As the world’s population ages and fewer people are choosing to have children, global pension plans, like Social Security, are struggling to keep up.
France, Britain, and China
In France, the Parliament forced an age increase through without a vote, angering France's powerful unions.
There have been sporadic strikes in the country, but for Thursday, there’s a nationwide strike planned. The strike is expected to affect about 25% of the nation’s intercity rail and stop most public transit in Paris. Hundreds of flights in and out of Paris are expected to be affected, even canceled or rerouted. The city is braced for riots as the French express their anger at being forced to work until the age of 64.
In Britain, ministers have delayed a vote to raise the retirement age as new reports show the life expectancy in the country is falling. The vote would have increased the state pension age to 68 from 66. Politicians in Britain and other nations are looking at the unrest in France as a warning.
Members of Parliament (MPs) are warning the Parliament that increasing the age of the average pensioner would be unwise since the rules for taxes on pensions have recently been relaxed on the wealthy in the country.
China is similarly planning to raise its retirement age. The nation’s leaders are looking at a “progressive” plan. Those near retirement age might only have to increase their time at work by a few months, but younger people can expect to work years longer. All of this in a nation that has among the youngest retirement ages, 60 for men, 55 for white-collar women, and 50 for female factory workers.
Proposed Changes to Social Security
In the U.S., a group of Senators have proposed raising the mandatory retirement age of commercial pilots from 65 to 67 to ease the employee shortage for airlines.
Proposals to handle Social Security in the United States range from increasing the eligible retirement age to collect benefits to proposals that would allow politicians to simply defund Social Security by making it “discretionary spending.” The move to make it discretionary doesn’t make paying Social Security taxes discretionary for the average American, so the government would essentially simply get a new source of revenue while cutting or eliminating Social Security benefits at will.
Republicans and Democrats are at odds on how to handle an aging population and fewer workers. 75 million Baby Boomers are expected to retire by 2030. "The Great Retirement" will put more strain on the Social Security system than ever before. While everyone in Washington agrees something needs to be done about the stress on the Social Security system, there is vast disagreement about how to handle it.
Democrats advocate increasing the Social Security tax limit. Social Security is only taxed on the first $160,200 of income. Democrats would increase to as much as $400,000 to put money into the fund.
Republicans have been struggling to build a message that Americans would find palatable. Several Senators and Representatives have been caught on film stating, in no uncertain terms, they wish to eliminate Social Security and Medicare altogether. Most Americans bristle at these proposals as many have paid into the system for a lifetime, expecting it to be there when they retire.
The Social Security Administration wrote that "The last 11 Trustees Reports have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Fund reserves would become depleted between 2033 and 2035 under the intermediate set of assumptions provided in each report. If no legislative change is enacted, scheduled tax revenues will be sufficient to pay only about three-fourths of the scheduled benefits after trust fund depletion."
The SSA website lists a number of proposals from members of Congress to fix the solvency issue. Thus far, none of the proposals have won widespread bipartisan support and Congress is stalled in fixing the issue.
Many analysts feel that whichever party gets control of Congress and the White House in the next few election cycles will decide if Social Security survives and how it will be paid for.
Labor force participation
Despite a narrative by some in national politics and on right-wing television that the collapse of Social Security is because young people are lazy and not working, workforce participation has been fairly steady for a decade and presently much higher than the 1950s and 60s that most conservatives look back upon with fondness.
Labor force participation has been fairly steady since 2013 at about 63%. During the 1950s and 1960s, participation was about 58%. It peaked in the late 1990s and early 2000s at just over 67%.
The COVID-19 pandemic caused a massive crash in the number of people in the workforce. It has since bounced back to 62.5% in February.
Labor force participation is a measure of the percentage of the population that is working or looking for work. In contrast, global labor force participation has been dropping since 1990.
The Kentucky Daily