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Grand Challenges of Our Aging Society: Workshop Summary (2010)

Chapter: 6 Social Institutions and Policies

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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
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6
Social Institutions and Policies

The impressive improvement in health and increases in longevity suggest a need to rethink the timing of major life events, such as education, raising a family, career and retirement. This will entail changes and flexibility in institutions, policies, and social norms and expectations.

WILL INSTITUTIONS AND POLICIES PERMIT SUFFICIENT FLEXIBILITY?

Phyllis Moen

Department of Sociology

University of Minnesota


Phyllis Moen explored flexibility (e.g., alternative work arrangements), structural lags (e.g., outdated institutions), and structural leads (e.g., innovative social policies). From the perspective of individuals and families, flexibility can mean more options and greater control over the life course, including the pathways of education, career, retirement, and civic engagement. From the perspective of businesses, however, flexibility or “flexibilization” can include contract work, temporary work, unpaid furloughs, layoffs, and forced retirements. This type of flexibilization, coupled with technological and global economic change, can result in rising demands on time, increased productivity expectations, and increased job and economic insecurity for workers and families.

Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×

Will social institutions help people meet these challenges and adjust their major life activities as longevity increases? Moen expressed several criticisms of outdated institutions and age-graded policies that perpetuate age stratifications and limit flexibility regarding work hours and life trajectories.

Addressing issues of aging and increased longevity, she questioned whether existing lagging policies and outdated institutions push people into retirement; limit their life planning; preclude encore activities in education, paid work, or civic engagement; and increase insecurity and uncertainty as well as health, isolation, and poverty risks. She further questioned whether the impacts of a global information economy combined with the new flexibilization of work will open or limit options for workers. She also speculated on whether and how current standard age schema precipitate transitions and limit options in the second half of the adult life course.

Several policies and institutions reify social patterns despite new emerging social goals. People need to work longer, yet rigid and outdated policies and practices continue to keep everyone on a lockstep path rather than enabling them to define flexible paths to retirement. Such flexible paths might include part-time work, encore careers, or productive civic engagement. Similarly, despite much attention to lifelong learning as a means to improve labor productivity, education continues to be presented as appropriate to earlier years, with college brochures featuring people in their 20s. Insisting on a standard 40-hour work week is another institutional rigidity. Part-time work is possible, but those who engage in it pay a price in lower wages, less training, and fewer promotions.

Social flux presents many challenges. In Moen’s view, “we are living on a moving platform of change and structural lag so that what we know may or may not still be relevant.” There are several elements of the moving platform of change. The current population includes the first generation with married women retiring in significant numbers. Models and expectations developed for men may not be predictive of women’s behavior. There is also greater variation in the timing and completeness of exit from the labor force. What used to be considered a normal retirement—that is, full retirement after a single full-time continuous career—is no longer as common, although alternative paths are not yet clearly defined. Moen wondered how such change is affecting the self-concept, preferences, and decision making of older workers and retirees at different ages and stages. Existing evidence on prior trends in age-related activities may not be relevant to emerging trends. Furthermore, consideration is needed of how the concepts, categories, data, and models of a previous period should be updated.

Although institutions and policies lag, baby boomers are making adap-

Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×

tations to social change and changes in their career paths and work lives. They often do not plan adequately, and couples tend to accommodate to the husband’s rather than the wife’s transition plans, for example, regarding the timing of retirement. Baby boomers also pursue self-employment and part-time work. They maintain engagement in meaningful paid and unpaid work. And they reduce the intensity of job demands by shifting the relative amounts of time in these different activities.

Structural leads, rather than structural lags, will help people adapt to the moving platform of change. Moen posed two questions regarding structural leads: What organizations and agencies are introducing transformative flexible innovations in career paths, retirement options, education and training opportunities, and civic engagement? And what innovative policies regarding work time, retirement age, health care, education, and incomes would promote alternative and flexible paths and thus promote a better fit to changing life courses?

Characterizing the current moment as a perfect opportunity rather than a perfect storm, Moen offered three possible avenues for change: reframe the standard duration of work days, work weeks and work lives; develop new standards or norms regarding work sabbaticals at all life stages; and facilitate possibilities for second, third, or fourth acts in schooling, civic engagement, and employment for people of all ages. Across the spectrum, she sees a need for social insurance and skill upgrades to respond to the risks and transitions in the world labor market.

Moen identified three research questions addressing institutional flexibility and an aging population:

  1. What are the impacts of a global information economy combined with the new flexibilization of work?

  2. How is the deinstitutionalization of normal retirement affecting the self-concept, expectations, preferences, and decision making of older workers and retirees at different ages and stages?

  3. What policy innovations regarding work time, retirement age, health care, education, and income can promote a good fit over the changing life course and the pursuit of alternative, flexible paths?

THE GROWING IMPERATIVE FOR STRUCTURAL CHANGE

Richard V. Burkhauser

Department of Policy Analysis and Management

Cornell University


The disjuncture between outdated institutions and current reality may be traced to a different source. Social Security was established to protect

Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×

people from a specific risk: that they would live too long. The structures created to deal with that risk are fine. The problem, rather, is that society is no longer abiding by the implicit contract. People are living too long. The simple solution, he joked, is that people all agree to die at the same age as their parents. “If we did that, we wouldn’t have to change our systems at all. They would be really perfect and we could go on in equilibrium.” However, people are living longer than their parents. They are more educated, in better health, and capable of productivity at later ages. Thus, attempting to save Social Security as we know it is not the right goal, because we are not the same people for whom that institution was built. It is time to change Social Security and other outdated institutions and policies.

Matilda White Riley defined structural lag as “the inertial tendency of social structures to persist rather than respond to the changing needs and characteristics of individuals, creating a continuing tension between people and the structures in which their lives are embedded.” Considering structural lag as it concerns institutions and population aging, Burkhauser posed four questions: (1) Can society afford to grow old without changing current institutions and policies? (2) Are institutions and policies changing? (3) Are people responding to these changes? (4) Has society reached equilibrium, or is more change necessary?

The country cannot afford to grow old with its existing institutions. The burden on workers is growing as the number of beneficiaries per worker increases. Demographic changes mean that the United States has gone from four workers per beneficiary in 1965 to a projected two workers per beneficiary in 2030. Social Security payments face a shortfall in the future, and when Medicare and Medicaid are added, the picture will be “unimaginably bad.”

The good news is that this scenario need not occur. Echoing other presenters, Burkhauser said the solution is for people to work longer over their increasing lifetimes. And indeed, people are already changing their behavior. The participation of men over age 65 in the labor force had been declining in the latter half of the 20th century. That trend has stabilized, and the labor force participation of men over age 65 has begun to increase. Women’s labor force participation has also seen a tremendous increase, including among women over age 65.

What explains labor force exits at relatively young ages? Although there are several possible answers, one very important reason may be disability policies that create perverse incentives. Noting a “gradual but profound decline in the employment of those people who have disabilities,” Burkhauser suggested there are valuable lessons to be learned from policy change in the Netherlands. When policy reforms made it more

Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×

possible to receive disability payments, the Netherlands saw a dramatic rise in the number of individuals claiming disability.

A similar story unfolded in the United States following welfare reform in 1993, in which states gained responsibility for welfare. States can get people off their rolls in two ways. One is to invest in them, train them, and help them join the workforce. The other is to classify them as disabled and shift them onto federal disability rolls. States have an interest in expanding the rolls of persons with disabilities so as to shift the burden to the federal government. Burkhauser argued that these rises in disability rates resulted from bad policies that create perverse incentives to claim disability, not increases in actual disability rates.

In another example, in the 1980s, Medicare was switched from being the first provider of insurance at older ages to second provider. That is, if an individual was employed after age 65 and had private employer-sponsored health benefits, then Medicare paid only the residual after those benefits were used. People over age 65 have higher health costs. For a firm that provides health insurance, it is much more expensive to hire an older than a younger person. Fewer jobs are therefore available to older workers in such firms.

Burkhauser offered these as examples of “the unintended consequences of changing policies that we need to think more carefully about.” He added, “when we set up our systems, when we think about our institutions, we have to think about incentives that those institutions set up for contracts between employers and employees.”

In identifying the most important questions in this area, Burkhauser asked:

  • What are the behavioral and distributional consequences of raising the Social Security early retirement age?

  • What are the behavioral and distributional consequences of shifting to more prowork strategies for working-age people with disabilities?

  • What are the behavioral and distributional consequences of changing the way health insurance is purchased and provided?

Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×

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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×
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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×
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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×
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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×
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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×
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Suggested Citation:"6 Social Institutions and Policies." National Research Council. 2010. Grand Challenges of Our Aging Society: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/12852.
×
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Aging populations are generating both challenges and opportunities for societies around the globe. Increases in longevity and improvements in health raise many questions. What steps can be taken to optimize physical and cognitive health and productivity across the life span? How will older people finance their retirement and health care? What will be the macroeconomic implications of an aging population? How will communities be shaped by the shift in age structure? What global interconnections will affect how each society handles the aging of its population?

To address these questions, the National Academies organized a symposium, summarized in the present volume, to determine how best to contribute to an evidence-based dialogue on population aging that will shape policies and programs. Presentations in the fields of biology, public health, medicine, informatics, macroeconomics, finance, urban planning, and engineering approached the challenges of aging from many different angles. The presenters reviewed the current state of knowledge in their respective fields, identifying areas of consensus and controversy and delineating the priority questions for further research and policy development.

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