Zeev's Turnips Patch-No Politics (ZEEV)

[Lane Hall-Witt]

Jetson--

You're certainly correct that the United States has some ability to compensate for its declining worker-retiree ratio by importing labor from abroad; the U.S. remains a desirable destination for people who choose to leave their homelands. However, immigration trends have not reversed the trend of the worker-retiree ratio, and going forward it's highly unlikely that it will. Culturally, I find it hard to imagine that the U.S. would be willing to absorb the large number of immigrants who would be necessary to reverse so powerful a demographic trend.

You're correct too about the problem of income disparities. Immigrants workers entering the labor force tend to make less than retiring U.S. workers leaving the labor force. Not only this, but younger workers entering the labor force also tend to make less than retiring workers, because of the role of seniority in determining payscales. To a degree, the problem of income disparities is constrained by the fact that the Social Security tax only draws on incomes up to a certain maximum limit, but it's still an important issue when we add it up on the scale of the U.S. economy.

Obviously, as you suggest, inflation and benefit reductions are problematic ways to address the longer-term problem. I would add: so to are increases in Social Security tax rates. But at some point, and soon, something will have to give.