Builders Could Benefit From Elimination Of Seniors Earnings Cap by Dena Amoruso There is no limit to how much someone aged 70 and older can earn while receiving Social Security income. But find yourself aged 65-70, and you are forced to keep your income at no more than $17,000 per year in order to continue to receive your level of benefits. In a plea to help ease the severe labor shortage now plaguing the construction industry, the National Association of Home Builders (NAHB) addressed Congress on February 15. In their address, the NAHB encouraged them to approve the elimination of this 5-year rule, putting younger seniors on a level playing field, and enabling them to use their years of expertise and skill where it is needed - building homes. Testifying on behalf of NAHB's 200,000 members before the House Ways and Means Committee's Subcommittee on Social Security, Tom Woods, chairman of the NAHB's Task Force on Labor Shortages and a Missouri homebuilder, spoke for his constituency by saying , "Each year the construction industry loses many skilled workers to retirement, and the earnings test essentially prevents them from working on even a part-time basis after retirement." Indeed, they maintain, the valuable skills, knowledge, experience and leadership provided by older tradesmen may well be what the industry needs to mentor, train, and encourage young people to enter the industry. Some of the skills they possess, according to Woods, may not even be taught in today's construction training programs. In an article appearing on the NAHB web site, a recent survey of NAHB members found that 91% say the labor shortage is a significant concern for them, and ranked it as the nation's top concerns for critical issues facing homebuilders. It also, "compromises the ability of homebuilders to provide Americans with quality, affordable housing," according to Woods. With Baby Boomers turning 50 every nine seconds beginning this year, the implementation of this change could indeed go a long way towards the number of years skilled tradespeople will spend in their careers, making them an essential part of the construction industry work force for the present as well as the future. According to an Employment Policy Foundation "Economic Bytes" statement on February 16, "It is likely that if the current disincentive for work is removed, many older individuals will want to remain in the work force past traditional retirement ages." They also maintained that a continued work effort by older workers is desirable because of the growing aggregate demand and slow growth in the labor supply, creating extremely tight labor markets that are not expected to end any time soon. Senate Republicans, on the heels of their victory on tax cuts for married couples, said Friday that they believe it absurd that the government penalizes seniors for working. "The time has come to give our seniors a break," said Dennis Hasert, R-Ill., in a comment on Friday, February 11. Current law penalizes thousands of senior citizens by $1 in social Security benefits for every $3 they earn over the $17,000 limit, discouraging them from working, or forcing them to work only part-time to avoid the penalty, elderly advocates say. President Clinton recently has spoken about the need to eliminate the earnings limit, and has said he will not endorse a "piecemeal" approach to Social Security, which faces insolvency as Baby Boomers retire. In his State of the Union Address, Clinton suggested that removing the earnings limits for older workers would benefit firms, workers, and the U.S. economy. High tech industries also join in the concern for changes like this to take place. In a position approved back in November of 1998 by the Institute of Electrical and Electronics Engineers (IEEE-USA) in Washington, D.C., the elimination of the Social Security earnings limit would "strengthen the economy by enabling many retired to remain productively employed. They went on to say, "This enlarges the pool of savings needed for productive investment and to continue to support government programs, including Medicare and Social Security, by paying federal and state taxes on their earnings." The origin of earnings limits for this age group of Social Security beneficiaries dates back to the Depression, when Social Security was first enacted. As the U.S. was emerging from this tragic period of economic history, unemployment was high and few jobs were available. In an effort to keep available jobs open to young breadwinners, the earnings limit was put in place to discourage retirees from being included in the labor pool. In today's world, the number of available jobs exceeds the available supply of skilled workers in many parts of the country. Anachronistic rules such as these, coupled with unprecedented economic growth, have no doubt contributed to some of the labor shortages being experienced today. And with new housing starts responsible for a huge chunk of this economic success by the number of industries tied to it, it seems likely that changes such as this are as inevitable as the changing face of the homebuilding industry itself. |
