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and women over the age of 65. Nevertheless, the figures derived for the 20 large cities and suburbs (as of autumn 1959) for budget costs of this limited segment of the aged population indicate that they are higher than the actual incomes of most of the older retired couples living in rented housing.
One measure of income adequacy, however, might be approximated by comparing the median income of all aged-retired and employed, family heads in urban areas with the range of budget costs among the 20 cities covered by the BLS study. TABLE 11.—Annual costs of a budget for a retired elderly couple, 20 large cities and
suburbs, autumn 1959
1 In 1948, the Social Security Administration issued a budget for an elderly couple, to parallel that for a city worker's family issued by the Bureau of Labor Statistics. The food costs in the SSA budget were developed from the low-cost food plan, and the budget included no provision for owning and operating a car. The newly issued interim revision of this budget by the BLS includes 2 versions--1 comparable to the original SSA budget and the other comparable to the budget for the city worker's family; namely, computing food costs from an average of low-and moderate-cost food plans, including some allowance for alcoholic beverages, and automobile ownership by 14 percent of the couples in New York, Philadelphia, and Boston, and 22 percent in the remaining cities.
NOTE.-For further details see Monthly Labor Review, November 1960, “The BLS Interim Budget for a Retired Couple," by Margaret S. Stotz, and Social Security Bulletin, December 1960, “Budget for an Elderly Couple: Interim Revision by the Bureau of Labor Statistics," by Mollie Orshansky.
Source: Bureau of Labor Statistics.
Specifically, in 1959, the median income of urban heads of families aged 65 and over-including those in the labor force-was $3,335. The range in budget costs in the BLS study of retired elderly couples in the 20 cities was from $2,390 to $3,112 in 1959 prices for a list of goods and services in a 1948 standard of living--not in a standard of living for the late 1950's. If the latter standard of living is used as a base of comparison, the range was from $2,641 to $3,366.
It should be emphasized that "budget costs" here refer not to what such retired elderly couples actually spent in these years, but rather to a standard of income deemed necessary for a "healthful, self-respecting manner of living which allows normal participation in community life," to quote the Bureau of Labor Statistics. Considering the fact that the $3,335 median income for urban aged family
heads includes the greatly higher incomes of employed persons and, further, that frequently such families include additional income earners, it is reasonable to conclude that at least one-half of all retired aged urban couples live on incomes below the BLS budget.
If the relationship of the median income of aged urban family heads not employed year-round, full time, to the median income of those employed year-round, full time, is similar to the previously stated relationship (table 7) in the case of all aged heads, 47.3 percent, or even if it is a higher percentage, say, as much as 60 percent, the adequacy of actual income-as compared with the BLS budget-is quite obviously low.
Even with the arbitrarily granted 60 percent relationship, the median income of urban aged family heads not working year-round and full time (“retired”) would be about $2,000, well below the BLS budget figure ranges for both the original and the current budgets. We feel fairly certain, however, that the 60 percent figure is a generous guess on our part and that, therefore, the actual figure is below $2,000. In the future, we hope that it will be possible to obtain precise figures from the Census Bureau. In other words, it is fairly well certain that more than one-half of our country's city-dwelling retired couples (including those not living in rented dwelling units) are living on incomes definitely below a standard of living defined as adequate but not ideal by the Bureau of Labor Statistics. The situation of unrelated aged individuals living in cities could be expressed in even stronger terms.
In dealing with these attempts to determine adequacy of income of the aged the subcommittee has been struck by the fact that statistical and other data on the subject have not been collected and organized in such a way as to answer many of the questions of concern to the subcommittee. We strongly urge that steps be taken to remedy this.3
PROPOSALS TO RELIEVE THE INCOME PROBLEM Among the major alternatives, not mutually exclusive, suggested for tackling the problem of the income of the aged, the subcommittee has chosen a few for discussion here.*
1. The subcommittee recommends, as it did a year ago, that there be a substantial increase in benefits under the system of old-age and survivors insurance for all beneficiaries. The present minimum of $33 per month (and there are some beneficiaries who actually receive less than this amount) should be raised to at least $50 per month. The importance of this recommendation is strengthened by our knowledge that beneficiaries with the lowest benefits typically have few, if any, additional sources of money income and few assets.
An increase in the minimum monthly benefit would be an important, even though modest, step toward attaining a level of income deemed in keeping with American standards in the latter half of this century.
2. There is the additional point that for those beneficiaries whose previous earnings were above average, the relationship between their benefits and previous earnings has not been adequately maintained, even with periodic changes in the law. Certainly for the future groups of retired Americans, as well as for those now retired, the taxable earnings base should be raised well beyond the present $4,800 limit.
3 For example, the Bureau of Census publishes median incomes for year-round, full time employed aged families and unrelated individuals, but not for part time and retired aged. The figures cited in table 7 were obtained by the subcommittee by special request.
* For a lengthier discussion of these and other recommendations, see the subcommittee's 1960 report, and the “Background Paper on Income Maintenance for the 1961 White House Conference on Aging."
If we were to use the 1939 percentage, when 94 percent of all full-time employed males were earning below the 1939 maximum taxable base of $3,000, we would have to raise the base to about $9,000. At this time, the subcommittee recommends that the base be raised to at least $6.000.
3. While the previous recommendations constitute no truly new ideas in the field of income maintenance for the elderly, there is one proposal that has received scant attention, until the subcommittee's report of last year. This is the recommendation for the issuance by the U.S. Treasury of bonds redeemable at retirement at an amount adjusted to any increases in the cost of living in the period between time of purchase and time of redemption, plus a given interest rate on the face value. Such bonds could be redeemed before retire. ment but only with the latter rate of interest. Pension funds and retirement annuity companies could invest in such bonds, and would thus be able to adjust pension benefits to increases in living costs. Within certain limits, individuals could also purchase them. The subcommittee is firmly convinced that such a proposal would be a major contribution toward solving the problem of income maintenance during retirement.
The approach has been used in other countries under less restrictive conditions than those proposed by the subcommittee, and it has also been commented upon favorably by a number of economists in the United States. If such bonds became a substantial source of pension payments in programs established by employers and employees, many millions of future retirees could be potentially protected at levels well above those otherwise possible.
While the subcommittee is well aware of the arguments against the recommendation, it nevertheless believes that the positive advantages and byproducts, as well as the stated objective of the proposal outweigh such criticisms.
Since the proposal of a constant purchasing power bond is directly aimed at the problem of inflation and its impact on retired Americans, a comment on inflation at this point is in order. The crucial matter involved in the phenomenon of inflation in our type of society and economy is not whether there is an increase in the number of dollars and cents required to purchase a given commodity or service, but rather whether there is an increase in the numbers of people having an increased ability to purchase more commodities and serviceswhether there is an increase in the level of living. Our technology and social organization make possible an increase in productivity, an increase in the number of most goods and services per capita. Theoretically, these increases could be distributed among consumers through a decrease in prices, thus keeping constant the absolute level of wages but in practice this is difficult, if not impossible, to achieve in the case of all goods and services. In practice, through such forces as collective bargaining and the operation of labor market mechanisms of supply and demand, wages and salaries have increased, in varying degrees, thus making possible the acquisition of the increased benefits of our technology, that is, improvements in our national standard of living.
Contrary to a widespread belief, income in general has not failed to keep apace of price changes; in fact, real income (purchasing power)
For example, those mentioned in the background paper on impact of inflation on retired persons for the White House Conference on Aging, 1961, pp. 38–39; and the subcommittee's report, p. 495.
of families increased by nearly 37 percent from 1949 to 1959; for unrelated individuals, by 18 percent.
But for persons not employed and not enjoying sufficient amounts of benefits from investments, that is, those persons not participating directly in a growing economy, such an improvement has not been possible. This situation applies, of course, to the vast majority of retired Americans: For them, even if price rises are not equal to wage and salary rises, "productivity progress” can be and is accompanied by retirement, and sharply reduced nominal and real income. They do not participate directly in the general real wage increase, and while real prices might actually decline for the employed person, they rise sharply for the retired.
One of the basic answers for future generations of retirees in our Nation, of course, is an overall economic and employment growth policy and program that would make possible, in an effective manner, financial preparation for retirement during the productive years. Such preparation includes public, private, and individual measures.
By providing bonds with a constant purchasing power, for retirement purposes, the Government would thus make possible a widespread system of partnership between itself, on the one hand, and pension funds, retirement annuity companies, and individuals, on the other hand, toward the goal of assuring retirement incomes adjusted to the cost of living at the time of retirement.
4. Finally, and as a recommendation for further serious consideration on the part of Congress, another step in this direction would consist of periodically legislated automatic adjustments in levels of social security benefits to keep up with changes in total national output, not merely with price changes. At the very least, such a proposal should be studied in the months ahead. The argument in favor of the proposal is that increases in the country's goods and services, as a result of productivity gains, should be shared by retirees as well as workers since they do contribute to the basis for such gains while still in the working force of the country. Otherwise, it is argued, retired persons would continually experience a declining level of living relative to that of the employed population. This principle is already in effect, in an isolated number of pension programs in which pensions are changed in accordance with changes in the earnings level in the occupation previously held by the retired worker.
In making these recommendations, the subcommittee notes that it is important also to consider that the level of living of senior citizens can also be substantially protected and improved through other, possibly less direct programs, such as the one recommended by the subcommittee concerning health insurance financed through the social security system; low-cost housing; changes in retirement and employment policies, etc. Furthermore, the subcommittee has no fears about the actual and potential ability of the country's economy to afford more than token improvements in the levels of living of currently and future retired men and women. A nation, such as ours, will be judged not only by the progress it makes possible for the "productive employed and younger members of its society; it will be judged by the degree to which the retired members enjoy an abovesubsistence level of dignity and material well-being in their increasing years of retirement.
6 "Income of Families and Persons in the United States: 1959, Current Population Reports, Consumer Income." Bureau of Census, Jan. 5, 1961.
Senator Wayne Morse
A NEW EMPHASIS ON RESEARCH
Scientific research--the production of verifiable and dependable knowledge—is a key factor in nearly all aspects of aging. It is the brilliant record of research in the basic biological sciences and in public health and medicine which has led to the control of infectious disease and to improvement in nutrition and in the sanitary environment. It is these factors that have added more than 20 years to average life expectancy since the turn of the century, and that, with the promised control of chronic conditions, will continue to extend the length of life. It is the equally phenomenal record of research in physics, chemistry, and agricultural and engineering technology that enables the country to sustain the rising older population. It provides the capacity to free them from the grinding poverty and misery of the majority of older people in earlier types of economies. It is to the great credit of the Congress that it has steadily and increasingly supported these researches over the long period of years necessary to produce the results we are now achieving.
THE PLACE OF RESEARCH
It is a truism in science that, while the discovery of knowledge confers benefits upon man, it also leads to new problems and new frontiers for study and investigation. Some of our older people are enjoying the fruits of longer life—in prolonged physical and mental vigor; in adequate incomes and housing; and in rich and rounded lives. But for the majority, the later years, as the subcommittee has frequently reported, are characterized by long-term illness and disability; by loss of physical and mental power due to the aging processes; and by the host of social and economic problems revealed during the subcommittee's investigations. Beyond this, millions of families, thousands of communities, and the whole Nation are confronted with problems arising out of the rapid extension of life and the growing numbers of older people.
The subcommittee is convinced that these problems and conditions exist largely because of lack of knowledge of how to resolve thembecause the expansion of knowledge has failed to keep pace with the increasing length of life, with technological developments, and with social change. One of the basic convictions of the subcommittee is, therefore, that there is immediate need for a greatly expanded research effort aimed at providing the basis for health
and vigor throughout the added years; for the preservation of psychological capacities; and for the creation of social and economic conditions that will enable older people to continue as active, contributing members of society. The subcommittee believes that almost every major scientific field-the physical sciences, the biological, the psychological, and the broad spectrum of social sciences—is involved in the discovery of knowledge