point.” A review of Malcolm Gladwell’s book of that name captures this phenomenon:
“Gladwell argues for the proposition that minor alterations, carefully conceived and adeptly enacted, can produce major consequences for individuals, organizations and communities.”
Our body politic has debated for decades the need for, character, and details of the so-called social safety net for older workers. While other advanced industrial economies frame social policies combining healthcare, adequate pensions, and work options such as phased retirement, the United States has accepted a set of stand-alone protections that have been nibbled away at over recent years.
Even as the massive Boomer generation has moved through the workplace like the proverbial pig through the python, we have predicted but not prepared for the consequences of their sheer numbers and unexpected longevity. Ten thousand people a day are retiring now, and will do so for the next twelve years. At the same time, their need for healthcare, income and productive work grows while the safety net seems to be undergoing systematic shredding. A few examples:
- Life expectancy is up 20 years over the last few decades; the assumed “retirement age” remains stuck in the mid-60s
- Private sector pensions have morphed into under-funded 401Ks; under-funded public sector pensions are being reduced
- Payroll-financed insurance programs Social Security and Medicare have been re-branded as “entitlements” and welfare, chronic targets for cost-cutting
- The health insurance “system” has undergone convulsions that affect the most significant users of healthcare: older workers
- Working longer and flexible retirement are orphans; older workers are left with second class and scarce part-time and contract jobs
The baton is being passed from government, challenging employers to step up
No doubt many Americans believe that these deteriorating public supports should be reversed, shored up or reinvented. And such an approach may be desirable or feasible in the long run. But our reading of the American model and preferences suggests that our elderly are unlikely in any reasonable time horizon to have a late life experience resembling Sweden’s or even the UK’s. As has been the uniquely US case for the last century, different pieces of the safety net will be provided by different sectors. Within that framework, the over-arching theme of the last two decades is a noticeable shift of wealth and power from government to employers – without the enriched private sector assuming greater social responsibility.
Major political decisions in 2017 have thrown these perilous trends into sharp relief. Quietly, without great fanfare or alarm, we have reached the tipping point for older workers. At a time when older workers need increased opportunity and revenue to recover from the recession, meet the financial demands of ill spouses and aging parents and continue to contribute, support for quality employment continues to erode:
One can quibble about the details and benefits of the new tax plan and budget. Most observers agree that corporations will receive the lion’s share of gain while cuts affecting older workers and the elderly are occurring in Medicare reductions, rising health insurance premiums for the 50+ cohort, and continuing resistance to Medicaid funding—the largest single source of nursing home payments. And Congressional leaders are considering a more direct “reform” (i.e., cost and benefit reduction) of entitlement programs in 2018.
From those to whom much is given, surely more should be expected
While government is shedding responsibility for the long-term well-being of older workers and retirees, rather than use their unprecedented and newly augmented wealth to offset this trend, few employers have stepped up to the plate. One is reminded of the Allstate CEO Tom Wilson’s September 2016 Washington Post op-ed “How corporations can be a force for good” in which he said:
For decades, corporations have been expected to concentrate on one mission: Maximizing profits for shareholders. While that might have been appropriate decades ago, it isn’t now. The emphasis on profits has widened the trust gap between corporations and society, resulting in an adversarial relationship between the private and public sectors. Let me be clear: Shareholders must get a good return, but at the same time corporations must work to be a force for good in society.
I doubt that he—and I know that we—are not calling for a vastly different economy. But if we have indeed reached a tipping point for the fate of older workers and retirees in America, this is the time to build on the concept of a sharing society which goes beyond ride hailing and housing to the more equitable redesign of work and retirement.
Is it too much to ask that entitled employers consider simple steps such as:
- Robust employment beyond ages 60 or 65?
- Full access to high quality flexible work as one ages?
- Phased retirement that keeps families whole and provides critical knowledge transfer and mentoring to strengthen the new workforce and the economy?
Join us as we build the campaign to achieve these sensible changes and put our new tax cuts to work for all of us.