Friday, January 28, 2005
Paul Krugman says Social Security is progressive and so benefits African-Americans and all low-wage workers, of course.
From his last column...
... the formula determining Social Security benefits is progressive: it provides more benefits, as a percentage of earnings, to low-income workers than to high-income workers. Since African-Americans are paid much less, on average, than whites, this works to their advantage.Putting race aside, let's see just how much Social Security benefits low-income workers.
Numbers from the Social Security actuaries for lifetime returns on contributions, prepared for the 1994 Social Security Advisory Commission, were quoted here previously.
Let's look again at one of those number sets for the actuarial current value of both taxes paid and benefits received over a lifetime, for persons who entered the work force in 1994, in 1994 dollars...
Single males(And, the actuaries note, these formula benefits of course are themselves 30% underfunded -- and if this funding gap is closed by tax increases and/or benefit cuts [as Krugman insists they should be] the workers' net will drop by 30% from there.)
low wage: taxes $39,024; benefits $38,004; net - 2.6%
Social Security is progressive. It benefits today's low-wage workers by making them poorer.