I can't believe it. The largely bogus "notch baby" controversy has generated a new press mention. I hope this is the last one.
2 comments:
Anonymous
said...
The change was how benefits were computed more than the COLA formula. Max SSA earnings went from $3000 in 1950 to over $10K in 1973. It took only 6 more years for it to go up that much in the 70s. It was getting to the point where a person could work for 10 years at max SSA amount and be getting more than someone who worked 30 years at max level when the max was very low. So indexing of earnings and a change in formula was necessary. Someone earning $40K just one year in the 80s, under the old formula, got as much credit as someone who worked and made max earnings throughout the 1950s. Had the max not gone up so quickly, the old formula would have still worked but Congress was raising the max every year.
2 comments:
The change was how benefits were computed more than the COLA formula. Max SSA earnings went from $3000 in 1950 to over $10K in 1973. It took only 6 more years for it to go up that much in the 70s. It was getting to the point where a person could work for 10 years at max SSA amount and be getting more than someone who worked 30 years at max level when the max was very low. So indexing of earnings and a change in formula was necessary. Someone earning $40K just one year in the 80s, under the old formula, got as much credit as someone who worked and made max earnings throughout the 1950s. Had the max not gone up so quickly, the old formula would have still worked but Congress was raising the max every year.
The confusion in the article comes from the author using SSA's current notch pamphlet instead of the original that 1:22pm described.
Current one blames COLA: https://www.ssa.gov/pubs/EN-05-10042.pdf
Original clearly discusses changes in benefit computation: https://www.ssa.gov/history/pdf/notch.pdf
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