all we have to live. Is this the thanks they give the people who served the Government the best part of their lives?"

Mr. Chairman, these items are all closely related to the question of Economics of aging. We are not seeking favored treatment; but we would like to have equal rights under the law. Any assistance this Committee may be able to lend toward correction of glaring injustices would be much appreciated.

Thank you, Mr. Chairman, for giving me this opportunity to appear before your Committee.

The CHAIRMAN. We will stop there and we will be returning after a break for lunch and maybe this is one of the things we can go into and there will be many other things we can discuss with our task force and with all of you this afternoon.

There is one statistic that would be helpful; if our record of this hearing could show the membership of all of the dignified and distinguished organizations represented here today. Bring that with you later this afternoon.

Everybody wonders who you are speaking for or what your membership is. You can't speak for every one of your members, of course, but it would be helpful. I have a feeling Bill Oriol, who, with all of the staff, works so herculeanly to develop our hearing today and as we go on-probably knows all of your publications.

(The information requested follows:)

National Council on the Aging---

National Council of Senior Citizens_-_.

ers Association___

American Association of Retired Persons and National Retired Teach

National Association of Retired Civil Employees--

We will reassemble at 2:15 p.m.

15,000 to 18, 000

2,500,000

1,850,000

133, 000

(Whereupon, at 1:20 p.m., the committee recessed to reconvene at 2:15 p.m., the same day.)

AFTERNOON SESSION

ROUNDTABLE DISCUSSION

The CHAIRMAN. Good afternoon. We continue this afternoon with a forum panel discussion of those who participated this morning, and I think maybe we had better have the record show the participants

here this afternoon.

Will you identify yourselves for the record, please?

Dr. SCHULZ. James H. Schulz, associate professor of economics, University of New Hampshire.

Dr. KREPS. Juanita M. Kreps, professor of economics, Duke University.

Mr. HUTTON. William R. Hutton, executive director, National Council of Senior Citizens.

Mr. FICHTNER. Charles C. Fichtner, member of the legislative council, American Association of Retired Persons, and National Retired Teachers Association.

Mr. SCHUCHAT. Theodor Schuchat, retirement editor, North American Newspaper Alliance.

Mr. GREENOUGH. William C. Greenough, chairman, Teachers Insurance and Annuity Association of America, College Retirement Equities Fund.

Mr. BURK. Othie G. Burk, vice president, National Association of Retired Civil Employees.

Mrs. BREWSTER. Agnes W. Brewster, consultant on medical economics. Research associate, Leonard Davis Institute of Health and Economics, University of Pennsylvania.

Dr. SHEPPARD. Harold L. Sheppard, visiting associate of Joint Center for Urban Studies, Harvard-MIT on leave from the Upjohn Institute for Employment Research.

The CHAIRMAN. Give us your former positions in the field, please. Dr. SHEPPARD. Research director of the Senate committee, and staff director of the Senate committee for 1959 and 1961, among other activities in the field of gerontology.

The CHAIRMAN. I think the staff of the committee will probably get into this discussion too, so why don't you all be included for the record.

Mr. MILLER. John Guy Miller, minority staff director.

Mr. ORIOL. William E. Oriol, committee staff director.

Miss MCCAMMAN. Dorothy McCamman, consultant on economics of aging.

The CHAIRMAN. Juanita, I understand that you are going to sort of be the maestro of the afternoon in bringing the task force questions and observations to the panel we have.

Dr. KREPS. I am concerned that we refocus our attention on what I think was the major thrust of the task force report and in short the task force was concerned I think to concentrate-that is, on the problem of the deterioration in income level of the aged relative to the young. In doing this, we must take account of two phases of the problem:

One, the problem of having people understand and accept the circumstance that growth creates for those persons who are no longer in the labor force, and two, the question of what the economy should do to minimize that relative deterioration.

THE PRESSURES OF ECONOMIC GROWTH

To document the first point, let me go back to a statement in the task force report and ask again that we consider it. In the report we indicated that the major problem of the aged was not just one of inflation and price rise. Even in the absence of an inflation in price level, the aged-were they aged long enough-would be relatively deprived, because the process of economic growth constantly raises the incomes of those persons still in the labor force while leaving the incomes of the aged fixed.

If a person saved each year of his earning life that amount which would supposedly guarantee him 100 percent of his consumption level when he retired, the fact that his earnings went up every year would mean that when he reached retirement he would have, if the growth rate were 3 percent, not 100 percent of his consumption level, but about 50 percent.

This is 50 percent of his earnings when he goes into retirement. But the problem is magnified then by the fact that he may spend two decades in retirement, and if he does so his consumption level by the

end of his 20 years will have dropped to almost 25 percent of the consumption level of the workers who remain in the labor force.

These figures indicate roughly the magnitude of the deterioration that occurs during the worklife and during the retirement span of a person in our economy.

What I would like us to consider this afternoon is the problem of how, in a high-growth economy, one protects the relative living levels of people who do not under our present institutional arrangements share in that growth. This is a question which is entirely apart from the question of inflation, which is admittedly an important one. But even if we stabilize the price level, we continue to face the growthrelative deterioration problem.

I hope this does not structure the discussion too rigidly, Mr. Chair

man.

The CHAIRMAN. How would you suggest, Dr. Kreps, we proceed now?

I don't know whether I would conclude it is the heart or not of the problem; I think probably it is the hardest problem, harder than the situations presented solely by inflation and the rising cost of living which can have its automatics.

It is a little harder to find the automatic in the growth rate.

Dr. KREPS. I would like simply to ask whether there are any members of the panel that would like to discuss either of the two questions I am raising.

The CHAIRMAN. Mr. Burk?

Mr. BURK. Mr. Chairman, might I ask Mrs. Kreps a question? Do I understand from what you are saying or from at least a part of your question that you are wondering and that retirement income which has the escalator clause in it under the civil service law if again rather than be tied to the cost-of-living increase, that it be tied rather to the wage scale of the persons who have served a similar number of years in the level from which I retired?

Is this your question?

Dr. SHEPPARD. She means adjustment to the standard of living rather than to the cost of living.

Dr. KREPS. Yes. It is a question of adjustment to the standard of living of those persons still in the work force rather than adjustment on the basis of a change in cost of living.

Mr. BURK. My observation would be that this has been proposed a number of times before the Members of Congress and has never even got far enough for a committee hearing.

Dr. SHEPPARD. As old pedagogs I am sure Dr. Kreps would agree then it always helps to have repetition. We are not going to give up on the idea although I understand the reality of the situation.

I think part of the story of convincing the public is to make the point, one point among others, that our economy can afford it and as the report points out the ratio of the 65-plus population to the working age population is a relatively constant one over the past and will be over the future, so we are not going, we're not really increasing the greater burden on the working age population and I think our economic education in this country is rather woefully inadequate on such matters.

I hope the Senate plays an educational role in this matter. Mrs. BREWSTER. Dr. Kreps, could you answer something for me? I have always assumed with retirement some of your needs were less, and when you speak of adjustment to the standard of living before retirement, are you talking about-are you taking these into account or is it the reverse side of the coin, your expenditures become less because your means become less?

I am talking about no more carfare; you don't have to dress as elaborately. As you grow older according to all the diet books you eat a lot less, and so forth.

I would appreciate illumination on that score.

THE RETIREMENT BUDGET

Dr. KREPS. I think the best answer to that comes from the Department of Labor BLS Older Worker Budget which indicates what it costs an elderly couple to maintain a particular standard. This standard is then priced for different parts of the country. From these dollar totals, one can get an idea of what is required to provide a given standard of living. The question of whether that is a lower dollar amount than would be required for a younger couple, is I think a moot point.

We generally concede that living costs are lower for an older couple, partly perhaps, because we are accustomed to seeing them living at a lower level than a younger couple.

But we don't have adequate information on the drop in the amount of money needed in retirement. Perhaps this is one area we ought to study further.

Dr. SHEPPARD. University of Pennsylvania studied this and found if older couples got $10,000 a year, they found a way of spending it. Isn't that a great miracle?

If they had $3,000 a year, they lived on $3,000 a year. So you can't just use what the aged are forced to live on now as a criteria for determining what they should be living on.

Mr. MILLER. Is it not valid to raise the question at this point whether it does not work the other way?

I have been struck by the great parallel between the median incomes. reported and the Bureau of Labor Statistics budgets. They seem to just go along together and it is a question that has puzzled me, really, to which comes first, the chicken or the egg. Is it a matter of everybody spending what they get and if they get enough you are going to spend more?

Dr. Kreps, I had another question on which I would like a little clarification.

On two counts you refer to the 48 percent consumption level versus the 100 percent at retirement, and then the 27 percent versus the 100 percent after two decades of retirement.

Is this per person, or is this per family unit?

Because I think this bears a relationship to Dr. Brewster's question, not just with reference to the cost of living per person, but to one of the points that has been made about the need for a higher income in the younger groups because they have children to educate, their houses to pay for, and so forth. Has this been taken into account?

My second question is, in this 27 percent versus 100 percent, is this a dollar after taxes or before?

Dr. KREPS. We were working with the savings of a worker as he worked through his worklife. The question was, How much he had to save in order to maintain in retirement 100 percent of his worklife consumption level? We did not correct in this case for family size.

I doubt however that you would want to say that 48 percent—or 27 percent would be offset by a decline in family size.

But none of this has any substance because in fact people don't save that way. We were posing the most optimistic set of circumstances a case in which the man saved systematically and significantly throughout worklife.

Our point was simply to illustrate that even if he did observe the most stringent savings rules, he would not have adequate retirement income.

Mr. ORIOL. I think Professor Schulz had a comment.

Dr. SCHULZ. Yes. I just wanted to add to what has been said that in 1967 the 51st International Labor Conference discussed what should be an appropriate level of living income for old age relative to the level of living in the working years. A resolution was passed at that time which set forth a minimal standard, ratio of pension to preretirement earnings, of 45 percent, and further a recommendation was made that countries not be satisfied with 45 percent, but they should try to reach 55 percent.

This was a conference participated in by all the developed nations of the world and many of the underdeveloped nations. The point that I would like to make is that if you look at chart I again of the task force paper you see the status in this regard of one of the richest countries in the world, the United States. Trends in U.S. pension systems, even under very liberal assumptions, will not provide pensionearnings ratios for a large proportion of people in the future that meet these very minimal international standards.

I think we have to keep working on developing information and data as to what the appropriate pension-earnings ratio should be, but we do have some guidelines already set out which the United States is not meeting.

Mr. ORIOL. I would like to point out Mrs. Geneva Mathiasen is representing the National Council on Aging. Another thing. The original question by Mrs. Brewster asked whether consumer needs of the elderly are down because income goes down on this, and so forth.

Senator Church has scheduled a hearing of his Subcommittee on Consumer Interests as part of the 22d Annual Conference of Michigan, which will be devoted to going into this area of consumer needs very, very explicitly.

Am I right, Mr. Fichtner, in your prepared statement wasn't there some commentary about university professors coming up with certain minimum needs?

Dr. FICHTNER. Yes. At AARP we feel that the notion that older persons need less income than younger persons is somewhat of a myth and derives only from the fact that having lower incomes the elderly necessarily spend less.

There is one item on which I think the elderly need less and that is when you reach 65 and over you don't have to save for your old age. You are there.