June 30, 2023
The Washington Post has used both its opinion and news sections to push for cuts to Social Security and Medicare for many decades. It continues this effort with a piece in its series “Work Reimagined.” The headline tells it all: “More Americans are retiring than ever before. See what that means for you.”
The basic point is true. With baby boomers now almost all in their sixties or seventies, the share of the population that is retired is increasing, but the piece hugely misrepresents the dimensions and implications of this trend.
In terms of the dimensions, the piece tells us that it defines a retired person as someone over age 60 who is not in the labor force. That is an interesting metric. This is not a person who is getting Social Security or Medicare. The latter program requires that a person be over age 65 or receiving disability benefits. Workers and their spouses can qualify for benefits at age 62, but most choose to delay collecting until later into their sixties.
If we are interested in the ratio of workers to Social Security beneficiaries, we can get that one right from the Social Security Trustees Report. It tells a different story than the Washington Post.
While the Washington Post tells us that there were roughly five workers per retiree from 1980 to just past 2006, when the baby boomers began to hit 60, the Social Security Trustees Report says that the number of covered workers per beneficiary had fallen to 3.2 by 1975. It hovered near this level until beginning its downward trend in the first decade of the century, as baby boomers started to collect benefits.
The downward trend for both sets of projections after this point is similar. The ratio of workers to beneficiaries is currently about 2.8 in the Social Security projections. It is projected to drop to 2.1 over the next 40 years. The Post has it edging down to 2.7 by 2060.
While the basis for the Post’s projections are not entirely clear, my guess is that they are simply showing the ratio of the age 20 to age 60 population to the over age 60 population who are not working. This is not necessarily a very useful ratio, since many people in the former group are not in the labor force and many people over age 60 are not collecting benefits.
And, it is worth noting that the share of the age 20 to age 60 population who are not in the labor force fell sharply over the period in question, primarily because of the entry of women into the labor force. Here’s the labor force participation rates for this group since 1960. It went from roughly 68 percent at the start of the period to 83 percent at present. Even this increase understates the rise in work from this age group, since women are far more likely to be working at full-time jobs today than forty years ago, when a large percentage of women were working part-time.
But overstating the increased burden of an aging population is only part of the misrepresentation here. The flip side of an aging population is a smaller population of young children. Children also don’t work, or at least until Republicans succeed in rewriting child labor laws. Society must cover the cost of educating and providing care for children.
If we looked at the combined dependency ratio – the ratio of both children under age 18 and people over age 65 to the working age population – this peaked at 0.946 in 1965, when the baby boomers were still children. It fell to 0.669 in 2005, as the baby boomers were in their prime working age. With the aging of the baby boomers it has been rising gradually, and now stands at around 0.730. It is projected to continue to rise gradually, hitting 0.841 in forty years. The Trustees don’t project it ever getting close to its 1965 peak.
So, where is the demographic horror story?[1] We will have to reallocate resources from other things to meeting the needs of an aging population, but we also had to reallocate resources in the 1950s and 1960s to meet the needs of a huge flood of children. That is the sort of thing that competent societies do. It is also the kind of thing that should be possible when it is widely anticipated and happening over many decades, as compared to, say, a climate crisis that many politicians are determined to ignore.
In considering the cost of the aging population it would also be reasonable to mention that we pay twice as much per person for our health care as people in other wealthy countries, with no obvious dividend in terms of quality. If we paid the same amount as people in places like Canada and Germany, we would save more than $2 trillion a year (roughly 9.0 percent of GDP).
Rather than looking to cut benefits to retirees, we could look to cut payments to drug companies, medical equipment manufacturers, insurers, and doctors. But, you are not allowed to make this point in the Washington Post. They are determined to paint a picture where the only option is cutting benefits that retirees depend on.
[1] The sixties would look even worse if we used the actual number of workers, rather than the working age population, since a much smaller share of women were in the paid labor force in the 1960s than at present.
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