1. The Long-Term Consequences of Economic Inequality
David W. Rasmussen
James H. Gapinski Professor of Economics
Dean Emeritus, College of Social Sciences and Public Policy
Affiliate, Pepper Center on Aging and Public Policy
L. Charles Hilton Center on Economic Prosperity and Individual Opportunity

2. Increasing Poverty Among the 65+ Population will be a Long-term Consequence of Increasing Economic Inequality
There will be more low-income households that cannot prepare adequately for retirement.
There will be enriched high-income households that could maintain entitlement programs.

6. Share of Total Wealth by Richest Households
Year
Top 10%
Top 1%
Top .01%
2012
77.2%
41.8%
22%
1986
64%
25% 9%
1927
84%
An economic “law” of rising wealth inequality?

7. Death of the American Dream

8. Market Forces 1 “Polarization” of the Work Force
Employment Growth,
Median Annual Wage, 2016
Actual
Percent
Expected
Actual - Expected
$60,000 and over
3,246.7
33%
2,212.4
1,034.3
$40,000 - $59,999
2,087.3
21%
1,722.9
364.40
$30,000 - $39,000
805.1 8%
2,936.7
-2,131.60
$20,000 - $29,000
3,649.8
37%
2,907.3
742.50
TOTAL
9,788.9
100%
9,779.3
9.6
*Expected growth is total employment growth times the employment share in 2014

9. Market Forces 2 Employers cut costs in a “fissured” economy
A plan to “fissure” ground crews at FSU
The rise of alternative work arrangements
Contingent workers
Self-Employment

10. Debt: The Enemy of Saving for Retirement
Student Loans (Federal Reserve Bulletin)
Home Equity Loans
Reverse Mortgages
Credit Cards

11. Changing Landscape of Retirement Finance
Decline of defined benefit plans
Rise of defined contribution plans
Entitlements under threat (Social Security, Medicaid and Medicare)

12. The Center for Retirement Research Offers Some Advice for Future Retirees
Fix Social Security
Save more
Use home equity
Work longer

13. There is Money Available to Fix Social Security
Tax Expenditures
Employer paid health care and insurance ($143.8b)
Lower taxes on dividends and capital gains ($134.6b)
Contributions to and earnings on defined contribution retirement plans ($82.7b)
Deductability of mortgage interest ($77b)
These four total $438b; 46% of the $945b spent on Social Security in 2017

14. Modest “Solutions” Fixing Social Security: The Easy Part
Impose Social Security taxes on all wage and salary income
Maintain current benefit levels
Eliminate tax expenditures that favor high income households
Can we “fix” the tendency to favor current consumption over saving for retirement?
Public/Private Responses to a lower standard of living
Give up highly valued independent living
There doesn’t have to be a solution