From MarketWatch:
More than doubling the federal minimum wage is quite the controversial proposal currently sitting in Congress, but there’s no debate about one facet of the concept: doing so would boost Americans’ retirement savings.
The House of Representatives recently passed the Raise the Wage Act, which would increase the minimum wage across the country from $7.25 to $15 an hour by 2025. The bill still needs to get approved in the Senate and then by the president ...
If a single worker with a life expectancy of 90 were to earn the current minimum wage her whole life, and claimed Social Security benefits at her full retirement age, she would receive a monthly benefit of $924, compared with that same type of worker earning $15 an hour, who would receive $1,337, said Bill Meyer, chief executive officer of software firm Social Security Solutions.
But Social Security benefits can also be calculated cumulatively — that is, the total amount in one’s lifetime. Cumulatively, a worker claiming at 62 after having earned the current minimum wage his whole life would receive $294,000 (assuming a 2% cost-of-living adjustment), and $398,000 if he claimed at 70. But if a worker earned $15 an hour and claimed at 62, he would see $425,000 in lifetime Social Security benefits, and $576,000 if he claimed at 70....
Humm- Doubling the wages, doubles the ss taxes but only results in a 33% increase in benefits. Perhaps someone would explain why the steady middle class worker and the employer should pay for this welfare. Why should those with rental income, interest income, dividend income, capital gain income and (my favorite) oil royalty income not pay for this relative generous welfare paid on the first $1000 of average monthly income?
ReplyDeleteOr better yet raise it to $30 an hour.
ReplyDeleteThe $15 would save money in some regards--less people eligible for the earned income tax credit and less people eligible for food stamps and other welfare programs (at least if they are working). On the other hand, higher prices for just about everything (if min wage is $15, people making $15 now for a more skilled position are going to want more) and less people working as some businesses can't afford to pay $15 to as many employees.
The new average life expectancy for Americans is 78.7 years, which puts the U.S. behind other developed nations and 1.5 years lower than the Organisation for Economic Cooperation and Development (OECD) average life expectancy of 80.3
ReplyDeleteIt won't mean increased revenue if it puts a lot of people out of work. A $15 minimum wage will put a significant number of small businesses out of business. Over time, it will result in inflation-increased labor costs = increased prices. So, a social security check won't go as far and Congress will need to look at seriously increasing the benefits, so any increased revenue disappears. So, you have prices increased, small businesses gone, fewer jobs, higher unemployment - but, hey, maybe the bureacrats will be able to brag about increased revenue.
ReplyDelete6:01, 33% more in retirement, plus whatever dependent child, survivor, or disability benefits they need. And if they live to be 100 or have a spouse that lives a long time, the additional benefits are even more pronounced.
ReplyDeleteIt's insurance. That means not everyone is going to get it, and it won't pay off for everyone. But it provides a level of protection that's not otherwise possible. A minimum wage worker isn't going to be able to save for a retirement/survivor/disability policy as good as Social Security and their job isn't going to provide one (if the private insurance market even offered an equivalent plan, which it doesn't).
$1337/$924 = 1.447, which is a 44.7% increase, not 33%. Yes, lower income people get a better deal from Social Security, since one of its purposes is to reduce old-age poverty. That's a good thing. I am grateful that I have a decent income and don't see any reason to complain that there are low-income people getting a little more out of Social Security. I'm more upset that the government gives huge quantities to the wealthy (such as when they bailed out the big banks, which otherwise would have gone bankrupt due to their own greed, although there are countless other examples).
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