Last week on NPR, Tyler Cowen suggested that rather than going after the top 1 percent, a better cause for OWS would be the inequality between seniors and young Americans:
The fundamental rule of current American politics is old people get their way. And that’s a lot of the future problem. I’d like to see more of a focus on that, on how old people are taking money from young people through especially Medicare. And rather than Occupy Wall Street, I’d say start with occupy the voting booth and idealistic young people.
Whether young people realize it or not, the reason most lawmakers won’t touch Medicare is because they know that older Americans vote. Since lawmakers are driven by their desire to get reelected, they won’t reform the program at the core of our future fiscal problems. What I fail to understand is why so many Americans (especially the ones who are years away from being 65) are okay pushing the cost of Medicare onto their children and grand-children.
Imagine my surprise, then, when I read this piece in yesterday’s New York Times Room for Debate blog by Paul Taylor of the Pew Research Center. It shows that, contrary to common perceptions, older Americans are doing very well, especially relative to younger ones:
The Pew Research Center report published Monday looked at the economic well-being of older adults and younger adults over several decades through a wide variety of economic lenses – wealth, income, homeownership, home equity, employment and poverty.
On every measure, we found a significant widening of the economic well-being gap between the two groups, with the old prospering relative to the young.
In 1984, the age-based wealth gap was 10:1. By 2009, it had ballooned to 47:1.
Our most vivid finding concerns household wealth, which is the sum of all assets (house, car, 401(k)’s, etc.) minus all debt (mortgage, car loan, credit card and student debt, etc.). In 2009, the typical household headed by an adult 65 or older had $170,494 in net worth, compared with just $3,662 for the typical household headed by an adult younger than 35.
People accumulate wealth as they grow older, so it is not surprising to find big age gaps on this measure. However, the current gap is by far the largest since the Census Bureau began collecting these data in 1984. Back then, the age-based wealth gap was 10:1. By 2009, it had ballooned to 47:1.
But older Americans are poor, you will say. Well, less and less, actually. And among younger Americans, poverty is growing:
Our report also looked at poverty. It found that over the past four decades, poverty rates for older householders fell by two-thirds, while for younger householders they doubled.
This new data from Prof. Bruce D. Meyer at the University of Chicago debunks the idea that older Americans are living in poverty.
Consider a retired couple whose only income is their modest monthly Social Security payment; they own their home and two cars free and clear and they are living comfortably off of their savings accumulated over their careers. Although this couple is well-off by any reasonable metric of well-being, according to official poverty (or the new supplemental poverty measure) this couple is impoverished. This is not an isolated example. Many of the elderly consume more than is suggested by their income; 83 percent of elderly households own a home and 86 percent own a car.
Our studies of consumption poverty indicate that those 65 and older have much lower poverty rates than most other demographic groups and that these rates have fallen sharply over time. Using consumption data, we deduct medical out-of-pocket spending in the same way that is done in the supplemental poverty measure, but this extra cost to the elderly is more than counterbalanced by spending out of past saving. In the past three decades, elderly poverty based on consumption has fallen by more than 60 percent, while child poverty has fallen by about 25 percent. Even over the past 10 years, those 65 and older with the lowest income are now living in bigger houses that are much more likely to be air conditioned and have appliances like a dishwasher and clothes dryer. Few other groups have enjoyed as much improvement in living standards over the past three decades. Unfortunately, this progress is not reflected in Census poverty estimates.
This is important because the idea that seniors would have to eat cat food and sleep outdoors is a powerful argument against reforming programs like Social Security and Medicare. Obviously there are seniors who are poor, and we should take care of them. But we don’t need a Medicare on top of Medicaid (which provides health care, in theory, for the poorest of Americans). In fact, if the argument for government intervention is that we must provide for the poor, then it would follow that we need to reform Medicaid to better assist the truly poor of all ages because the program in its current form is cost ineffective and riddled with fraud. In addition, we should stop subsidizing health care for the many seniors who have accumulated substantial assets through their lives. Hence, Medicare should be abolished. Besides, as my late uncle used to say, “What’s the point of being the richest guy in the cemetery?”
Younger Americans unite!