Reprinted from Campaign for America’s Future.
On Face the Nation this Sunday, Sen. Mark Warner was asked by host Bob Schieffer why his ‘Gang of Six’ would take on Social Security reform in their forthcoming budget proposal. His response reflected a commonly-held myth about Social Security’s history that greatly exaggerates the changes in the worker-to-retiree ratio between 1950 and today. Warner gave as his rationale the popular refrain that “part of this is just math: 16 workers for every one retiree 50 years ago, three workers for every retiree now.”
Senator Warner is claiming that Social Security is less financially secure than in decades past because it no longer has a sustainable worker-to-retiree ratio. But this statement is highly misleading, and in fact it is a version of the same conservative spin that President Bush often used during his attempt to privatize the program.
In fact, the high ratio of workers to retirees in 1950 was an anomaly, which resulted from the larger number of workers that were incorporated into the program at the time, such as millions of farm workers and domestic workers. Furthermore, because the program was still relatively new, the first workers to contribute to the program had not yet started to collect benefits. To demonstrate how meaningless the 16:1 number it, consider this: Only five years later [in 1955], the worker-to-beneficiary ratio was halved to 8:1, and by 1975 it was down to what it is today. And just ten years earlier, in 1940, the ratio had been 149.5 workers for every one retiree!
The truth is that as the economy grows and technological innovation increases,fewer workers are needed to generate the same and higher levels of economic productivity. So long as the economy is growing, having even a 2:1 ratio of workers to retirees is sustainable. The worker-to-retiree ratio has been stable for almost forty years and has not failed to supply adequate levels of benefits. Nor will it, provided our economy continues to recover at a reasonable rate. Senator Warner should know that the 16-to-1 statistic is little more than a falsely inflated argument that Social Security’s opponents have long used to delegitimize the program and push for calls for its’ “reform.”
(For more on the evolution of the worker-to-retiree ratio, see Nancy J. Altman’s explanation on page 274 of The Battle for Social Security: From FDR’s Promise to Bush’s Gamble.)