An enduring puzzle of our politics is why there isn’t more generational conflict. By all rights, younger Americans should be resentful. Not only have they been tossed into the worst economy since the 1930s, but there’s an informal consensus that the government, whatever else it does, should protect every cent of Social Security and Medicare benefits for the elderly. These priorities seem lopsided and unfair.
Generational distress isn’t an abstraction; it’s repeatedly reaffirmed. Just recently, the Pew Research Center reported that 36 percent of women aged 18 to 34 live with their parents or other relatives, the highest proportion since 1940, also 36 percent. Among men of the same age, 43 percent live with their families, though that’s still below the 1940 level of 48 percent.
Spread boomers’ retirement costs more equitably, say some. Here’s Washington Post economics reporter Jim Tankersley:
“If anyone deserves to pay more to shore up the federal safety net, either through higher taxes or lower benefits, it’s boomers — the generation that was born into some of the strongest job growth in the history of America, gobbled up the best parts, and left its children and grandchildren with … a big bill to pay. Politicians shouldn’t be talking about holding that generation harmless.”
For the record, I have taken a similar position. Boomers shouldn’t be exempt from sacrifice. There are millions of wealthier older Americans (including me — born in 1945) who have saved adequately for retirement and for whom some benefit cuts or tax increases, though unpopular, would not inflict any genuine suffering. Gradual increases in eligibility ages, starting now, would similarly represent a commonsense adjustment to a graying society.
As Pew’s Scott Keeter notes, these arguments haven’t made much headway among the public, especially the young. Although the 75 million baby boomers (people born from 1946 to 1964) are flooding into Social Security and Medicare at about 10,000 a day, there’s no clamor from the young to shift some of the programs’ costs from themselves to the elderly. (Social Security and Medicare are financed with current taxes and general funds, generated mainly by workers.)
It may be that many younger workers — so-called millennials, born between 1980 and the mid-1990s — think their present economic problems are temporary. Despite high student debts and low wages, they’re optimistic. If things are bound to improve, why pick a fight?
“While (millennials) are not as satisfied with their current financial situation as are their older counterparts, they are much more upbeat about their financial futures,” Pew said after a 2014 survey. “Among millennials who are employed, only 33 percent … say they now earn enough to lead the kind of life they want, but fully half (51 percent) say they will be able to earn enough in the future.” A mere 14 percent said they won’t ever “earn enough.” By contrast, 38 percent of boomers feared they would never earn enough.
Although this could be wishful thinking, millennials may have stumbled onto something. All those retirees will do more than run up Social Security and Medicare costs. The massive departure of boomers from employment may also create a tight labor market. Jobs may be easier to find, and “real” (inflation-adjusted) wages may rise as employers compete for scarce workers. Bargaining power would shift from businesses to workers.
The magnitude of replacement needs is astonishing. Economists at the Bureau of Labor Statistics estimate that employers need to replace two retiring workers for each new job created by economic expansion. From 2012 to 2022, replacement jobs are projected at 34 million compared with 15.6 million new jobs. Consider engineers. Over the decade, the economy will need 544,300 more; three-quarters are projected replacements.
Still, the best explanation of why there is no generational war may be the simplest. “A generational war needs combatants, and the generations like each other,” says Paul Taylor, author of The Next America. Unlike the 1960s, when children often challenged their parents’ political and cultural beliefs, today’s young workers “value their parents … and they’re not spoiling for a fight.”
The result is paradoxical: While half of millennials never expect to get any Social Security benefits, according to Pew, they have protected benefits for existing retirees. Millennials seem to have subordinated their economic and political interests to their parents’. Within a family, this may be admirable; for the country, it’s an exercise in avoidance. We’d be better off with a little less social peace and a little more generational conflict.
Mr. Samuelson has written about business and economic issues since 1977.