From the Front Lines of the Generational Wars

Reading the NYT story this morning about the decline in law school applicants, I got struck by a curious irony.  The subject is generational wars and the labor force.  We've been telling ourselves for years on of our major headaches is the giant vampire squid of retirees extracting sustenance from an ever (relatively) smaller workforce.

Maybe someday, but for the moment, it's just the reverse, isn't it?  I mean--we may not yet be Greece or Spain, with youth unemployment rates north of 50 percent.   We don't have anything like those numbers yet, but the youth number does run something like double the general rate.   Conventional unemployment numbers those who aren't trying because they are in school.  They don't count those who have simply quit trying and I wonder--is the "quit trying" (home in mama's basement) number higher for kids than it is for adults.  And I read that the pension model is in some places exactly the reverse of the common understanding: the old are sharing  their pension checks with the unemployed young, turning the old age benefit into a general support net.

At any rate if we are going to depend on the kiddies in our dotage, we'd better find some way to put them to work.

Floyd Norris Minus the Long View

Foyd Norris offers a useful reminder that public pensions aren't the only ones in trouble: private employers, too, are busy stiffing their lifers and loyalists as fast as they can. It's a useful summary, and my guess is that it spotlights at least one reason why some segments of the electorate get so bitter about the thought of having to bail out the public sector: we're not getting ours, why should they get theirs. As an aside, I'd venture that the same sense of discrimination may explain (some of) the hostility to public employee unions, but leave that one for another day.

The only thing really odd about the Norris piece is that he never points out how this tradition of greed and betrayal is nothing really new: employers have been stiffing the the pension plans since there first were pension plans. It's the capitalist corollary to the corrupt union bosses who looted their union-sponsored funds although I don't recall the great and good getting nearly so upset over the management promise-breakers as they did over the labor looters. To my recollection, the pension-reform issue that most excerised the greedy bosses was the matter of balance-sheet reporting: put our true iiabilities on the balance sheet and disaster will follow! For the gods; sake, don't make us tell the truth!

But I digress. Here's a chart (H/T USNews), now three years old, of the 10 largest fund failures in history up to that time. I note that four out of the ten are steel: once the monarch of American industry, it's the monarch that never learned to keep up, that stood by paralyzed while the market changed and its protected central position disintegrated through its fingers.

The other is, of course, airlines, of which we could say "legacy carriers"-those who never learned how to adjust to the new world of airline degregulation. Idle thought, could it be that the greatest enemy of the union movement in the post-war period was our greatest modern Republican president, Jimmy Carter?

More Pension Penciling

To solve the pension problem, make workers work longer: I've heard it before and I've passed judgment on the point, however briefly. But here's a point which (though it cannot be original with me) I have not seen in the debate so far. That is: consider retirement protection as a function of lifespan.  The average American 65-year-old male can look forward to something north of 17 years of life.   In 1940, by Social Security's own account, it was more 12.7 years.  Translated into percentages, that means that a 1940 retiree was looking forward to a retirement equal to 16 percent of his working life.  The comparable figure today would be 20 percent.  So to have the same percentage of life in retirement, today's retiree should keep working until he is a bit over 68 1/2.

Today's Number: 18 Percent

The Economist reports that "82% of senior California Highway Patrol officers discover a disabling injury about a year before they retire."  I want to know about the other 18 percent: are the the Quixotes of good  behavior, still tilting at the windmill of corruption in a fallen world?  Or are they bureaucratic nominees for a Darwin award, not even competent enough for a dab of mainstream corruption?

Easy for You to Say...

Found trawling through the StatCounter links: somebody has translated this page of Underbelly into Japanese. Underbelly groupies will of course recognize it as one of my many learned and insightful commentaries on pension issues.