OPINION: Advanced economies could ease one major source of inflation by inducing more people to join the workforce, especially those at the two ends of the labor barbell: older people and young people.
SAN DIEGO, Calif. —In the past few years, a million retired Americans have picked up a pickleball racket. We would have less inflation if they had picked up a hammer, wrench, or pencil instead.
“ At the same time, more than 20 million prime-working-age Americans effectively wake up each morning, smell the coffee, and then scroll through cat videos on TikTok until lunch. ” Three smart strategies A smart supply-side labor strategy has three prongs. It should draw some of the “unworked” back into jobs by correcting public pension distortions, attacking the epidemic of occupational licensing and credentialism, and defending gig workers and the platform economy from heavy-handed regulation.
To manage this imbalance, pension taxes for seniors should be eliminated when they reach a certain number of years in the workforce. After 45 years, for example, an individual would be “paid in full” and could continue to work without facing penalties or payroll taxes. Too many energetic seniors are moving to “active” communities too soon, indulging in rum punch when they might prefer punching a time card.
With a smarter supply-side labor strategy, 16-24-year-olds who pay into government retirement plans would be credited at double the current payout rate when they retire. A 20-year-old who earns $15,000 in 2022 and pays about $1,200 in Social Security taxes would be credited at retirement as if she had earned $30,000.
No surprise then that IBM IBM, -1.60% announced that half of its U.S. jobs are now open to anyone with the right skills, and Ernst & Young flung open its doors to non-university grads. To excel at a tech job requires staying on top of the latest industry innovations—hardly a specialty of tenured professors lecturing from last year’s notes. Governments can take the lead by hiring the best candidates, not necessarily those with gilded diplomas.
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