Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
21 February 13
was born in 1946, just when the boomer wave began. Bill Clinton was
born that year, too. So was George W. Bush, as was Laura Bush. And Ken
Starr (remember him?) And then, the next year, Hillary Rodham was born.
And soon Newt Gingrich (known as "Newty" as a boy). And Cher (Every time
I begin feeling old I remind myself she's not that much younger.)
Why did so many of us begin coming into the world in 1946? Demographers have given this question a great deal of attention.
My father, for example, was in World War II - as were
the fathers of many other early boomers. Ed Reich came home from the
war, as did they. My mother was waiting for him, as were their mothers.
When it comes down to it, demographics is not all that complicated.
Fast-forward. Most of us early boomers had planned to
retire around now. Those born a few years later had planned to retire in
a few years.
But these plans have gone awry. First, boomer wages
didn't rise as fast as we expected they would. In fact, over the last
thirty years the median wage has barely budged, adjusted for inflation.
As a result, most of us haven't saved as much as we'd hoped.
Then employers scaled back our pensions. Instead of
the predictable monthly benefits many of our parents got when they
retired, we received "defined contribution" plans - basically,
do-it-yourself pensions. Some employers initially offered to match what
we socked away, but those employer matches often shrank to the vanishing
point.
We nonetheless took comfort from the rising prices of
our homes, and assumed they'd become modest nest eggs when we sold them
and bought smaller places for retirement.
But then the housing bubble burst.
Meanwhile, whatever we'd managed to sock away in the stock market lost years of value.
We assumed we'd at least have Social Security and Medicare. After all, we've been paying into both programs for years.
Yet both are now being eyed by deficit hawks who say
the only way to avoid large and unsustainable budget deficits in future
years is to limit these programs.
For example, Erskine Bowles and Alan Simpson have just
offered another of their deficit-cutting plans - paring back Social
Security's annual cost-of-living adjustment and reducing Medicare by
squeezing suppliers and cutting benefits for higher-income retirees.
So are the boomers doomed?
Not necessarily. One possible response to the aging of
America, not yet on the table: Expand the number legal immigrants
coming to America.
As I've noted before, the biggest reason Social
Security and Medicare are projected to cost so much in future years is
because America is aging so fast.
It's not just that so many boomers are planning to
retire, and their bodies will wear out. It's also that seniors are
living longer. And families are having fewer children.
Add it all up and the number of Americans who are working relative to the number who are retired keeps shrinking.
Forty years ago there were five workers for every retiree. Now there are just over three.
By 2025, if present trends continue, there will be only two workers per
retiree. There's no way just two workers will be able or willing to pay
enough payroll taxes to keep benefits flowing to every retiree.
This is where immigration comes in. Most immigrants
are young because the poor countries they come from are demographically
the opposite of rich countries. Rather than aging populations, their
populations are bursting with young people.
Yes, I know: There aren't enough jobs right now even
for Americans who want and need them. But once the American economy
recovers, there will be. Take a long-term view and most new immigrants
to the U.S. will be working for many decades.
Foreign-born workers are now 15 percent of the
nation's workforce. At the present rate of immigration, between now and
2050 immigrants and their children are projected to account for nearly all the growth of the American population under the age of 65.
Immigration reform is already on the national agenda,
but we've been focusing on only one aspect of it - how to deal with
undocumented workers.
We need to think more broadly, and connect the dots.
One logical way to help deal with the crisis of funding Social Security
and Medicare is to have more workers per retiree. And the simplest way
to do that is to allow more immigrants into the United States.
Immigration reform and entitlement reform have a lot to do with one another.
Robert B. Reich, Chancellor's Professor of Public
Policy at the University of California at Berkeley, was Secretary of
Labor in the Clinton administration. Time Magazine named him one of the
ten most effective cabinet secretaries of the last century. He has
written thirteen books, including the best sellers "Aftershock" and "The
Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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