Monday, November 26, 2007

S.S. wage adjustment gives away truth of wage inequality (on Kevin Drum)

"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.


Posted by: Denis Drew on November 26, 2007 at 2:01 PM | PERMALINK


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