Raising Social Security’s minimum age is bad economics

Among the ideas that have been floated for reducing the Social Security budget is to raise the eligibility age to receive benefits. It is currently 66-years of age; one year after a worker qualifies for Medicare.

It’s axiomatic that if the age is raised, the payout of benefits will be reduced. This is a simple way to cut the Social Security budget, but not without reducing the well-earned benefits of recipients. Furthermore, it is a breach of contract. Millions of Americans patiently stand in line to receive the promised rewards of years of work after having paid in mandated taxes for Social Security and Medicare.

Raising the eligibility age has a serious impact on one particular sector of the American labor force besides than the elderly. If seniors work another year to qualify for Social Security, it means that the jobs from which they previously would have retired at 66 will not open up for others until a year later. This might even be longer if eligibility age is raised more than one year. Currently, when seniors retire, their positions often are turned over to young adults just entering the labor force. Blocking off this entry for many individuals who are fully trained and ready for work places a huge burden on millions of Americans and their families.

In essence, what raising the eligibility age for Social Security recipients would do is increase the number of job slots that would be in the American labor force. On first thought, this might sound like a good way to address unemployment since there would be more job openings. However, many of the jobs are ones that are not on the technological cutting edge. The jobs that many workers in their 60s hold are becoming obsolete. In reality, these jobs actually reduce our productivity. As we presently see, a variety of sectors of our economy grow while employment stays largely stagnant. Under the best of circumstances, it will take until the end of the current decade for unemployment to decline to the pre-2007 recession levels.

Our economy has evolved so that workers must be better trained and skilled than ever before. Mechanization has removed millions of jobs that used to provide solid, long-term employment for many of our workers. While the so-called Protestant work ethic is still deeply engrained in our national values and culture, we have to face current dynamics. We will have fewer jobs, and each job may have fewer hours. Raising the eligibility age for retirement would only exacerbate this problem and put a pinch on all workers, not just those who are about to retire. Workers are in many ways victimized by our modern economy. The time is long past to penalize workers for structural changes that are not of their own making. If anything, we should be reducing the eligibility age for Social Security rather than raising it.