Social Security Spotlight was created to provide a one-stop information source detailing the impact Social Security has for millions of American families living in all 50 states, their communities and throughout the economy. By providing data on Social Security’s economic impact as well as detailed data on beneficiaries by state, county and congressional district, race/ethnicity, age and gender, this research offers a clear and compelling description of the vital role Social Security plays throughout America.

Funding

The research and the SocialSecuritySpotlight website were funded by a grant from the Retirement Research Foundation.

Report Executive Summary

Social Security’s significant economic contribution to communities across America is often misunderstood or ignored in the public debate.

“Social Security Spotlight” is an online research tool with easily accessible information at the state, county, and congressional district level that provides a compelling perspective on Social Security’s economic impact. The website’s detailed data on beneficiaries by race/ethnicity, age and gender, tell part of Social Security’s story. In 2014, 59 million Americans, representing 18% of the entire US population, received Social Security benefits, which accounted for about 5% of the total national economy.

Social Security also has a critical economic stimulus effect in states and local communities, contributing $1.6 trillion nationally as benefits are spent and cycle through the economy. The economic stimulus impact varies from state to state—generally, the larger states have more Social Security recipients and thus more benefits. However, the report’s impact estimates are adjusted for taxes and the composition of state economies, which affect how benefits are multiplied and generate additional economic activity. For example in 2014, California residents received $80.4 billion in benefits, which added $165.9 billion to the state economy. At the other extreme, District of Columbia residents received $1.1 billion in benefits, generating $1.6 billion in economic activity.

Drs. Peter Arno and Andrew Maroko, the report researchers, also present another metric—called the Regional Support Index (RSI)— to assess Social Security’s support for the total resident populations for all counties and states.

The RSI is composed of three variables: (1) percent of each state’s or county’s entire population that receives Social Security benefits; (2) percent of personal income in the state or county derived from Social Security; and (3) per capita Social Security income at the state or county level (total amount of Social Security benefits divided by total number of residents). Higher RSI values indicate a higher level of Social Security support for the population. When examining the change in the RSI between 2008 and 2013, a higher number reflects increasing Social Security support, whereas a lower number indicates decreasing support over this five-year period. At the state level, only North Dakota decreased its RSI score during this time. At the county level, only 197 out of 3,108 counties (6.3%) with reliable data for both years decreased their support over the same time period. While the overall national trend is increasing support by Social Security, a wide variation exists across all states and counties.

Social Security’s automatic economic stabilizer effect is important to consider as well because beneficiaries continue to receive benefits even during economic downturns. These dollars not only aid individuals and their families but also circulate in communities to help moderate the effects of the business cycle.

Social Security is America’s most efficient anti-poverty program. More than 99 cents of every dollar is paid in benefits, with less than one percent allocated to administrative expenses. It has been estimated that Social Security lifts 22 million Americans out of poverty, including 15 million persons age 65 and older, 5.9 million between ages 18 and 64 and more than a million children.

Social Security is a social insurance program for workers and their families throughout their lifetimes. Workers pay Social Security premiums for a guarantee that they will receive income in their retirement years or earlier if they become disabled, and that their spouse and children will receive support in the event of their death or disability.

Task Force on the Future of America’s Health and Retirement Security

The project has been guided by the Task Force on the Future of America’s Health and Retirement Security

  • Chair, Marilyn Moon, PhD, Institute Fellow and Director, Center on Aging, the American Institute for Research
  • Ronald J. Angel, PhD, Professor of Sociology at the University of Texas at Austin
  • Peter S. Arno, PhD, Senior Fellow and Director of Health Policy Research at the Political Economy Research Institute at the University of Massachusetts-Amherst. National Committee to Preserve Social Security and Medicare Foundation
  • Carroll L. Estes, PhD, Founding Director of UCSF Institute for Health & Aging. Chair, Board of Directors, National Committee to Preserve Social Security & Medicare Foundation
  • Madonna Harrington Meyer, PhD, Senior Research and Faculty Associate for the Center for Policy Research at the Syracuse University Aging Studies Institute
  • T.J. Sutcliffe, Director of Income and Housing Policy at The Arc, Washington DC.
  • Bruce Vladeck, PhD, Senior Advisor to Nexera, Inc., former Administrator of the Healthcare Financing Administration (HCFA)
  • David R. Williams, PhD, Professor, Harvard School of Public Health.
  • William K. Vaughan, Vice Chair, Board of Directors, National Committee to Preserve Social Security & Medicare

Research conducted by:

Peter S. Arno, PhD, Senior Fellow and Director of Health Policy Research at the Political Economy Research Institute at the University of Massachusetts-Amherst.  Board member, National Committee to Preserve Social Security & Medicare Foundation

Andrew R. Maroko, PhD, Assistant Professor, City University of New York Graduate School of Public Health and Health Policy

Project Manager

Ann E. Beaudry

Report Methodology

Social Security’s Economic Stimulus Estimates
Social Security’s economic stimulus impact is based on a study by Koenig and Myles (K&M) conducted for the AARP Public Policy Institute[4]. In their study, using data from 2012, they derived Social Security’s state-based economic multipliers by using an input-output model of the US economy; these multipliers are used in this report. According to K&M, “The input-output model captures not only the direct impact of Social Security expenditures but also the indirect and induced impacts that occur when recipient dollars work their way through the economy.” NCF researchers made the following adjustments and assumptions to update their analysis: (1) used the latest available Social Security benefits data (2014)[5]; and (2) derived the tax adjustment factor by dividing K&M’s tax adjusted Social Security benefits for 2012 by actual Social Security benefits for 2012 and applied these ratios to 2014 Social Security benefits data.

Thus, the total economic stimulus impact of Social Security at the state level is simply the product of Social Security benefits adjusted for federal and state taxes and the economic multiplier for each state.

Social Security Regional Support Index (RSI)
The RSI is based on work from Gallardo and Myles [6] and focuses on entire state or county population rather than just direct beneficiaries. The RSI is based on three variables: (1) percent of the state or county’s entire population that receives Social Security benefits; (2) percent of personal income in the state or county derived from Social Security benefits; and (3) per capita Social Security income at the state or county level. Our approach uses the variables listed above and combines them into an index using principal component analysis (PCA), a data reduction technique which merges the variables into one number. [7]  This enables us to compare changes in Social Security support by state or county over time to detect increases or decreases. It should be noted that state and county level RSI are each scaled from 0-100, but are weighted independently, and therefore the values at these different geographic levels are related but not directly comparable. Higher RSI values indicate more Social Security support for the population. When examining the change in RSI, a positive number suggests increasing Social Security support between 2008 and 2013, whereas a negative number indicates decreasing support over this five-year period. At the state level, only North Dakota decreased its RSI score over this time period. At the county level, only 197 out of 3,108 counties (6.3%) with reliable data for both years decreased their support over the same time period.

Data Sources

Regional Support Index (RSI)

General Social Security Data
The majority of the Social Security data was gathered from sources within the Social Security Administration, including the Annual Statistical Supplement (2015)[8] and OASDI Beneficiaries by State and County (2014). [9] Earnings based on the Annual Statistical Supplement were converted from monthly estimates (December, 2014) to annual estimates by multiplying December data by 12.

Beneficiaries by Race
Social Security data stratified by race/ethnicity is not routinely collected by the Social Security Administration. Race and ethnicity data used here were derived from the 2014 American Community Survey public use microsample dataset via IPUMS-USA (University of Minnesota, www.ipums.org)[10]. The race and ethnicity of survey respondents were identified in a mutually exclusive manner so that those who identified as “Hispanic” are not counted in the White, Black, Asian, or other categories. Additional variables of interest (e.g., social security income, age, gender) were then coded and cross-tabulated in order to generate various tables and graphics.

Veterans
Social Security data stratified by veterans is not routinely collected by the Social Security Administration. The number of veterans receiving Social Security benefits by state was obtained from the Social Security Administration, and was based on their analysis of the Current Population Survey (personal communication; August 17, 2015).

[1] The 2016 Annual Report of the Board of Trustees, Federal Old-age and Survivors Insurance and Federal Disability Insurance Trust Funds, Table III.A6—Administrative Expenses as a Percentage of Non-interest Income and of Total Expenditures, Calendar Years 2011-2015. Released, June 22, 2016. Available, http://1.usa.gov/294iCJ4

[2] Romig K. Social Security Lifts 21 Million Americans Out of Poverty. Center on Budget and Policy Priorities. November 9, 2015. Available, http://bit.ly/1U9DM9g

[3] Arno PS, Wicks-Lim J. Overlooked but Not Forgotten: Social Security Lifts Millions More Children Out of Poverty. Analysis conducted for the Center for Global Policy Solutions, July 2016. Available, http://bit.ly/29TTy9y

[4] Koenig G, Myles A. Social Security’s Impact on the National Economy, AARP Public Policy Institute, October 2013. Available, http://bit.ly/1cUzFNm

[5] Social Security Administration, Table 3, “Amount of benefits in current-payment status, by state or other area, type of benefit, and sex of beneficiaries aged 65 or older, December 2014.” [released August 2015]. These figures are multiplied by 12 to derive an annual estimate for 2014. Available, http://1.usa.gov/1UpjcmJ

[6] Gallardo R, Myles A. Economic Impact of Social Security in the United States, prepared for the Southern Rural Development Center, Technical Report, Fall 2011. Available, http://bit.ly/1EF8cwt

[7] PCA was run in SPSS based on 2013 data to calculate one major component. Regression equations were fit to this data then coefficients & intercept applied to 2008 data.

[8] https://www.ssa.gov/policy/docs/statcomps/supplement/2015/

[9] http://www.ssa.gov/policy/docs/statcomps/oasdi_sc/2014/

[10] Steven Ruggles, Katie Genadek, Ronald Goeken, Josiah Grover, and Matthew Sobek. Integrated Public Use Microdata Series: Version 6.0 [Machine-readable database]. Minneapolis: University of Minnesota, 2015.

A project of:

About the Report

Social Security is our nation’s bedrock social insurance program. It protects American workers, their families and their children against the risks of poverty as a result of old age, death of a spouse or parent, or a life-changing disability. At a time of escalating inequality and declining retirement savings, the National Committee Foundation examines Social Security’s crucial and often neglected role in the economic life of communities in every state.

Research conducted by:
Peter S. Arno, PhD
Senior Fellow and Director, Health Policy Research, Political Economy Research Institute, University of Massachusetts, Amherst. Board member, National Committee to Preserve Social Security and Medicare Foundation

Andrew R. Maroko, PhD
Assistant Professor, City University of New York Graduate School of Public Health and Health Policy

NOTE:
This report uses 2014 data, unless specifically indicated otherwise. Due to rounding some totals may not correspond to the sum of the separate figures.

Social Security Spotlight