A different approach to stimulus

Gazette columnist Todd Dorman is on vacation.

By Thom Hartmann

One of the most powerful forms of stimulus we could apply to our economy right now would be to lower the current Social Security retirement age to 55. Also increase the benefits back to where they were in inflation-adjusted 1960s dollars by raising them between 10 to 20 percent (so people could actually live, albeit modestly, on Social Security).

The right-wing reaction to this, of course, will be to say that with fewer people working and more people drawing benefits, it would bankrupt Social Security and destroy the economy. But history shows the exact reverse.

Instead, it would eliminate the problem of unemployment in the United States. All those Boomers retiring would make room in the labor market for all the recent high-school and college graduates who are now finding it so hard to find a job.

If enough Boomers left the job market, it would even flip the current dynamic of too many people chasing too few jobs upside down, and create tight labor markets. Tight labor markets drive up wages.

And as wages go up, tax revenues - which are paying for Social Security (among other things) - would increase.

Additionally, these new-into-the-workforce people can then pay off student loans, buy new houses and cars, and otherwise drive the economy from the bottom up. Which will further increase tax revenues further strengthening the Social Security system.

To further tighten the job market and drive up wages (and tax revenues), modify the Fair Labor Standards Act of 1938 - which tightened the labor market and reduced unemployment by establishing the 40-hour workweek - to include all hours worked by a person. We could also drop the 40-hour maximum workweek threshold to 35 hours (used to successfully lower unemployment and stimulate the French economy).

Labor movements of the 18th and 19th centuries fought child labor; they knew if children were removed from the labor marketplace, the supply of labor (the number of people available to work) would decrease and the price of labor (wages) would increase. And, sure enough, that's exactly what happened - and it began the creation of a blue-collar middle class.

It's also why the labor movement pushed for an 8-hour day and a 40-hour maximum workweek. By reducing the amount of labor available from each worker from the average 60 hours a week or so people were working before 1938, the labor market tightened up, increasing the number of people who could be employed and raising wages.

Thom Hartmann is a New York Times best-selling author, and host of a nationally syndicated daily progressive talk program.