MARCH 24, 2021
Kuttner on TAP
Another Reason for a $15 Minimum Wage—Social Security
Social Security faces a double-barreled challenge. Benefits are grossly inadequate, and yet the system faces a shortfall in its trust funds projected to hit sometime in the 2040s, depending on your assumptions of economic growth and wage growth.

Social Security is funded by payroll taxes on worker earnings. The entire shortfall is the result of wages failing to keep pace with productivity growth since about 1973.

According to data and a graph made famous by the Economic Policy Institute, median wages and growth in the economy’s productivity rose in lockstep from 1948 to 1979, and have widely diverged ever since. Since 1979, productivity has grown by 69.6 percent but hourly pay only by 11.6 percent.

With a $15 minimum wage, EPI projects annual wage gains of $107 billion. That in turn would increase payroll tax receipts by $13 billion a year, or over $200 billion between now and 2040. That’s not enough to plug the entire Social Security shortfall, but it’s not chump change either.

The indirect impact of a minimum-wage hike would spill over into faster GDP growth, tighter labor markets, and higher wages elsewhere. That would also be good for Social Security tax receipts.

We do need to find other revenue sources to combine Social Security solvency with adequacy of benefits, which are far too low. But a $15 minimum wage would be a great place to start.

The Growing Movement to End the Surveillance Economy
A new coalition has formed against digital platforms’ dangerous business model of collecting voluminous user data and using it to serve up ads. BY DAVID DAYEN
Corporate America’s Empty Threats
Uber, Amazon, and others continually vow to leave any place where public-interest regulation might limit their profits. Don’t buy it. BY ALEXANDER SAMMON
The Case for Taking Back Solar
Installing a lot more solar is part of the path to clean, renewable energy. But we also need to be producing the entire supply chain. BY JOAN FITZGERALD
The Promise of Offshore Wind
We can create good jobs and clean, cheap power by bringing back production as well as accelerating installation. BY BRITTANY GIBSON
First 100: Postal Transformation Plan Has Democratic Board Support
Plus, let’s get real, there doesn’t look to be any action forthcoming on gun violence. BY DAVID DAYEN

 
 
 
 
 
 
Copyright (c) 2021 The American Prospect. All rights reserved.