Beaver County Reds – 11/8/11

This page was last updated on November 17, 2011.

I found the following on the Facebook wall of Tina Shannon, chairwoman of Beaver County Reds. Attached to a link to “Young People and Poor People: Unite or Lose,” Mrs. Shannon wrote, “This is a good argument for lowering the retirement age so more young folks can enter the work force. Also. how [sic] about we take some of those record-high corporate profits & recycle them back into our communities by shortening the work week at the same pay. That would force some more hiring. MOVE THE MONEY BACK TO OUR COMMUNITIES.”

Wow! Mrs. Shannon believes featherbedding, forced unemployment of older employees, and further confiscation of business profits would help address youth unemployment. I would not be surprised to learn Mrs. Shannon also believes in the broken-window fallacy.

First, Mrs. Shannon would force the unemployment of older people who would otherwise be working and – using classic leftyspeak - call it “retirement.” Sure. Let’s look at some of the effects. (With a few exceptions, mandatory retirement has been illegal in the U.S. since 1978.)

· In most cases, retirees must lower their standard of living because their retirement income is usually less than that of their paychecks. This proposal would make it even worse because any retirement savings these people had would have to last longer than planned, meaning less income so as not to drain the savings too soon.

· What about pensions? If these folks were allowed to tap their pensions early, they would have the same problem as I mentioned with their retirement savings. It’s also possible pension plans could have solvency problems since they would have to disburse funds to pensioners sooner than they planned. If these folks aren’t allowed to tap their pensions early, their standard of living would drop even further until they became eligible to receive their pensions.

· Now let’s look at Medicare & Socialist Security (M&SS). Forcing older people out of their jobs would increase beneficiary demands on M&SS and decrease M&SS tax revenue. Despite claims by her husband to the contrary, M&SS are in deep financial trouble and Mrs. Shannon’s proposal would make it worse. Even if the same number of younger people hired equaled the number of older people forced into unemployment, the tax revenue would still drop. That’s because how much we pay in M&SS taxes (15.3% of gross wages) depends on how much we make and the wages paid to younger employees are generally less than earned by older employees.

· The tax revenue drop would not be limited to M&SS taxes; the drop would also apply to income and property taxes. I suspect Mrs. Shannon’s “solution” to this problem would be to force businesses to pay the young, inexperienced employees the same as the outgoing experienced employees and/or increase tax rates on businesses (but probably not hers) and “the rich.”

Second, Mrs. Shannon proposes “we take some of those record-high corporate profits” but fails to mention who “we” is and from whom the profits would be taken. I’m sure Mrs. Shannon would like us to believe this proposal would take a bite out of “the rich” but, as of early-2011, about “54% of Americans said they own ‘individual stock, a stock mutual fund or in a self-directed 401(k) or IRA,’ down from 65% in 2007.” This doesn’t include indirect ownership a person may have via a pension plan’s investments.

Third, Mrs. Shannon would force businesses (but probably not hers) to pay current employees the same compensation to do less work plus hire new employees to work the hours taken from existing employees. This is featherbedding and another version of make-work programs. Most obviously, this would drive up the cost to produce a given product or service and it’s already tough for U.S. businesses to compete on the basis of labor. This proposal would accelerate offshoring due to labor expense.

Finally, the “corporate profits” are already “recycle[d] … back into our communities.” As noted above, more than 50% of us own stock and benefit from “corporate profits.” Why didn’t Mrs. Shannon mention profits of proprietorships and partnerships or the surpluses of non-profits?

In Peace, Friendship, Community, Cooperation, and Solidarity. <g>