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- Policy Reform Work
Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
In "Leisure Inequality: What the Rich-Poor Longevity Gap Will Do to Retirement," SCEPA Director Teresa Ghilarducci looks at the inequality in end-of-life experiences between the rich and the poor. She begins with a startling fact from the 20th century: between 1930-1960, while the life expectancy of rich men increased by eight years, the life expectancy of poor men was unchanged. Though Social Security and Medicare have improved the end-of-life experiences of poor and middle-class Americans, a chasm remains between the golden year experiences of the rich and poor.
One difference is how the children of wealthier Americans are more prepared to guide their parents through later-life. She tells of a friend of hers who recently wrote her about the difficulties of navigating the medical, financial, and legal challenges arising from her father's end-of-life care. She says they have taken her "nearly to the limits of my intellectual capacity" - and she is a health-care policy expert with a PhD!
Her friend's point summarizes decades of research. Gaps in class, education, and income translate into gaps in end-of-life care. Wealthy, educated Americans tend to have educated children who can help them make the best end-of-life decisions and are likely to be with them at the end of their lives. This has important implications for retirement policy. Cutting benefits by raising the retirement age will force lower-income Americans, who haven't experienced a large increase in longevity, to work longer and miss out on their golden years.
In "Raising the Retirement Age: A Sneaky Way to Reduce Social Security Benefits" SCEPA Director Teresa Ghilarducci writes about how raising the eligibility age for Social Security is bad politics and bad policy. Employers wanting to hire from a larger labor pool and Republican hard-liners who reflexively support decreases in government spending have long-supported cutting Social Security. Recently, it's been trumpeted as a prudent centrist policy. It's not.
First the policy. Make no mistake, raising the retirement age is a cut in benefits. As it stands, the full retirement age is 70. If you start collecting benefits before 70, you receive a lower monthly payment for life. Raising the age at which Americans can start collecting benefits will likely push the benefit-maximizing age up to an unattainable level. In general, we should not expect Americans to work into their seventies.
Second the politics. Americans overwhelmingly don't support benefit cuts. The Pew Research Center found that Americans are opposed to Social Security cuts by a margin of two-to-one. This preference persists among millennials, despite endless misinformation that Social Security will be gone by the time this cohort retires. Republicans have tried to re-brand a cut to Social Security as raising the retirement age. This is misleading at best. Raising the eligibility age for Social Security is a reduction in benefits.
We should be talking about strengthening and expanding Social Security, not weakening it.
The U.S. Department of Labor today announced a slight increase for the unemployment rate for older workers (aged 55 and over) from 3.7% to 3.8% in August. While this number represents 1.3 million older Americans who cannot find a job, this national number hides the fact that some cities are less friendly to older workers than others.
In August, the national unemployment rate for all workers was 5.1%. In contrast, the local data (ASEC September 2014) shows four metropolitan areas have an unemployment rate of over 12% for older workers, including San Jose, California (13.7%), El Paso, Texas (13.6%), New Haven, Connecticut (13.1%), and Austin, Texas (12.2%).
These cities' high unemployment rates for older workers are not necessarily related to the unemployment rate for those under 54. While San Jose and El Paso have high unemployment rates for younger workers (8.4% and 7.3%), Austin has one of the country's lowest unemployment rates (3.6%) for younger workers.
Industry clusters could be to blame. San Jose and Austin are home to hot new tech corridors and New Haven's economy is closely tied to Yale University and its status as a college town. Both would favor employing the young over the old.
There are also regional pockets where older workers struggle to find a job, such as Ohio's Rust Belt cities. Cleveland has an unemployment rate of 9.6% for 55 and over versus 5.2% for workers 54 and under. Cincinnati's older unemployment rate is 7.7% versus 6.6% for younger workers.
Economists have long understood the domino effects of lower wages and decreased bargaining power resulting from high unemployment. Add to this a downward trend in access to retirement savings plans at work and older workers nearing retirement age are increasingly at the mercy of a labor market that cannot meet their needs. Ironically, the less work they can find and the less wages they can save, the longer older workers will need to work.
Only a national solution will ensure that all workers, regardless of where they live, will be able to retire rather than resign themselves to unemployment or low-wage work. Guaranteed Retirement Accounts (GRAs) would ensure a path to retirement by providing a safe, effective vehicle for all workers to save over their working lives.