If you wish to level the finger at one thing for Social Safety’s struggles, do not make it boomers. As a substitute, blame the next three developments.
Rising earnings inequality
To start with, assign among the blame for Social Safety’s woes on growing income inequality. This widening hole between the wealthy and everybody else is hitting Social Safety in two methods.
First, as famous, the 12.four% payroll tax on earned earnings is this system’s major income. In 2020, all earned earnings between $zero.01 and $137,700 is topic to the payroll tax, with earnings above $137,700 exempt. Between 1983 and 2016, the quantity of earnings exempted from the payroll tax has surged from a little over $300 billion to $1.2 trillion. Because of this, in a typical 12 months, greater than $150 billion in potential payroll tax income escapes the system.
The second challenge with earnings inequality has to do with entry to healthcare. The rich normally haven’t any monetary constraints in the case of receiving preventive care or shopping for prescription medication. That is not at all times the case with lower-income People. Consequently, the wealthy are considerably outliving lower-income staff. This has allowed the rich to not solely pocket a bigger month-to-month profit from Social Safety, however to additionally obtain an above-average payout for a protracted time frame.