Age, Retirement and the "Adams Principle"

June 21, 2005
New York Times
The Adams Principle
by
John Tierney

The work ethic is alive and well among America's retirees, or at least the ones who bombarded me with letters after I suggested raising the retirement age for Social Security. They said they would be glad to keep working if I could find them a job.

In theory, this shouldn't be a problem because employers ought to be clamoring for workers as baby boomers hit retirement age and the pool of younger workers shrinks. In reality, though, older workers face discrimination. While some companies are recruiting them, many employers are still leery, partly because of irrational prejudice against the old, but also because of perverse incentives in current policies.

Some of the blame lies with the federal government, which has officially outlawed age discrimination while at the same time makes it inevitable. The antidiscrimination law itself is a reason not to hire an older worker. Given a choice between two equally qualified candidates, whom would you hire, a 35-year-old who could be quickly demoted or fired if he turns out to be incompetent, or a 65-year-old who could sue you for age discrimination?

A more immediate reason not to hire the 65-year-old is that he would be more expensive to add to the company health plan. If federal policy were changed to allow older full-time workers to rely primarily on Medicare instead of on their employer, they'd have a much better shot at jobs.

But it's not enough just to change laws. We need to rethink the old assumption that employees keep getting raises throughout their careers.

This seniority system was built on what economists call an implicit contract with workers: we'll pay you less than you're really worth when you're young, but stick with us and we'll make it up to you by paying you more than you're worth later in your career. Employers kept giving raises to workers even after their productivity started to decline, which typically occurs around age 50, says the economist Vegard Skirbekk (whose finding I shouldn't be publicizing now that I'm 52).

The system made economic sense when employers and employees stuck by the contract. Now they each feel free to abandon the other, but the old assumptions linger and interfere with older workers' attempts to find comparable jobs after they have been downsized.

Some workers refuse to consider a lesser job, and even if they're willing to take a cut in pay and status, employers fear they'll be frustrated and find the new job beneath them. So these workers are retiring earlier even though they're living longer, forcing younger people to work harder to support them.

It would be fairer to redistribute some of this free time so that young people, like harried parents, could enjoy it instead of waiting to get it all as one lump sum. As Ron Lee, a demographer at the University of California, Berkeley, asks, "Why not restructure our life cycles so that we take more leisure when we most need it, earlier on, and less later in life?"

That advice isn't practical for some blue-collar workers who aren't strong enough to keep doing their jobs into their 60's. But they're becoming a smaller and smaller minority - fewer than 10 percent of jobs are physically demanding, according to the economist Eugene Steuerle - and they could still quit early under a disability program even if the retirement age were raised.

Most workers could keep going longer if they and employers reconsidered the old assumption about a career trajectory. They could learn from the example of John Quincy Adams, who was elected to Congress after serving as president. He dismissed objections that the new job was beneath him, and voters didn't discriminate against him for being overqualified.

Adams started his new career at age 63, just about when the typical American man now retires. He wasn't especially spry, once calling his body "a weak, frail, decayed tenement battered by the winds and broken in on by the storm." Yet he stayed on the job until his death at age 80.

He accomplished so much in those years that he is remembered as a better congressman than president. You could call him an inverse example of the Peter Principle, someone who succeeded by being demoted below his level of incompetence.

But I prefer to draw a different lesson. Call it the Adams Principle for employees and employers: if the president can flourish after a demotion, so can anyone else.

For Further Reading:

Age and Individual Productivity: A Literature Survey by Vegard Skirbekk, Max Planck Institute for Demographic Research, August 2003, working paper.

"Social Security -- A Labor Force Issue" Testimony Before the Subcommittee on Social Security, Committee on Ways and Means by Eugene Steuerle, June 14, 2005.

"Rescaling the Life Cycle: Longevity and Proportionality," by Ronald Lee and Joshua Goldstein, Life Span: Evolutionary, Ecological, and Demographic Perspectives, a supplement to Population and Development Review, v. 29, pp. 183-207, (2003).

E-mail: tierney@nytimes.com