CounterPunch Exclusives

CounterPunch Exclusives

Social Security is a Problem of Income Distribution, Not Demographics

Photograph Source: US Government – Public Domain

The rich almost completely control debate in this country. There is no better proof of this fact than the current debate over the future of Social Security.

This has been conveniently framed as a problem of demographics. You know, too many people living long into retirement and not enough kids entering the workforce. That sounds compelling, as long as we don’t try to think about it too much.

First, we knew this basic story long ago. On the life expectancy side, we’re actually doing somewhat worse (better from the standpoint of the program’s finances) than was expected in 1982, the last time there was a major reform to the program. The projections from that year showed men living on average 16.6 years after they turned 65. We are beating that some in the current projections at 18.2 years. But the story for women looks considerably worse than was projected in 1982: 20.7 years now compared to a projection of 22.6 years in 1982. So, we can’t say the problem is people are living longer than expected.

The fertility rate has fallen behind projections, and that has made the financing of the program worse. But the big story is that wage growth has fallen far behind the pace projected in 1982. The projection in 1982 was that real wages (the gap between wage growth and prices) would grow 1.8 percent annually for the indefinite future.  And this wage growth was assumed to be for the workforce as a whole; there was no anticipation that there would be substantial changes in the wage distribution.

Inequality Matters Big Time for the Finances of Social Security

If real wages had grown as projected, they would have increased by........

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