TEXT OF STORY
Bob Moon: The Social Security system needs a new source of cash. Baby boomers are about to retire. And there aren’t enough younger workers paying in to support them all. So commentator Robert Reich offered a solution on our show yesterday.
ROBERT REICH: One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree. And the simplest way to do that is to allow more immigrants into the United States.
Reich says the government should encourage immigration because a flush of younger, foreign-born workers would make up for the gap we have now. This fix didn’t seem like much of a fix at all to many of you.
Listener Jonathan Gyory of Winchester, Mass., sums up a bunch of letters and comments we got on our Web site.
JONATHAN Gyory: This is just a slow-acting Ponzi scheme to help maintain retirement benefits in the short term.
Gyory and other listeners complain it wouldn’t solve the problem once all those immigrants themselves reach retirement age.
So we decided to consult someone who studies these things for a living. Dowell Myers is a professor of demography at the University of Southern California. Thanks for joining us.
DOWELL MYERS: My pleasure.
MOON: So is the former Labor secretary proposing what amounts to a Ponzi scheme or no?
MYERS: Well, a Ponzi scheme is a scam where there’s really no actual investment and the money is just taken away, but every society invests in a younger generation so they can be better prepared to support the older generation. And that’s not a Ponzi scheme. But it does base one generation’s well being on another one’s.
MOON: Is this a solution for Social Security, do you think?
MYERS: Well, the problem is we have so many baby boomers, and they are all going to deserve their entitlements. And we don’t have relatively as many younger people. Immigrants do help. My calculations show that immigrants, though, only contribute about one-quarter of the solution. They can’t solve the problem all by themselves.
MOON: Well, we’ve heard this idea from Professor Reich. Are there any other kinds of possible demographic solutions to fixing the system?
MYERS: Well, the easiest one would be to delay retirement. Because people live so much longer now than when we started the system. It used to be they would live only on average one year after they got entitlements and now people are pushing it out to 20 and 30 years. And given that long lifespan after 65, more of that should be made productive or else we can’t balance our economy.
MOON: So what do you say about these immigrants? They are going to be getting entitlements themselves, so how do you respond to that?
MYERS: Well, immigrants get older also, but not right away. Our big problem is the next 20 years. We have a steep cliff that we have to climb with so many older folks all of the sudden, because of the baby boom, crossing age 65. We need some help just in the next 20 years. And after we get past 2030, we’ll be in much better shape. But I don’t know how we get there without some help.
MOON: And how urgent of a problem do you think this is?
MYERS: Well, the first baby boomer crosses age 65 next year. And so here it comes.
MOON: Dowell Myers is a professor of urban planning and demography at the University of Southern California here in Los Angeles. Thanks for giving us your analysis.
MYERS: OK, thank you.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.