Gutting Social Security: It Isn't Just an Issue for Old Folks

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Years of corporate cuts to employee pensions and unchecked rises in health care costs have turned the hopes of golden years for many to tin. More than 22 percent of those 65 and older live in poverty in the United States, the seventh-highest level of elder poverty among the 30 member nations of the OECD. The poverty rate among seniors in the United States is more like Mexico’s (28%) than Canada’s (6%), Germany’s (8%) or the United Kingdom’s (10%).

The changes to the cost-of-living formula used by Social Security proposed by President Obama may sound small at first, reducing recipients’ checks by a few dollars every month. But the formula, known as chained CPI, is cumulative. You lose a few dollars this month. Next month you lose those same dollars and a few more.  After 20 years the average Social Security recipient’s check will be more than $100 less than it would be under the current formula. To make matters worse, many economists argue that the existing cost-of-living formula already penalizes seniors because it fails to reflect the higher proportion of health care expenses in most seniors’ budgets, and the reality that health care inflation has outpaced broad inflation for many years.

When we asked Rhonda Straw when she expects to retire, she said simply: “I’ll never be able to afford to retire.” Therein lies the problem for young people and for those who have struggled with long-term unemployment.

Washington should be focused on solving the persistent jobs crisis. Instead, they’re embroiled in an irrational debate over cuts to Social Security – cuts that would only make the jobs crisis worse. If Congress falls for this austerity mania, job opportunities for young workers may become as rare as the sight of CEO in a bread line.