With all the controversy over the President's proposed "chained CPI" cuts to Social Security, it's worth noting the effect the economy is already having on Social Security benefits. We're seeing a growing divide between the "penthouse economy" and the one the rest of us live in, with implications that last well into our retirement years.
The Penthouse Recovery
Corporate profits are at record highs. Corporate earnings have risen 20 times as fast as disposable income during this ‘recovery.’ And most of that 1/20th went to higher-income earners. Hourly wages actually fell.
Those profits are, in Derek Thompson’s well-chosen words, “eating the economy.” As Thompson notes, corporate profits have doubled their share of the overall economy since 2000 while labor’s percentage, which were already at a half-century low, have fallen another four points.
The wealthy have reaped all of the benefits of our post-crisis ‘recovery’ – and have actually used that recovery to gain a bigger slice of the pie than they had before.
Death of 1,000 Cuts
There are no jobs in sight. All the key indicators - The “U6” measurement of un- and under-employed workers, labor force participation figures, and other indicators - are at or near record levels.
Even the "good" jobs reports leave us well below the kind of private-sector hiring we would need to keep up with growth in the workforce and reduce real unemployment at a reasonable pace. And we just had a very bad jobs report.
The jobs we are getting are trending much more heavily toward low-paying, unskilled jobs. Government jobs are good jobs, but the President’s budget cuts those.
Wages are at record lows. Workers’ wages hit new lows last year, and the trend line isn’t pointing the right way.
Poverty is at its highest level in fifty years. As the latest census shows, nearly fifty million Americans now in poverty. One child in five is impoverished.
Each of these indicators is a grim reality in its own right. And each results in lower Social Security benefits for the American people.
The 1 Percent Solution
In an economy like this one, a proposal to cut Social Security benefits compounds the injuries which have already been inflicted on the middle class. Dean Baker’s calculations show that the President’s budget asks the typical financially-strapped senior to sacrifice more than three times as great a share off income as the average wealthy American.
The "chained CPI" is a bad idea under any circumstances. In this economy, it's a declaration of war on the middle class - and an expression of solidarity with the wealthiest and most powerful among us.