ASBA Update From Washington

As an ASBA member, you now have free access to news and updates on important issues from our legislative team in Washington DC.

May 2008
by James C. Musser, ASBA Washington Representative

Even as the first wave of eighty million baby boomers is reaching retirement age, many are choosing to continue working and Congress hopes that millions will decide to stay on the job a few more years. With life expectancy increasing and a growing need for experienced workers, Congress is searching for ways to keep seniors on the job a least a little longer to both ease the expected labor shortage and reduce the demands on the Social Security Trust Fund.

Senators Gordon Smith (R-OR), Herb Kohl (D-WI) and Kent Conrad (D-ND) have introduced the bill S. 2933 called the Incentives for Older Workers Act to help prevent projected declines in the workforce resulting from the baby boomers retiring in unprecedented numbers. The bill is intended to remove or reduce barriers for older workers wishing to stay in the workforce. It is also designed to encourage employers to recruit and retain older workers. Kohl is the Chairman of the U.S. Senate Select Committee on Aging and Smith is the Ranking Republican Member of the committee.

In introducing the bill Senator Smith said "A colossal demographic shift is on the horizon. Retiring baby boomers will cause significant gaps in our workforce if we do not incentivize them to work longer. We need to ensure the door stays open for those willing and able to remain an active part of the workforce during their golden years."

Chairman Kohl stated, "With the retirement wave upon us, we must encourage employers to adopt policies now to attract and retain older workers. Our common-sense policy creates a win-win situation for both older workers and the companies that employ them."

Senator Conrad stated, "This legislation confronts the changing face of retirement. The divide between working and retirement is no longer the bright line it once was. Many workers stay on the job longer, not just because they have to but also because their employers want them to stay." The Senator continued by saying, "What we offer in the Incentives for Older Workers Act would make sure older employees who want to cut back their work schedules won’t lose pension benefits as a result."

Among the important provisions of the bill is one allowing seniors to earn additional retirement credits for Social Security for two years if they work until age 72 rather than age 70. It also reduces the amount of Social Security benefits lost by seniors who claim benefits before reaching the full retirement age while they continue to work. The bill also provides for an expansion of the Work Opportunity Tax Credit to include older workers.

The Incentives for Older Workers Act has been read twice and referred to the Senate Finance Committee where it is awaiting action. In an interesting twist, the Government Accountability Office (GAO) reports that the Social Security Administration (SSA) itself may be facing a labor shortage because of the baby boomers retiring.

The GAO has warned that during the next eight years 44% of the SSA’s workforce will retire. That number includes some of the agency’s most experienced staffers and could have a "serious impact" on the agency’s operations. Congress may need to take steps to keep some of those wise men and women in the workforce a bit longer.

ASBA closely monitors the government’s actions affecting you and your family. Check back each month for the latest news from Washington, D.C.

James C. Musser, Esq. is a legislative consultant based in Falls Church, Virginia. His reports are updated monthly.