Archive
Correcting Labor Supply Projections for Older Workers Could Help Social Security and Economic Reform
Correcting Labor Supply Projections for Older Workers Could Help Social Security and Economic Reform
Source: Urban Institute
Changing age demographics have powerful implications for the shape of the nation’s work force. Formal models of labor force participation fail to take into account that as the relative supply of younger workers declines, employers will increasingly turn to older workers to meet their demand for labor to provide goods and services. Increased labor force participation among older workers can add to the solvency of Social Security and the broader federal budget. Policymakers in both the public and private sectors can accommodate this trend by removing barriers that discourage hiring and retaining older workers.
Social Security in the BRIC Countries
Social Security in the BRIC Countries
Source: IMB Center for the Business of Government
Social security is a well-established part of the societal landscape in traditional westernized countries. There are a variety of approaches, and there are substantial differences between the operation of social security under the predominantly insurance-based (or Bismarckian) systems and the social assistance (Beveridge) systems. But both were developed and matured in the context of the industrialization of societies and both reflect the need to provide social protection in mass-scale workforces. It is recognised that (at least historically) the development of social security was seen as a natural complement to the process of economic development. Indeed, they can effectively be characterized as two sides of the same coin.
But what can we draw from the lessons of history and how much do these lessons apply to countries undergoing the 21st century equivalent of the industrial revolution? The so-called BRIC (Brazil, Russia, India, China) countries are experiencing the same kind of growth and rapid change experienced in western economies almost two centuries ago. Certainly, there are similar demands and pressures to balance economic advancement with social protection for those workers who provide the labour to fuel the economic development.
This report examines the existing nature of social security in the BRIC countries in order to consider the likely trajectory of its future development. The report provides a useful reminder that, whilst the underlying pressures are at least to some extent similar,
the starting places and norms are quite different. Also, the globalised world of the 21st century brings new pressures compared with the conditions that applied in the 19th and 20th centuries.
A young person’s guide to Social Security
A young person’s guide to Social Security
Source: Economic Policy Institute
Many young people don’t think Social Security will be there for them when they retire. Coupled with the doubt about Social Security’s longevity is a general apathy toward learning its basic functions and how it operates. Young people are uninformed and therefore misinformed. They do not understand how Social Security works, who it affects, and how it fits into their future plans.
Yet, Social Security is the nation’s most successful anti-poverty program and it remains a fundamental pillar of the American economy—one that is critical to the long-term economic security of today’s young people. The new edition of A Young Person’s Guide to Social Security, released by the Economic Policy Institute and the National Academy of Social Insurance, gives young adults the information they need to participate in debates about Social Security’s future. The 60-page guide is written by young authors for students and young workers and explains why Social Security is not in grave danger as oft-reported.
The new edition coincides with the seminar for Washington interns, “Demystifying Social Security,” sponsored by NASI, and reflects the latest official estimates for Social Security in the 2012 Social Security Trustees’ report.
CBO Releases Report on Policy Options for the Social Security Disability Insurance Program
CBO Releases Report on Policy Options for the Social Security Disability Insurance Program
Source: Congressional Budget Office
The Social Security Disability Insurance (DI) program has expanded rapidly during the past few decades, and CBO projects that, under current law, future spending for the program will significantly exceed the revenues dedicated to it.
In a study prepared at the request of the Ranking Member of the Senate Budget Committee, CBO has examined a variety of potential modifications to the DI program. CBO has also prepared an infographic summarizing the application process for DI, the number of beneficiaries and benefits paid under the program, and policies regarding disabled people in other countries.
Alleviating the financial pressures on the DI program would require a substantial increase in revenues for the program, a substantial decrease in the program’s costs, or some combination of those two approaches. Options to increase revenues are straightforward but limited: DI taxes paid (through the Social Security Payroll tax) by employers or employees must rise, or some other source of funding must be used. In contrast, options for reducing costs are both more complex and more numerous: For example, the components of the formula that is used to calculate DI benefits could be altered, as could one or more of the rules used to help determine eligibility for the program. Alternatively, policymakers might want to increase spending for the program by providing greater amounts of support to certain disabled workers or their dependents. CBO in conjunction with the staff of the Joint Committee on Taxation has estimated the budgetary effects of a variety of such modifications to the DI program.
Back to Work: Recent SSA Employment Demonstrations for People with Disabilities
Back to Work: Recent SSA Employment Demonstrations for People with Disabilities
Source: Mathematica Policy Research
This issue brief summarizes short-term impacts from four large scale- demonstration projects by the Social Security Administration designed to increase the economic self-sufficiency of Supplemental Security Income recipients and Social Security Disability Insurance beneficiaries. Results from these rigorous assessments include modest improvements in employment.
Should You Buy an Annuity From Social Security
The brief’s key findings are:
- Households now retiring need to transform their 401(k) and IRA savings into retirement income.
- One way is to delay claiming Social Security to increase their monthly benefit, using savings to pay current expenses while they wait.
- In effect, they are buying an annuity from Social Security: The savings used is the “price” and the increase in their monthly benefit the annuity income it “buys.
- ”Buying an annuity from Social Security is generally the best deal in town, especially in today’s low interest-rate environment.
New From the GAO
New GAO Reports and TestimoniesSource: Government Accountability Office
+ Reports
1. Indigent Defense: DOJ Could Increase Awareness of Eligible Funding and Better Determine the Extent to Which Funds Help Support This Purpose. GAO-12-569, May 09.
http://www.gao.gov/products/GAO-12-569
Highlights – http://www.gao.gov/assets/600/590737.pdf
2. Medicare: Review of the First Year of CMS’s Durable Medical Equipment Competitive Bidding Program’s Round 1 Rebid. GAO-12-693, May 09.
http://www.gao.gov/products/GAO-12-693
Highlights – http://www.gao.gov/assets/600/590713.pdf
3. Social Security Administration: Improved Planning and Performance Measures Are Needed to Help Ensure Successful Technology Modernization. GAO-12-495, April 26.
http://www.gao.gov/products/GAO-12-495
Highlights – http://www.gao.gov/assets/600/590493.pdf
4. Indian Issues: Federal Funding for Non-Federally Recognized Tribes. GAO-12-348, April 12.
http://www.gao.gov/products/GAO-12-348
Highlights – http://www.gao.gov/assets/600/590103.pdf
5. Workplace Safety and Health: Better OSHA Guidance Needed on Safety Incentive Programs. GAO-12-329, April 09.
http://www.gao.gov/products/GAO-12-329
Highlights – http://www.gao.gov/assets/590/589964.pdf
+ Testimonies
1. Department of Health and Human Services: Opportunities for Financial Savings and Program Improvements in Medicare and Medicaid Remain. GAO-12-719T, May 09.
http://www.gao.gov/products/GAO-12-719T
Highlights – http://www.gao.gov/assets/600/590723.pdf
2. Homeland Security: DHS and TSA Face Challenges Overseeing Acquisition of Screening Technologies. GAO-12-644T, May 09.
http://www.gao.gov/products/GAO-12-644T
Highlights – http://www.gao.gov/assets/600/590730.pdf
3. Medicare: The First Year of the Durable Medical Equipment Competitive Bidding Program Round 1 Rebid. GAO-12-733T, May 09.
http://www.gao.gov/products/GAO-12-733T
4. Social Security Administration: Technology Modernization Needs Improved Planning and Performance Measures. GAO-12-723T, May 09.
http://www.gao.gov/products/GAO-12-723T
Social Security Claiming: Trends and Business Cycle Effects
Social Security Claiming: Trends and Business Cycle Effects
Source: Urban Institute
Social Security claiming behavior matters because early claimants receive lower monthly benefits for the rest of their lives. Early claiming fell over the past decade, after increasing over the previous 10 years. However, high unemployment encourages early claiming by less-educated men. A 1 percentage point increase in the state unemployment rate is associated with a 0.4 percentage point increase in the monthly claiming probability by men who never attended college, implying that the Great Recession boosted their claiming rates by about 40 percent. In contrast, claiming behavior by women and well-educated men is not significantly correlated with the unemployment rate.
+ Full Report (PDF)
Social Security Board of Trustees: Projected Trust Fund Exhaustion Three Years Sooner Than Last Year
Social Security Board of Trustees: Projected Trust Fund Exhaustion Three Years Sooner Than Last Year
Source: Social Security Administration
The Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2033, three years sooner than projected last year. The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate. The Trustees also project that OASDI program costs will exceed non-interest income in 2012 and will remain higher throughout the remainder of the 75-year period.
In the 2012 Annual Report to Congress, the Trustees announced:
- The projected point at which the combined Trust Funds will be exhausted comes in 2033 – three years sooner than projected last year. At that time, there will be sufficient non-interest income coming in to pay about 75 percent of scheduled benefits.
- The projected actuarial deficit over the 75-year long-range period is 2.67 percent of taxable payroll — 0.44 percentage point larger than in last year’s report.
- Over the 75-year period, the Trust Funds would require additional revenue equivalent to $8.6 trillion in present value dollars to pay all scheduled benefits.
Social Security — Great Recession-Induced Early Claimers: Who Are They? How Much Do They Lose?
During the Great Recession, more older workers have claimed Social Security benefits early. This paper addresses two important policy questions: Who are these early claimers? How much retirement income have they lost as a result of claiming early? Using the Health and Retirement Study (HRS) we estimate a discrete-time hazard model that makes claiming Social Security benefits a function of age, personal characteristics, and the national unemployment rate. We project that high unemployment rates during the Great Recession led to a 5-percentage-point increase in the probability of claiming early relative to a less severe recession such as the 2001-2003 downturn, and this increase was nearly uniform across socioeconomic groups. Our estimates also suggest that while the Great Recession did impact the claiming decision, it did not cause a dramatic change in benefits. “Great Recession Claimers” – those whom we simulate were likely to claim early during the Great Recession but would not have in a milder downturn – filed for Social Security only 6 months earlier, on average, than they would have in a minor recession. This modest change in timing reduced their monthly Social Security benefit checks by $56, or 4.6 percent of average monthly benefits, and the Social Security replacement rate fell by 1.7 percentage points relative to a more typical recession. The benefit reduction resulted from the combined effect of the actuarial reduction for early claiming and the foregone opportunity to continue working and increase the wage base used for calculating benefits.
+ Full Paper (PDF)
How Many Disability Beneficiaries Forgo Cash Benefits Because of Work? Evidence from a New Measure
In recent years, the Social Security Administration (SSA) has placed a greater emphasis on increasing employment among people who receive federal disability benefits while also reducing their reliance on those benefits. SSA’s efforts have led to a growing interest among policymakers in exactly how many disability beneficiaries forgo cash benefits because they are working and how long they are able to remain off cash benefits. In this brief, we summarize findings from a longer report by Stapleton et al. (2010a), who used a newly developed indicator to determine how many beneficiaries receiving Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) forgo cash benefits because of work.
New From the GAO
New GAO Report and TestimoniesSource: Government Accountability Office
Report
1. Homeland Security: DHS Needs Better Project Information and Coordination among Four Overlapping Grant Programs. GAO-12-303, February 28.
http://www.gao.gov/products/GAO-12-303
Highlights – http://www.gao.gov/assets/590/588964.pdf
Testimonies
1. Managing Preparedness Grants and Assessing National Capabilities: Continuing Challenges Impede FEMA’s Progress, by William O. Jenkins Jr., Homeland Security and Justice, before the House Homeland Security Committee: Emergency Preparedness, Response, and Communications Subcommittee. GAO-12-526T, March 20.
http://www.gao.gov/products/GAO-12-526T
Highlights – http://www.gao.gov/assets/590/589447.pdf
2. Modernizing SSA Disability Programs: Preliminary Observations on Updates of Medical and Occupational Criteria, by Dan Bertoni, Education, Workforce, and Income Security, before the House Ways And Means Committee: Social Security Subcommittee. GAO-12-511T, March 20.
http://www.gao.gov/products/GAO-12-511T
Highlights – http://www.gao.gov/assets/590/589451.pdf
3. Aviation Safety: FAA Has An Opportunity to Enhance Safety and Improve Oversight of Initial Pilot Training, by Gerald L. Dillingham, Ph.D., Physical Infrastructure Issues, before the Senate Commerce, Science, & Transportation Committee: Aviation Operations, Safety, and Security Subcommittee. GAO-12-537T, March 20.
http://www.gao.gov/products/GAO-12-537T
Highlights – http://www.gao.gov/assets/590/589444.pdf
4. Joint Strike Fighter: Restructuring Added Resources and Reduced Risk, but Concurrency Is Still a Major Concern, by Mike J. Sullivan, Acquisition Sourcing Management, before the House Armed Services Committee: Tactical Air And Land Forces Subcommittee. GAO-12-525T, March 20.
http://www.gao.gov/products/GAO-12-525T
Highlights – http://www.gao.gov/assets/590/589455.pdf
Do Income Taxes Affect the Progressivity of Social Security?
Do Income Taxes Affect the Progressivity of Social Security?
Policymakers have designed Social Security to be a progressive retirement program that replaces a larger share of monthly earnings for low- and middle-income workers than for high earners. However, previous research has found that, although the Disability Insurance (DI) component of Social Security is very progressive, the Old-Age and Survivors Insurance (OASI) component may be less progressive than intended. One reason is that high earners tend to live longer than low earners. Since Social Security pays an annuity that lasts throughout retirement, it benefits high earners with greater longevity…
+ Full Paper (PDF)
CBO — Raising the Ages of Eligibility for Medicare and Social Security
Raising the Ages of Eligibility for Medicare and Social Security
Source: Congressional Budget Office
Raising the ages at which people can collect Medicare and Social Security would reduce federal spending and increase federal revenues by inducing some people to work longer. However, raising the eligibility ages for those programs also would reduce people’s lifetime Social Security benefits and cause many of the people who would otherwise have enrolled in Medicare to face higher premiums for health insurance, higher out-of-pocket costs for health care, or both. This issue brief reviews how ages of eligibility affect beneficiaries under current law and how delaying eligibility would affect beneficiaries, the federal budget, and the economy.
Most-Read Urban Institute Research Published in 2011
Our top 10 most-read research publications and commentaries reflect the nation’s policy priorities and legislative debates from health care and social security to unemployment, taxes, and recession.
- Social Security and Medicare Taxes and Benefits Over a Lifetime (UI & TPC site)
C. Eugene Steuerle, Stephanie Rennane
How much will you pay in Social Security and Medicare taxes over your lifetime? And how much can you expect to get back in benefits? It depends on whether you’re married, when you retire, and how much you?ve earned over a lifetime. - The Nonprofit Sector in Brief: Public Charities, Giving and Volunteering, 2011
Katie L. Roeger, Amy Blackwood, Sarah L. Pettijohn
This brief highlights trends from the eighth edition of The Nonprofit Almanac 2011, prepared by the National Center for Charitable Statistics at the Urban Institute. We highlight the growth in the number and finances of 501(c)(3) public charities, as well as key findings on private charitable contributions and volunteering. - Why Some Tax Units Pay No Income Tax
Rachel M. Johnson, Jim Nunns, Jeff Rohaly, Eric Toder, Roberton Williams
About 46 percent of American households will pay no federal individual income tax in 2011, roughly half of them because of structural features of the income tax that provide basic exemptions for subsistence level income and for dependents. - Committees Tackle the Deficit
John L. Palmer, Rudolph G. Penner
Numerous committees have formed to suggest ways of restoring fiscal stability. Some come from the political right or left, but the most interesting include members who span the ideological spectrum. The most important is the president’s National Commission on Fiscal Responsibility and Reform (NCFRR 2010). - Thirteen Ways of Looking at Poverty
Urban Institute
This factsheet presents a quick overview of recent cross-cutting Urban Institute research on poverty, including 13 key points on poverty’s effects on immigration, health care, children, infants with depressed mothers, employment, assets, and neighborhoods. One in an occasional series of Thirteen Ways factsheets. - The Multi-site Adult Drug Court Evaluation: Executive Summary
Shelli B. Rossman, John Roman, Janine M. Zweig, Michael Rempel, Christine Lindquist
The National Institute of Justice’s Multi-site Adult Drug Court Evaluation (MADCE) tested whether drug courts reduce drug use, crime, and associated problems; assessed how drug courts work and for whom; examined how changes in participant attitudes and behaviors explain effectiveness; and determined whether drug courts generate cost savings. - Poverty in the United States
Austin Nichols
The U.S. Census Bureau has announced that the poverty rate jumped to 15.1 percent in 2010, up from 14.3 percent in 2009 and 13.2 percent in 2008. This 18-year high still understates the dire straits of many Americans today. The devastation of poverty grows more severe over time as individuals exhaust private resources and temporary benefits. - What Role is Welfare Playing in this Period of High Unemployment?
Sheila R. Zedlewski, Pamela J. Loprest, Erika Huber
Temporary Assistance for Needy Families (TANF), the nation’s cash assistance program for poor families with children, has not played much of a countercyclical role during the current recession. - How Will the Affordable Care Act Affect Jobs?
John Holahan, Bowen Garrett
Opponents of health reform have made strong claims about the effect of the Affordable Care Act (ACA) on jobs. Supporters of legislation to repeal the ACA, the so-called “Repealing the Job Destroying Health Care Law Act,” argue that the law will increase unemployment in an already fragile economy. - The Elected Official’s Toolkit for Jail Reentry
Jesse Jannetta, Hannah Dodd, Brian Elderbroom
The Elected Official’s Toolkit for Jail Reentry provides information and resources for local elected officials interested in launching or expanding a jail reentry initiative. The Toolkit includes an overview of jail reentry, first steps for developing a context-appropriate jail reentry initiative, essential facts and data to engage stakeholders, sample legislation, profiles of elected officials who have championed jail reentry, and a guide to additional resources.
Disability Insurance: Does Extending Unemployment Benefits Help?
Disability Insurance: Does Extending Unemployment Benefits Help?
Source: Center for Retirement Research at Boston College
The Great Recession has resulted in the highest national unemployment rate in nearly 30 years, and those who find themselves unemployed remain jobless longer than ever before. In response, the federal government has extended unemployment insurance (UI) benefits for up to 99 weeks, almost a year and a half longer than normal durations. At the same time, applications for Social Security disability insurance (SSDI) benefits, which had been increasing for decades,1 reached an all-time high in 2009 and have continued to rise. An important question is how the availability of unemployment insurance, in general, and extended UI benefits, in particular, affect SSDI applications and the composition of the pool of applicants. This question is the topic of this brief…
+ Full Document (PDF)
Does Disability Insurance Receipt Discourage Work?
Does Disability Insurance Receipt Discourage Work?
Source: RAND Corporation
The authors present the first estimates of the causal effects of Social Security Disability Insurance receipt on labor supply estimated using the entire population of program applicants. They exploit administrative data to match applications to disability examiners, and use natural variation in examiners’ allowance rates as an instrument for the allowance decision in a labor supply equation contrasting denied vs. allowed applicants. Importantly, they find that the disincentive effect is heterogeneous, ranging from a 10 percentage point reduction in labor force participation for those with more severe impairments to a 60 percentage point reduction for entrants with relatively less severe impairments.
+ Full Paper (PDF)
New From the GAO
New GAO Reports and Testimonies
Source: Government Accountability Office
+ Reports
1. International Military Education and Training: Agencies Should Emphasize Human Rights Training and Improve Evaluations. GAO-12-123, October 27.
http://www.gao.gov/products/GAO-12-123
Highlights - http://www.gao.gov/highlights/d12123high.pdf
2. VA Philippines Office: Maintain Operations, but More Information Needed to Determine Future Presence. GAO-12-20R, October 27.
http://www.gao.gov/products/GAO-12-20R
+ Testimonies
1. DOD Financial Management: Challenges in the Implementation of Business Systems Could Impact Audit Readiness Efforts, Asif A. Khan, FMA, before House Committee on Armed Services: Defense Financial Management and Auditability Reform Panel. GAO-12-177T, October 27.
http://www.gao.gov/products/GAO-12-177T
Highlights - http://www.gao.gov/highlights/d12177thigh.pdf
2. Supplemental Security Income: Preliminary Observations on Children with Mental Impairments, by Daniel Bertoni, EWIS, before House Committee on Ways and Means: Human Resources Subcommittee. GAO-12-196T, October 27.
http://www.gao.gov/products/GAO-12-196T
Highlights - http://www.gao.gov/highlights/d12196thigh.pdf
The Evolution of Social Security’s Taxable Maximum Wage Threshold
The Evolution of Social Security’s Taxable Maximum Wage Threshold
Source: Social Security Administration
Major Findings
- The tax max has been in place since Social Security’s founding, but Congress has modified it over time to address several policy goals, such as improving system financing and maintaining meaningful benefits for middle and higher earners.
- Although the nominal value of the tax max has grown from $3,000 in 1937 to $106,800 today, in inflation-adjusted dollars the tax max declined from 1937 until the late 1960s, and then grew once it was indexed to wage growth in 1975. In wage-adjusted dollars, the tax max has remained roughly constant since the mid-1980s.
- The percentage of workers with earnings above the tax max (“above-max earners”) fell from 15 percent in 1975 to about 6 percent in 1983 and has remained at that level since.
- Historically, an average of roughly 83 percent of covered earnings have been subject to the payroll tax. In 1983, this figure reached 90 percent, but it has declined since then. As of 2010, about 86 percent of covered earnings fall under the tax max.
- The percentage of earnings covered by the tax max has fallen since the early 1980s because earnings among above-max earners have grown faster than earnings among the rest of the working population.
New From the GAO
New GAO Reports and Testimonies (PDF)
Source: Government Accountability Office
+ Reports
1. Drug Pricing: Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement. GAO-11-836, September 23.
http://www.gao.gov/products/GAO-11-836
Highlights - http://www.gao.gov/highlights/d11836high.pdf
2. Indian Health Service: Increased Oversight Needed to Ensure Accuracy of Data Used for Estimating Contract Health Service Need. GAO-11-767, September 23.
http://www.gao.gov/products/GAO-11-767
Highlights - http://www.gao.gov/highlights/d11767high.pdf
3. Electronic Government: Performance Measures for Projects Aimed at Promoting Innovation and Transparency Can Be Improved. GAO-11-775, September 23.
http://www.gao.gov/products/GAO-11-775
Highlights - http://www.gao.gov/highlights/d11775high.pdf
+ Testimonies
1. DOD Financial Management: Improved Controls, Processes, and Systems Are Needed for Accurate and Reliable Financial Information, by Asif A. Khan, director, financial management and assurance, before the Subcommittee on Government Organization, Efficiency and Financial Management, House Oversight and Government Reform Committee. GAO-11-933T, September 23.
http://www.gao.gov/products/GAO-11-933T
Highlights - http://www.gao.gov/highlights/d11933thigh.pdf
2. Social Security Disability: Participation in the Ticket to Work Program Has Increased, but More Oversight Needed, by Daniel Bertoni, director, education, workforce, and income security issues, before the Subcommittees on Social Security and Human Resources, House Ways and Means Committee. GAO-11-828T, September 23.
http://www.gao.gov/products/GAO-11-828T
3. American Samoa and Commonwealth of the Northern Mariana Islands: Employment, Earnings, and Status of Key Industries Since Minimum Wage Increases Began, by David Gootnick, director, international affairs and trade, before the Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs, House Natural Resources Committee. GAO-11-956T, September 23.
http://www.gao.gov/products/GAO-11-956T
4. Polar Satellites: Agencies Need to Address Potential Gaps in Weather and Climate Data Coverage, by David A. Powner, director, information technology management issues, before the Subcommittees on Investigations and Oversight and Energy and Environment, House Science, Space, and Technology Committee. GAO-11-945T, September 23.
http://www.gao.gov/products/GAO-11-945T
Highlights - http://www.gao.gov/highlights/d11945thigh.pdf
