Today’s Tax Cuts and Jobs Act may be similar in spirit to the Kennedy and Reagan Tax reforms, but a big difference is its context, which in 2017 is the Aging of America. The megatrend of population aging – not only living longer, which transforms how we must think about things economic, including jobs – but also lower birth rates, which translate into a new proportion of old to young. This difference in the age demographic character of America today and well into the rest of our 21st century translates to a profoundly different set of variables on how we will measure success. Cutting taxes is, after all, nothing more than a “means to an end” to achieve economic growth, worker productivity and healthy employment structures.
Or, as President Trump said of the legislation, “it's really, above all else, it's a jobs bill.”
That “jobs part” of our new law will also require a different mindset and culture about how we live our lives after, say, 60 – given that the 20th century idea of retirement is no longer sustainable. Will the idea of “jobs creation” we expect from the Tax Cut also include those who are over 60, a group comprising a growing portion of society? And what will it take to re-calibrate our thinking about keeping all those older people employed, even if differently compared to how we defined the character of work during the Reagan or Kennedy tax reform eras? How might want their own businesses, but need some tiny slice of the $15 trillion global economy to help fund that startup? This issue is no small matter, as Bruce Wolfe, Executive Director of The Blackrock Retirement Institute so clearly states: “… getting more older citizens to extend their working life, along with increasing female participation, may be the single, simplest prescription for addressing the problem of slow global growth.”
This “older workers” idea is also of a piece with our challenges regarding the entitlement spend: if we can keep Americans over 60 working, we can literally change the arithmetic around the public fisc.
This shift in how old you can still be to work is itself transforming rapidly, even if most HR departments have yet to catch up. Consider the latest research out of Transamerica’s Center for Retirement Studies® (TCRS), Wishful Thinking or Within Reach: Three Generations Prepare for “Retirement,” which reported that many workers are now planning to live to age 90 (median) and only 18 percent are very confident that they will be able to fully retire in the 20th century style with a comfortable lifestyle: “Many are envisioning retirement as a new chapter in life that involves continued work but with more free time to pursue personal interests,” said Catherine Collinson, president of TCRS. “The big question is whether their vision is wishful thinking or within their reach.” A full 30% are now citing some form of paid work as a retirement dream. This latest data from Transamerica found that more than half of workers expect to retire after age 65 or do not plan to retire and 56 percent plan to continue working at least part-time in retirement. Indeed, one of the more interesting findings is that 75 percent say they want to keep working because they know that “being active” and “keeping my brain alert” are good things.
If working can have an impact on our health spending – private and public – isn’t that another very big reason to keep the momentum going on this culture shift?
Nor is it coincidental that another leader in defining, understanding and valuing the Longevity Economy, Bank of America Merrill Lynch, brought us parallel and reaffirming data that the “part about jobs” in 21st century America is changing – their latest, groundbreaking study, The Journey of Caregiving: Honor, Responsibility and Financial Complexity, examines a growing trend whereby older workers do double and triple time as family caregivers. This time has impact on their pocketbooks, emotional strain and workplace productivity, with a full 61% telling us they go to work late, leave early, lose time during the day and/or decline opportunities for promotion because of caring for mom or dad. What we learn from these data is not only that work is changing, but that workplace norms must change along the way. If American workplaces have been adapting to the needs of childcare in order to attract and keep young mothers working, now it is time to adapt to the needs of older workers and their elder caregiving challenge, as flagged by Bank of America.
If we are to make good on the political promise of the jobs part of Tax Cuts and Jobs Act, we will have to re-imagine work and retirement to align with the reality of 21st century age demographics. In a profoundly important, but little noticed report from the U.S. General Accounting Office (GAO), the simple but powerful conclusion is that Americans’ retirement security is at risk. And that risk will have impact on the economic growth we now expect to be stimulated by the events out of Washington this week.
The GAO Report came out in October with barely a notice, but should now be fully examined in light of the vision for growth and jobs creation reflected in the nation’s seminal new Tax Cuts and Jobs Act. Surely, that vision must include working longer and differently – as Americans want to do, fiscally need to do, and from a health perspective will benefit as they do.