Decline social Security benefits : Social Development

Decline social Security benefits

(August 19, 2013)

Believing official reassurances based on Fantasyland projections of ever-rising payroll taxes and employment does not magically make the Social Security system viable.

Questioning the financial viability of the Social Security system is often taken as an attack on the program itself. Nothing could be further from reality. Anyone who truly wants Social Security to continue as is should take an active interest in structural trends rather than focusing all their energy on attacking those who question the official reassurances that the the system is sound until 2033.

The two primary trends are obvious:

1. A structural decline in full-time employment

2. A historically unprecedented increase in Social Security benefits paid

Take a look at this chart I prepared from St. Louis Federal Reserve and Social Security Administration (SSA) data: Social Security beneficiaries, by year

Notice that the ratio of full-time workers to SSA beneficiaries was comfortably higher than 2-to-1 for decades. Simply put, the number of full-time workers rose at roughly the same rate as the number of people drawing SSA benefits.

The full-time worker/beneficiary ratio was 2.56 in 1970 and 2.49 in 2000-basically the same ratio held for 30 years as full-time employment expanded along with the number of SSA beneficiaries.

But the trendlines are separating as the number of people drawing SSA benefits is soaring while the number of full-time jobs is stagnating. The increase in beneficiaries fro 1970 to 1980 was a steep 9.8 million, but full-time jobs increased by about 16 million despite the stagflationary economy.

The increases in beneficiaries in the next two decades was modest: 4.3 million more between 1980 and 1990, and 5.6 million more between 1990 and 2000. Meanwhile, the economy added roughly 30 million full-time jobs over those two decades.

The increase in beneficiaries between 2000 and 2010 was almost 10 million, while the number of full-time jobs in 2010 actually declined from 2000.

The ratio of full-time workers to SSA beneficiaries is now 2-to-1 and will fall below 2-to-1 as the number of beneficiaries rises.

The recession of 2008-9 revealed a deeply structural decline in full-time employment. Why focus on full-time employment? Only full-time workers pay enough payroll taxes to fund the system. Around 38 million workers make less than $10, 000 a year, which means the SSA contributions they and their employers pay is on the order of $1, 000 or so a year.

Workers paying in $1, 000 or so a year (adjusted for inflation) will receive far more than their contributions in benefits, and so the system depends on higher-income workers.

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Social Security And The Decline In Full-Time

by Employment_

elieving official reassurances based on Fantasyland projections of ever-rising payroll taxes and employment does not magically make the Social Security system viable.
Questioning the financial viability of the Social Security system is often taken as an attack on the program itself. Nothing could be further from reality. Anyone who truly wants Social Security to continue as is should take an active interest in structural trends rather than focusing all their energy on attacking those who question the official reassurances that the the system is sound until 2033.
The two primary trends are obvious:
1

More proof social welfare has to be cut

by causeimthesquid

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.
Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.
“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients

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