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Reich writes: "Why did so many of us begin coming into the world in 1946? Demographers have given this question a great deal of attention."

Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)


Connecting Entitlement Reform to Immigration Reform

By Robert Reich, Robert Reich's Blog

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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+19 # chicagoflygirls 2013-02-21 23:42
I agree, especially since many immigrants here now are, in fact, already working, with much of their income off the books. In fact, lots of legal citizens are not paying full taxes either since enforcement is too lax. We need to get everyone working and everyone paying their fair share, and collect it for the good of all. For that we will need fairness and a sense that America is a fair and equitable place. And for that, we must close tax loopholes mostly used by the rich and businesses with lots of accounting power. Salaried workers are the real wage slaves in the US right now... with their taxes withheld, and few opportunity for deductions.
 
 
-1 # robcarter.vn 2013-02-22 23:23
Spot on Robert Reich, but don't forget Vietnamese Migrants are now sending $4bn a year home to help their families get out from under.

I don't get Aussie pension living in Vietnam 25 years I am forces to austerity of my saved pennies, & friends gifts. Why? Well our early Spanish migrants like Viets sent remittances home then get welfare of one form or other even transport their Australian pensions to retire rich in poorer Spain. Viets where doing it when I mover here 25 years ago, and I expected the same I paid Australia tax for decades in hope but by age 65 some 3 years back it was removed and I get zilch.

But yes USA must get the Romney 47% non-workers back in jobs and de-mechanise the Robots or flounder. You talk 7%-8% unemployed because they are getting entitlements for a year and forget the other 47-8% or 39% who just don't have a stable job.
 
 
+3 # pbbrodie 2013-02-24 10:03
Riech left off one of the most important considerations here. The cap on payroll taxes MUST be eliminated so that everyone pays their fair share. Those who earn less than about $110,000 per year pay payroll taxes on 100% of their income, yet those making in excess of $400,000 per year pay payroll taxes on about 25% of their income. The more they make, the less percentage of their income they pay payroll taxes on.Let's make the payroll taxes fair and equitable by lifting the cap and their want be any pressure on keeping Social Security and Medicare afloat!!!
 
 
-18 # Walter J Smith 2013-02-22 00:08
"One possible response to the aging of America, not yet on the table: Expand the number legal immigrants coming to America."

Yeah, we need a larger pool of the unemployed.
 
 
+15 # BradFromSalem 2013-02-22 08:06
Actually, the number of employed is too low and the need for work to be done is high. Work such as reinventing our infrastructure and education system as well as migrating our energy sources away from burning stuff.
That is just the top of the iceberg.
So to alleviate the need for people to do work without stressing the labor market put the unemployed to work doing the stuff I just listed. There are lots of other actions that will put people to work as well, lower the hours per week to 36 at current pay, lower the age fo full SS benefits and raise the benefit amounts.
There, no more pool of unemployed!
 
 
+5 # rockieball 2013-02-23 08:37
Wrong. Immigrants come to this country to work and to make themselves a better life than what they had. But then they run into racism and the bigots who scapegoat them for the problems of the country. It has been that was since the 19th century when the Irish and Chinese built the railroads, Then came the Germans to settle the Midwest and the Italians to work the factories. The blacks were the scapegoat of the south. When the job was done it was "Go back where you came from, you're not needed or wanted here." The right likes to make everyone think that today only the Hispanic and blacks are unemployed, on welfare and food stamps. More so in the south than elsewhere. That is far from the truth. All our ancestors were immigrants including the American Indian. they were given the chance yet to many today want to deny that chance to others coming here. the statue of Liberty does not say "Give me you well rested, well fed, and rich." It says the opposite.
 
 
+8 # Walter J Smith 2013-02-22 00:10
"One logical way to help deal with the crisis of funding Social Security and Medicare is to have more workers per retiree."

This is true. But until we get our government back from Wall Street, just packing in more bodies without more jobs makes about as much sense as re-electing democrats and republicans.

Wall Street wins again.
 
 
+4 # egbegb 2013-02-22 00:45
What do you, Robert Reich, think "entitlement reform" is?
So many liberals and progressives use words and phrases that have different meanings to different people. If you are
going to use the phrase
"entitlement reform"
you must define what you mean by "entitlement".
 
 
+20 # Ralph Averill 2013-02-22 04:17
The economic model that is based on growing markets and growing populations, and a constant influx of cheap labor, has to change. What if we boomers had had as many children as our parents? (There were six in my family.) There are few jobs, and fewer good ones, for young adults now, what if there were 20 million more? Planet Earth is past it's carrying capacity for human beings.
There has to be a new model, one that is not based on greed and selfishness. During the last thirty years worker productivity has grown and grown. During that time the productivity of wages, buying power, has not. Where did all that increased wealth go? That's why we can't fund Social Security and Medicare.
BTW, the reason for the baby boom wasn't choice. In those days birth control was illegal. (Condoms said "For prevention of disease only" on the packaging. Really!) No pill, no iud, no sexual revolution, no women's lib. Anybody want to go back there?
 
 
+1 # ladybug 2013-02-24 15:01
Not so sure about that-my mom used a diaphragm But she may have needed a medical reason to get it, as a prescription. Birth control/family planning was pretty controversial
 
 
+15 # Trueblue Democrat 2013-02-22 05:22
"But once the American economy recovers . . . ."

Tell me what basis there is for thinking our economy will ever recover. We continue to hemorrhage jobs to the Pacific rim, mostly to China. (The Congress won't even readdress the legislation that rewards US corportions for exporting jobs.) The 98 percent continue to lose purchasing power while the 2 percent (who don't spend significantly) continue to stash away more and more of their unearned income. Factor in that much of what the 2 percent does spend is spent overseas or on imported luxury items, while much of their loot is stashed in the Caymans and other tax shelters.

A country might conceivably overcome such handicaps, but not one that is governed by corrupt, bribe-taking pols who invariably support legislation that is most hurtful to the national economy.

Today's rising tide might very well lift all yachts (at least temporarily) but it swamps the average person's lifeboat.
 
 
+3 # cmp 2013-02-22 09:38
~"Today's rising tide might very well lift all yachts (at least temporarily) but it swamps the average person's lifeboat."~

It's a great analogy! I really do love it!

But actually, if it's high tide there, then it has to be a low tide here..

It kills me that politicians this phrase interchangeably for Globalization and they have no idea, how much they are really telling us all the truth.

But also, the high tide will cycle approximately every 12 hours. How long has our cycle been?
 
 
+2 # Norma 2013-02-22 06:22
You are right on Robert!
 
 
+10 # cwbystache 2013-02-22 07:24
"When the people have nothing more to eat, they will eat the rich"--Rousseau , on the French Revolution
 
 
+8 # RLF 2013-02-22 07:47
Letting a lot of immigrants into the country is just a way of kicking the ball down the road. What about when THEY retire? Do we let them in without letting them collect on all of the benefits of being citizens? The only way to get over this hump is to go through it by getting sufficient monies into the treasury and using it for what it was intended. There will be pain but creating another population boom is not a solution, it just places the problem on a future generation.
 
 
+6 # MidwestTom 2013-02-22 07:48
Two years ago my company spent about $6,000 trying to get an H1-B1 visa for an African who had graduated from an American University, and we failed. Since he some day wants to return here legally he went back to Africa. The quote for educated foreigners has been cut to under 300,000 I was told. Meanwhile we raised our quote for Middle Eastern people from Muslim countries to over 250,000. We also have millions of low skill Americans looking for work, while we are considering legalizing millions of people in our midst here illegally with no skills. It is truly hard to make sense out of our immigration policies.
 
 
0 # ladybug 2013-02-24 15:03
We need farm workers-how about those "low-skill" Americans? Oh, wait, farm work is actually skilled labor. Just try it.
 
 
+10 # Poliwonk04 2013-02-22 07:58
We have enough people to fill the working population now. We just don't have enough jobs. They have been taken overseas. Bring the jobs back to this country and we will have enough payroll deductions to pay Social Security for this generation and future generations.
 
 
+4 # cwbystache 2013-02-22 08:26
I've been following NPR's series of reports on H1-B1 visas in the last week--they've been looking closely at the issue of low- (or no-) skilled Americans vs. low- (or no-) stilled illegal workers vying for the same jobs. One construction company owner must've stopped a lot of people in mid-sip of their coffee when he said almost offhandedly, that "white" guys applied and worked in about the same numbers as the hispanic guys he used to get lots of, but the big difference was that the white guys failed their drug tests, and the hispanic guys didn't.
 
 
+12 # cmp 2013-02-22 08:57
During the 1950's a common phrase amongst the middle class was "for better, for worse but never for lunch." A lot of the households were sustained with just one income.

Then, JFK lowered the wealthy and corporate marginal tax rates. LBJ opened Tijuana (Free Trade.) And, here's the biggy, International Banking was greatly expanded.

During the 70's, 80's and 90's, in order to sustain a household, American woman were forced to join the workforce. This effectively was our primary "Immigration Policy" by almost doubling our workforce. According to the Bureau of Labor Statistics this trend stopped inflating our over all number in 98. Where was our corrupt gov then? They were busy shipping jobs and creating stock bubbles. But, did any of this 30 year growth trend solve any of our problems? No, household income's still went down. 40 years later, woman are still glass cieling-ed. Retirements are sucked dry before our eyes.. Why?

Unfettered hot money and International banking, that's why. Globalization isn't about Fair Trade or Rising all boats. It's about modern day, International Pirates who sail Continent to Continent looting money and corrupting citizens laws.. From the United States to Mexico, Central America, South America, Africa, India, S.E. Asia, Spain, Greece, Ireland, Iceland, Italy, the former Soviet States, on & on & on..
 
 
+1 # Philothustra 2013-02-22 09:12
Mr. Reich's thinking is badly off kilter, but it is true that if the current population of illegals was given SSNs (many already do pay in
taxes) that would help fund SS over the long haul. We have high official" unemployment now, but higher unemployment among the low-wage, low-skill undocumented population. I concur with Midwest Tom about h1B1 vissas- it is nearly impossible for well-ducted, skilled and willing worker to enter and remain in the US.
Try going to Mexico, the EU, Japan or China and
taking a job or starting a business? No can do.
No nation in the world opens the floodgates to
the third world.

Some kind of reform is needed that reverses the present system that rewards illegal entry.
If we legalize them as guest workers, they can
pay the taxes everyone else does and sustain
our "entitlements". ...
 
 
-1 # randyjet 2013-02-23 11:09
I wish that it were that simple. The FACT is that those illegals work off the books for the most part, about 50%. I doubt that they will go to their crooked employers and demand that they be put on the books and have all the taxes withheld, such as state income tax, FICA, Medicare, Medicaid, and Federal income tax. Nor do I think the employers will suddenly confess to the IRS that tehy have been cheating all those years. In FACT, the IRS pays OUT over $4 billion/yr to illegals who use stolen or ficticious numbers to get the EIC of $5,100/per household. So they get a refund of ALL of their Federal income tax, PLUS the EIC if they work on the books. So even giving away SS numbers and legalization, will not result in any increase in revenues.In FACT, since they will become eligible for WIC, Medicaid, and many other programs, such as unemployment, and food stamps, we will see another outflow of money rather than an influx.
 
 
+5 # giraffee2012 2013-02-22 09:56
The simple solution is to raise the CAP on the RICH - why do THEY get a TAX break (i.e. pay only a small % of their income) along with their other tax breaks?
 
 
+3 # thethinker 2013-02-22 10:10
Importing more workers (and increasing population) to compensate for an aging population is a dangerous Ponzi scheme.

Our economy is part of our environment - dependent on natural resources and the ability of our environment to absorb the pollution created by our economy. We cannot continue to add more people to our already overcrowded (315 million people) country without massive environmental and resource issues.

Mr. Reich is an old school economist. Very smart, but seems to assume resources are unlimited and so is the ability of our country and planet to withstand an ever growing population.

We need a stable population and a steady state economy - not an unending growing population and economy, which is no longer possible
 
 
+1 # marthature 2013-02-22 10:28
We can't let those immigrants in, nor let them become citizens, they'll all vote Democratic!
 
 
-3 # amye 2013-02-22 10:37
One more item Mr. Reich forgot to mention....the new immigrants will be the ones to buy our houses at higher prices when we retire! I often wonder who will buy my house when I retire. The answer is an immigrant family!
 
 
+4 # reiverpacific 2013-02-22 11:49
Actually, the likes of INTEL, rather than exporting jobs overseas, have now created a new dynamic, IMPORTING I.T. "white collar" engineers from India at vastly reduced salaries than they'd pay US born counterparts (I've often wondered what kind of visas they acquire?). These folks are already from the new middle or upper classes or they'd never have been able to attend college in India, Europe or the US.
So you now have a strange dynamic of a home based white-collar almost sweatshop milieu by the corporate state and it's lackeys, hence an increasingly shrinking incentive for young Americans to go to college with some possibility of a livelihood at graduation, especially with the burden of debt they are asked to pay back, job or no job.
Strangely related to this, one of the few growth industries I'm seeing here outwith the Military-Indust rial behemoth, is "Medical Billing" a.k.a. "Let us teach you how to deny insurance claims" in usually private colleges -no wonder there is little hope of a Universal Health Care system here.
Best way to retire comfortably -run for office; if successful, you'll have a lifelong safety net but be able to deny this to voters and whilst in office, have lobbyists burrowing through the back entry of your office to get you on their payrolls.
Oh but I forgot -you have to be stinkin' rich or have as powerful corporate sponsor to run for office in the first place and be at your kind sponsor's constant beck and call!
 
 
0 # boomerjim 2013-02-25 12:54
The reason there are so many of us, Boomers, is not as simple as stated. Note that after WWI many guys came back to the States, but there was no baby boom then. The best explanation I have seen is the combination at the end of WWII of both savings that could support larger families(wartim e employment at good wages with rationing meant more saving) and the availability of labor-saving devices, which lowered the perceived time cost of raising a child.
But I'm glad to see recognition that the demographic strains relate not just to the Boomer generations but especially to the overall aging of the population, with every cohort tending to live longer. This means that part of the strain on Social Security and Medicare will be alleviated as we Boomers die.
But instead of focusing only on the numbers of workers supporting retirement for elders, we should note a major reason why there is a revenue problem with current workers, and why the "reforms" of 1986 may fail: the shift of national income toward the rich and the FICA cap that results in increasing proportions of such income not being taxed. Raise or eliminate the FICA cap and much of the problem will be resolved.
Note further that Social Security is solvent for about 25 more years -- what other government program, or private initiative, can claim that?
 
 
0 # Smokey 2013-02-26 19:10
One of the big question is seldom raised.

"How will the boomers behave as they enter their last years?"

Will the boomers become an enormous political force working for justice? Or will they sit on the sidelines in American politics?

To borrow an old question from the 1960s, "Will the boomers be part of the problem or part of the solution?"
 
 
0 # sandyclaws 2013-02-27 08:22
Some of the immigrants could become caregivers for the elderly boomers. But we must keep in mind the fact that we are having serious water issues all over the world. There are some farmers in parts of this world are committing suicide because they no longer have water for their crops. Here in Florida we are having a serious over pumping problem depleteing our aquifer. Even in light of that fact, the growth people are saying with a smile on their face, more people will come and there is nothing we Floridians can do about it. The average American uses 5 times more resources than he should. The more Americans we make, it is like increasing the drain on the earth's resouces by a factor of five. We will be getting refuges from drought and lack of water. We need to make a lot of changes world wide not just here. We need to stop squandering our water resources and stop polluting them with fertilizers and fracking. Oil needs to be a whole lot more expensive! Costs will be the only thing that will save us from destroying the earth. We can't depend on the politicians!
 

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