Thursday, June 14, 2018

Commentary on the 2018 Social Security Trustees Report

On June 5 the Social Security Trustees released their 2018 report on the program’s finances. Not much change: the 75-year actuarial deficit increased by a minute amount to 2.84% of wages while the date of the trust fund’s projected insolvency remained steady at 2034.

Following are some articles commenting or providing insight onto the Trustees Report.

The Trustees summary of their report.

  • A letter from the two former public trustees, Chuck Blahous and Robert Reischauer.
  • Marc Goldwein: As Demagogues Squawk, Clock is Ticking on Social Security.
  • Video of the Committee for a Responsible Federal Budget’s event on the Trustees Report.
  • Elizabeth Bauer: Who's Afraid Of The Big, Bad Old Age Dependency Ratio? and Against Social Security Anti-Chicken-Little-ism (On The Social Security Trustees' Report)
  • Andrew Biggs: Social Security Reform, Back Where We Started.
  • Alicia Munnell: Social Security’s Financial Outlook: The 2018 Update in Perspective.
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Thursday, May 31, 2018

SSA Policy Job Openings!

The Social Security Administration (SSA) is looking for two individuals to serve in leadership roles within its Office of Research, Evaluation, and Statistics (ORES) as the Office’s Associate Commissioner (AC) and Chief Research and Data Officer (CRDO). The AC will report directly to the Deputy Commissioner and Assistant Deputy Commissioner for the Office of Retirement and Disability Policy (ORDP), while the CRDO will report directly to the AC for ORES. The office has locations in Woodlawn, MD and Washington DC. Duty location will be determined based on the selectee for the position; however, regular travel between the two offices is expected.

The AC for ORES has responsibility for the broad research, evaluation, and statistical programs of SSA, including the:

· Study of problems of poverty and insecurity;

· Examination of expected or projected outcomes from current or modified program rules; and

· Evaluation of proposed solutions to such problems by social insurance and related programs.

The AC is also responsible for:

· Advising senior Agency officials on research findings relating to Social Security reform;

· Responding to information requests from Agency, Administration and Congressional policy makers; and

· Participating in formulating Agency-level policy and program planning.

S/he represents the research, evaluation, and statistical interests of SSA at meetings or on committees with other Government agencies, including the Interagency Council on Statistical Policy colleges and universities, research centers, and other professional organizations. As such, the incumbent makes commitments concerning research, evaluation and statistical projects and activities to be carried out, and the products to be supplied. 

Candidates for the AC position must have professional experience at a senior level (equivalent to the GS-15 in either the General Schedule (GS) or a comparable pay plan) and demonstrate via their resume and application their level of experience for each of the Executive Core Qualifications (ECQs) that are included in the job posting.

The CRDO meanwhile will oversee the technical aspects of the office's comprehensive research and statistics program to support social security policy development and inform policymakers, the public and external stakeholders on a spectrum of critical social security issues. Responsibilities for the position include:

· Developing the agency's portfolio of short and long-term research projects;

· Ensuring the scientific integrity of SSA’s intramural and extramural research products, developing program data used to inform policy decisions, authoring peer-reviewed articles on research project findings in professional journals, and improving the use of research results in decision making throughout the agency;

· Advising management regarding the statistical processes/practices the organization is responsible for engaging in as a formally recognized federal statistical agency producing statistics on SSA's social welfare programs;

· Presenting agency research projects before Congress, the Office of Management and Budget, the Interagency Council on Statistical Policy, colleges and universities, research centers, other professional organizations, and external monitoring authorities such as the Government Accountability Office, the Social Security Advisory Board, and the Office of Inspector General; and

· Fostering research, evaluation and statistical projects that tie into the Social Security research program via extramural mechanisms.

Applicants to the CRDO position must possess progressive research experience at a senior analytical/scientific level, including substantial specialized experience managing extramural social science research programs, and demonstrated experience and ability designing a portfolio of internal social science research projects. Typically, experience of this nature will have been gained at or above the GS-15, comparable pay band or level above in the federal government; or comparable position with a state or local government, or private sector organization. Applicants are required to address each of the mandatory technical qualifications (TQ) statements included in the job posting to substantiate their technical knowledge and abilities.

The complete vacancy announcement for both jobs can be found on USAJOBS; direct link below. Interested applicants may apply to one or both of the vacancies:

Associate Commissioner                   SSA-EX-500

Chief Research and Data Officer       SSA-SL-004

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Tuesday, May 29, 2018

New paper: “What Explains the Widening Gap in Retirement Ages by Education?”

“What Explains the Widening Gap in Retirement Ages by Education?”

by Matthew S. Rutledge

The brief's key findings are:

  • The increase in the average retirement age has been driven almost solely by those with more education.
  • Those with less education have:
    • seen less improvement in health;
    • faced more physically demanding jobs and less flexible work schedules;
    • experienced slower increases in lifespans, meaning less to gain from delaying Social Security; and
    • seen steeper drops in marriage rates, providing less incentive to work longer in order to retire with a younger spouse.
  • These trends make it harder for those with less education to achieve a secure retirement.

This brief is available here. Read more!

Thursday, May 24, 2018

New paper: “Modernizing Social Security: An Overview”

Modernizing Social Security: An Overview

by Alicia H. Munnell and Andrew D. Eschtruth
IB#18-9

The brief’s key findings are:

  • Many policy experts support targeted changes to Social Security benefits for vulnerable groups, such as caregivers, widows, the very old, and low earners
  • Several of these changes have been endorsed by bipartisan groups, which indicates the potential for widespread support.
  • Such changes, by themselves, would raise Social Security’s long-term deficit.
  • But if the cost increases were offset by reducing other benefits, Social Security could be modernized in a way that is both effective and cost-neutral.
  • Further briefs in this series will evaluate the policy options for specific groups in more detail, including potential offsets to cover the costs.

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Monday, May 21, 2018

New papers from the National Bureau of Economic Research

Labor Force Participation of the Elderly in Japan by Takashi Oshio, Emiko Usui, Satoshi Shimizutani - #24614 (AG PE)

Abstract:

Japan experienced increases in labor force participation (LFP) of the elderly in recent years, as have other advanced countries.

In the present study, we overview the employment trend of the elderly in Japan, and examine what factors have contributed to its increase since the early 2000s. Improved health and longevity, increasing education levels, and a shift towards less physically demanding jobs have allowed the elderly to stay longer in the labor force. However, elderly employment rebound and its timing are more closely linked to changes in social security incentives, especially increases in the eligibility age for public pension benefits. More broadly, reduced generosity in social security programs since the mid-1980s has been a key driver of the long-term trend change in elderly employment. A series of social security reforms have helped utilize the elderly's potential work capacity, accumulated due to improving health conditions and other favorable factors for LFP in the elderly.

http://papers.nber.org/papers/w24614?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Long-run Trends in the Economic Activity of Older People in the UK by James Banks, Carl Emmerson, Gemma Tetlow - #24606 (AG)

Abstract:

We document employment rates of older men and women in the UK over the last forty years. In both cases growth in employment since the mid 1990s has been stronger than for younger age groups. On average, older men are still less likely to be in work than they were in the mid 1970s although this is not true for those with low education. We highlight issues with using years of schooling as a measure of educational achievement for analysing labour market trends at older ages, not least because a large proportion of men who left school at young ages without any formal qualifications, have subsequently acquired some.

Reforms - such as the abolition of the earnings test and rises in the female State Pension Age, have pushed up employment rates.

But other factors - such as the shift from defined benefit to defined contribution pensions being offered by private sector employers and the growth in employment rates at younger ages among successive cohorts of women - are also important. We discuss the role of other cohort and economy-wide trends, highlighting that the proportion of older men and women employed in professional, managerial and technical occupations has been particularly strong.

http://papers.nber.org/papers/w24606?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Early Social Security Claiming and Old-Age Poverty: Evidence from the Introduction of the Social Security Early Eligibility Age by Gary V. Engelhardt, Jonathan Gruber, Anil Kumar - #24609 (AG HC LS PE)

Abstract:

Social Security faces a major financing shortfall. One policy option for addressing this shortfall would be to raise the earliest age at which individuals can claim their retirement benefits. A welfare analysis of such a policy change depends critically on how it affects living standards. This paper estimates the impact of the Social Security early entitlement age on later-life elderly living standards by tracing birth cohorts of men who had access to different potential claiming ages. The focus is on the Social Security Amendments of 1961, which introduced age 62 as the early entitlement age (EEA) for retired-worker benefits for men. Based on data from the Social Security Administration and March 1968-2001 Current Population Surveys, reductions in the EEA in the long-run lowered the average claiming age by 1.4 years, which lowered Social Security income for male-headed families in retirement by 1.5% at the mean, 3% at the median, and 4% at the 25th percentile of the Social Security income distribution. The increase in early claiming was associated with a decrease in total income, but only at the bottom of the income distribution. There was a large associated rise in elderly poverty and income inequality; the introduction of early claiming raised the elderly poverty rate by about one percentage point. Finally, for the 1885-1916 cohorts, the implied elasticity of poverty with respect to Social Security income for male-headed families is 1.6−. Overall, we find that the introduction of early claiming was associated with a reduction in income and an increase in the poverty rate in old age for male-headed households.

http://papers.nber.org/papers/w24609?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Pauvrete, Egalite, Mortalite: Mortality (In)Equality in France and the United States by Janet Currie, Hannes Schwandt, Josselin Thuilliez - #24623 (AG CH HC HE)

Abstract:

We develop a method to compare levels and trends in inequality in mortality in the United States and France in a similar framework.

The comparison shows that while income inequality has increased in both the United States and France, inequality in mortality in France remained remarkably low and stable. In the United States, inequality in mortality increased for older groups (especially

women) while it decreased for children and young adults. These patterns highlight the fact that despite the strong cross-sectional relationship between income and health, there is no necessary connection between changes in income inequality and changes in health inequality.

http://papers.nber.org/papers/w24623?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Changes in Nutrient Intake at Retirement by Melvin Stephens Jr., Desmond Toohey - #24621 (AG LS PE AP)

Abstract:

While the literature finding a decrease in food expenditures at retirement suggests households do not adequately save for retirement, subsequent evidence that nutrient intake is unaffected by retirement has tempered these concerns. We further examine nutrient intake changes at retirement both by analyzing a much wider range of datasets, including longitudinal data, and by improving upon the empirical methodology used in earlier work.

Our analysis yields four main results. First, unlike prior work, we find that caloric and nutrient intake fall at retirement in numerous cross-sectional datasets. We can reconcile these contrasting results as being due to well-documented differences and improvements in methodologies used to measure food intake.

Second, using longitudinal data, we also find that intake falls at retirement. Third, we show that a food consumption index used in prior work to capture the relationship between permanent income and foods eaten can severely underestimate the impact of retirement on consumption. We show that a minor methodological revision circumvents this bias and that the revised consumption index falls at retirement. Finally, while unemployment reduces the consumption index, we find, in contrast to prior work, that the impact of retirement on the consumption index is larger.

Overall, we consistently find that retirement reduces food intake.

http://papers.nber.org/papers/w24621?utm_campaign=ntw&utm_medium=email&utm_source=ntw

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Tuesday, May 15, 2018

New papers from the American Economic Association Conference Proceedings

Disability Saliency and Discrimination in Hiring (#51)
Phillip Armour, Patrick Button and Simon Hollands

Full-Text Access | Supplementary Materials

The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants (#52)
Mashfiqur R. Khan

Full-Text Access | Supplementary Materials

Return-to-Work Policies and Labor Supply in Disability Insurance Programs (#53)
Arezou Zaresani

Full-Text Access | Supplementary Materials

Time and Money: Social Security Benefits and Intergenerational Transfers (#77)
Anita Mukherjee

Full-Text Access | Supplementary Materials

In Debt and Approaching Retirement: Claim Social Security or Work Longer? (#78)
Barbara A. Butrica and Nadia S. Karamcheva

Full-Text Access | Supplementary Materials

The Changing Face of Debt and Financial Fragility at Older Ages (#79)
Annamaria Lusardi, Olivia S. Mitchell and Noemi Oggero

Full-Text Access | Supplementary Materials

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Thursday, May 10, 2018

New paper: “Working Longer in the U.S.: Trends and Explanations”

Working Longer in the U.S.: Trends and Explanations

Courtney Coile

NBER Working Paper No. 24576
Issued in May 2018
NBER Program(s):Aging

Over the past two decades, labor force participation rates for older men have been rising, reversing a century-long trend towards earlier retirement. Participation rates for older women are rising as well. A number of theories have been put forward to explain the rise in participation at older ages, including improving mortality and health, increasing education and a shift towards less physically demanding work, and changes in employer-provided benefits and Social Security. This paper documents trends in labor force participation and employment at older ages and in the factors that may be contributing to rising participation. A review of these trends and of the relevant literature suggests that increases in education, women’s growing role in the economy, the shift from defined benefit to defined contribution pension plans, and Social Security reforms all likely played some role in the trend towards longer work lives.

http://www.nber.org/papers/w24576

Among the causes of increased labor force participation, as summarized by the Retirement Income Journal:

  • A shift in employer-provided pensions from DB to DC type plans reduced the share of workers facing strong incentives to retire at particular ages, while a decline in retiree health coverage left some workers with no means of obtaining health insurance other than through their job, at least until the Medicare eligibility age of 65; both changes contributed to longer work lives.
  • Changes to the Social Security FRA (full retirement age), DRC (delayed retirement credit) and RET (retirement earnings test) have strengthened the incentive for work past the FRA, contributing to the increase in participation at older ages.
  • Three changes to Social Security – the increase in the FRA, the increase in the DRC above the FRA, and elimination of the RET above the FRA – seem likely to have contributed substantially to the increase in employment at older ages, particularly at ages 65 and above.
  • Each one percentage point increase in the DRC is associated with a roughly one percentage point increase in the employment rate of men ages 65 to 69. This estimate suggests that the five-point increase in the DRC since 1990 could explain up to half of the increase in participation of men ages 65 to 69 over this period.
  • For men ages 60 to 64, participation began to rise in the mid-1990s, growing from 53% in 1994 to 62% in 2016, a 9-point increase. For men ages 65 to 69, the trend began a decade earlier and the increase to date is 12 points, from 25% in 1985 to 37% in 2016.
  • The trend for women is quite different. In all age groups, participation has risen continuously since 1980, increasing by 17 points at ages 55 to 59 and 60 to 64 and by 13 points at ages 65 to 69. In 2016, nearly two-thirds of women ages 55 to 59 and half of women ages 60 to 64 were in the labor force.
  • There are very large differences in participation by education. On average across all years, the participation of college graduates is 25 points higher than that of high school dropouts for both men and women ages 60 to 64; at ages 65 to 69, the participation gap between college graduates and high school graduates is 23 points for men and 15 points for women.
  • Single men participate at rates 10 to 20 points below their married counterparts, depending on the age group, and these differences have been stable or widened slightly over time. In the case of women, single women in 1980 had participation rates 16 to 18 points higher than those of married women at ages 55 to 64 and 8 points higher at ages 65 to 69.
  • Self-employment is fairly popular among men, with 12 to 13% of men ages 55 to 64 and 10% of men ages 65 to 69 engaged in such work in 2016; rates of self-employment among women are about half as large.
  • The fraction of men working part-time (less than 35 hours per work) is low but rises with age, at about 6% of those ages 55 to 59 and 9% of those ages 65 to 69. Part-time work is more common for women, with 11 to 12% of all age groups working part-time in 2016.
  • Health at older ages – as measured by mortality risk – has improved substantially over time. The mortality rate at age 60 has declined by 40% for men and one-third for women since 1980. While better health may have supported longer work lives, there is little evidence that it is a primary driver.
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