Social Insecurity?

Given the firestorm that President Bush's proposed Social Security changes have already sparked, it's highly likely that the final outcome—whatever it is—will be greatly modified and hotly debated in Congress. It's far too early to even guess whether the program will remain entirely tax-funded or become a blend of individual investment and government-guaranteed income. It would also be naïve to think that the question of asking businesses to help shoulder some of the costs won't come up.

Baby boomers are spenders, not savers. When our parents wanted something, they saved up until they could afford it, or they did without. We just charge it and get it anyway. And with many merchants' offering no interest and no payments for months and even years, we don't need to think about paying for it for quite a while after we buy it.

The proposed Social Security changes are particularly targeted to younger workers—those under 30 now—called the Millennial generation. Children of the baby boomers, Millennials are not big savers either. They are growing up brand-aware, media-rich, design-savvy, and with shopping as the national pastime. Even kids whose parents' income is modest have their own cell phones, their own television sets and, in many cases, their own DVD players and computers. These are not kids accustomed to making a current sacrifice for future gain.

Partisan arguments about the future of Social Security aside, one thing is already painfully evident: In any form, it won't be enough. Many baby boomers are now seeing their supersaving World War II–generation parents caught in a financial vise despite their prudence—they've saved too much to be eligible for government help, but rising medical costs are still beyond their means. One would think that would scare their kids into socking away more money, but consumer debt levels are higher than ever.

Baby boomers at least have memories of how their parents shopped. Mom or Dad went to the bank (before 3 p.m.), withdrew money, and paid for their food, hardware, whatever, with cash. Millennials' memories will be of Mom and Dad swiping a piece of plastic. One would assume that parents are teaching the youngsters that there has to be money behind the plastic, but the tangibility of actually handing over the cash makes an impression that handing over a credit card doesn't.

These are the customers we're starting to target now. They're the ones who are getting married, starting families, buying platinum—and buying it with platinum credit cards. And being in a retail business, we in the jewelry industry have a strongly vested interest in the answer to "plastic or paper?" Frankly, we don't care which, as long as both keep coming steadily into the cash register.

What does this mean to you?

In the macro sense, if the system falls short you might find some of your customers have a lot less disposable income to spend on jewelry if they're suddenly called upon to help take care of Mom and Dad financially.

In the more immediate sense, consider instituting a 401(k) plan as part of your benefits package. According to the 2004 JCK Annual Salary Survey, only 32.3 percent of respondents offer this benefit to their employees. Even allowing for the fact that many jewelry stores are family owned and have few if any full-time outsiders employed, this still doesn't translate to a stellar record overall.

But offering a 401(k) retirement plan can help you attract better employees. People who are conscientious enough to be concerned about their future are likely to be valuable, conscientious employees now. And it's not unusual for employees to choose a company based on the benefits it offers. If you have highly skilled employees, you could risk losing them to either a jeweler with better benefits or, in the case of salespeople whose skills are transferable to other fields, to any company with better benefits.

Keep abreast of political and legislative developments. If business is asked to help share some of the costs, it could affect you even if small businesses are exempted, because it could put you at a disadvantage for hiring talented people.

Whether the answer lies in taxation, forced private savings, or something else entirely, remains to be seen. But one thing is clear: Without some kind of safety net, the ramifications to the future are far worse than hitting the end of the interest-free period on a credit card. And the costs are going to be far higher than we ever imagined.