Thursday, February 12, 2015

[NJFAC] The Effect of Rising Inequality on Social Security

The Effect of Rising Inequality on Social Security

By Rebecca Vallas, Christian E. Weller, Rachel West, Jackie Odum  February 10, 2015

Our analysis demonstrates that the rise in earnings inequality, which has led to an upward redistribution of income, has taken a significant toll on our nation's Social Security system. If wage increases had kept pace with workers' productivity gains over the past three decades, the OASDI trust funds would be $753.8 billion larger today, which would have reduced the expected 75-year shortfall by 6.8 percent.** If policymakers had acted to freeze the cap on taxable earnings at 90 percent of covered wages after 1983, the trust funds would be $1.1 trillion larger today, and the shortfall would be smaller by 10.1 percent. Looking ahead, that one action would on its own close more than one-quarter of the projected 75-year shortfall. While policymakers cannot undo the past, they can take action to improve Social Security's fiscal outlook by implementing policies that boost wages, combat rising inequality, and modernize the program's revenue structure to reflect today's economy.

Thanks to NJFAC Executive Com. member, Marguerite Rosenthal, for the reference.
National Jobs for All Coalition

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