"The current system pegs initial benefits to the prevailing wages at the time of retirement."
Actually the wage adjustment -- if we are talking about the same thing -- only adjusts wages of each year (one by one) used to compute your benefits. Thus, you might expect that if you made $25,000 in 1967 you would get credit for $50,000 today in computing your benefits -- average income having DOUBLED since 1967.
However, the index must be geared to median wages or some pay gauge that reflects what economists call inequality -- that began to hit labor in this country in the early 1970s (I call it the race to the bottom* ).
Interestingly, should American labor ever get its act together and get back its proper share of the growing economic pie, that would surge FICA receipts -- currently collected with a tax cap -- by leaps and bounds beyond current projections.
* http://ontodayspage.blogspot.com/2007/11/had-adam-smith-lived-to-see-1800s.htmlPosted by: Denis Drew on November 26, 2007 at 2:01 PM | PERMALINK