By Elana Schor - 06/15/05 12:00 AM EDT
As congressional commitment to a Social Security overhaul continues to fray, the U.S. Chamber of Commerce and AARP are today shifting to a topic they can agree on: keeping aging workers employed.
The last goal that the Chamber, the biggest lobbying spender in the country, and AARP were this closely aligned on was the Medicare prescription-drug benefit. This year, the nation’s largest business group and the largest senior-citizens group have been sharply divided over the president’s Social Security plan, but both sides hope today’s conference on redefining retirement will be a healthy collaboration.
AARP created its Workforce Initiative program earlier this year with the Chamber as a key ally to give businesses incentives to hire and train older workers who would otherwise retire. Baby boomers older than 45, who represent nearly 40 percent of the work force, provide both groups with a legislative challenge and an inspiration to get creative.
There are no specific bills to push today, which is just one sign of the new Chamber-AARP partnership’s uniqueness.
“We’re trying to look beyond what we have into some more innovative ideas and hoping the laws catch up with the practices,” said Aliya Wong, a lobbyist for the Chamber.
Of course, everyone is eager to see what Rep. Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, has up his sleeve for the broad retirement legislation he has promised in the coming months.
If Thomas proposes to raise the retirement age, said Evelyn Morton, an AARP lobbyist and its director of economic issues, “I don’t know if that’s to get older workers to work more. It’s for Social Security solvency.” Instead of requiring seniors to stay employed, “you’d want to do that more artfully than forcing them.”
Cash-balance plans are a particular point of contention. They are increasingly popular hybrid retirement offerings, a combination of the defined-benefit plans that are falling out of favor and the defined-contribution plans, such as 401(k)s, that lawmakers pitch as the future of retirement.
“If Congress moves forward on cash-balance plans, that could discourage older workers,” Morton said, because they will fear a lack of protection if employers are forced to default on some promised benefits.
Another roadblock the Chamber and AARP see is suspension-of-benefits rules, which the Supreme Court upheld in August 2004. The rules push many aging employees out of their jobs by subtracting their income from their future benefits after they reach 70 1/2 years of age.
The Internal Revenue Service took a first step toward circumventing suspension of benefits last year when it offered a new phased retirement regulation, which AARP praises. The IRS rule would allow semi-retired workers to receive a portion of their pensions equivalent to the amount of work hours they cut back, which must be at least 20 percent of their previous schedule.
“Employers may or may not know how to put a phased retirement plan in place,” said Emily Allen, director of the AARP Workforce Initiative. “First we must engage and gain an understanding of what the challenges are before we can sweep in and start making demands for policy changes.”
Policymakers will be listening to the Chamber’s conclusions today. Sen. Larry Craig (R-Idaho) and an adviser to Sen. Gordon Smith (R-Ore.), chairman of the Senate Special Committee on Aging, will be attending the conference, and the Bush administration has asked conference participants to submit four recommendations that will be considered at October’s White House Conference on Aging.
In anticipation of the conference, the AARP team yesterday met with 23 trade associations to instruct them on how to promote hiring older workers. The associations can carry the message to their member businesses, many of which are also involved with the Chamber.
Seemingly forgotten are the bitter days of winter, when AARP poured more than $5 million of advertising into beating back the president’s plan to allow people to put part of their Social Security taxes into private investment accounts, while the Chamber rallied to Bush’s side. Uniting for changes to most aspects of retirement allows the two hugely influential interest groups to become strange bedfellows for the time being.
“We’ve been accused of” being an odd couple, Morton said, “and we wear that label proudly. If we’re going to solve these problems, we have to have conversations with the people who are going to help to solve the problems. Employers need to understand this issue from the older worker’s perspective, perhaps a little better than they do [now].”
Will Social Security interrupt the comity today? Not a chance, said Mike Aitken, a lobbyist with the Society for Human Resource Management, an employee-manager group that is working with the Chamber and AARP.
“We won’t be touching on Social Security,” Aitken said. “We’ll be focusing on some of the demographic trend issues as opposed to getting up there with a policy statement.”
Wong, of the Chamber, agreed with him. But Deborah Russell, AARP’s director of economic security, echoed many in Congress by pointing out the obvious bonus that empowered older workers would give to Social Security.
“The longer somebody’s working, the longer they’re paying into the Social Security system,” Russell said. “That’s a positive thing.” With phased retirement, benefits for those who keep working after the current average retirement age of 62 “will also increase a bit, because we will be in the workplace longer than people have been in the past.”
AARP continues to point out that it only opposes creating private accounts within Social Security, not any other structural changes to the system. The Chamber, in turn, has not shied away from promoting the White House proposal even as polls show public support for it slipping.
Chamber President Thomas Donohue co-wrote an opinion piece yesterday in Knight Ridder newspapers that asserted any Social Security legislation “must meet four core principles,” including private accounts. The Chamber advocates giving the accounts to younger workers alone.
If the Chamber and AARP steer clear of considering older workers’ Social Security needs, Rep. Jim McCrery (R-La.) could bring them back to that discussion. McCrery chairs the Social Security Subcommittee in Ways and Means, and yesterday he heard from advocates who share AARP’s distaste for a higher retirement age.
“Raising the ‘normal’ retirement age won’t magically make anyone able to work longer; it will only move the finish line so they must wait longer for their full Social Security retirement benefit, or, more likely, take a bigger benefit cut,” said Gerry Hudson, executive vice president of the Service Employees International Union, in testimony prepared for McCrery’s subcommittee hearing.
Employing more seniors, especially those who have a desire to be active, would almost certainly help Social Security’s bleak demographic future. The number of Americans older than 65 is projected to more than double by 2041, the year the Social Security Administration has said it will no longer be able to pay full retirement benefits.