I spent a big chunk of today pulling stats from the Social Security website, and playing with the numbers. I'll be putting together a more professional piece later, but here are some starter stats.
In 1940, the OASI tax (combined payroll and employer 'contribution') was 2%. Only the first $3000 was taxed, so the maximum yearly tax burden was $60 ($738 in 2000 dollars). The average monthly benefit was $22.71.
By 1960, twenty years later, the tax had risen to 5.5%, and the maximum taxed income to $4800. The most an individual paid a year was $264 ($1388.42 in 2000). The average benefit was $81.73 a month. Also, at the time, the median family income was $5620.
In 1980, the tax was up to 9.04%, and the income ceiling was at $25,900. Maximum tax was then $2341.36 ($3865.05 in 2000). Average benefit was $321.10, and median family income was $9867.
Finally, in 2000, the tax had settled at 10.6%. Maximum income was $76,200 (since then it's risen to $87,000). Maximum tax was $8077.20. The average monthly benefit was $844.70, while median family income was $50,890.
Now look at how the program has changed since 1960. Average benefits have risen from $81.73 to $844.70 a month. That's a little more than a tenfold increase. Median income rose from $5620 a year to $50,890, a little more than a ninefold increase. So average benefits have actually increased slightly more than average income levels over that 40-year period.
BUT, over the same period of time, people have come to pay a lot more for these same benefits. The tax in 1960 was just 5.5%, while in 2000 it was 10.6%. Benefits have shrunk, while the tax has nearly doubled.
And in 1960, the maximum taxable income ($4800) was below the median family income ($5620). By 2000, the maximum taxable income was in excess of 50% more than the median family income.
Also, while average benefits have kept pace with income, the picture is a lot less rosy for people paying more in taxes. From 1940 to 2000, the maximum tax burden rose from $60 a year ($738 in 2000) to $8077.20, and eleven-fold increase. Maximum monthly benefits, on the other hand, have gone from $41.20 ($506.76 in 2000) to $1435.30, less than a threefold increase. People at the upper end of the tax scale are effectly getting one-third the return on their money as they did at the program's start.
As soon as I can find a median income for 1940, I'll contrast that as well. Given the 2% tax, less than 1/5 of the modern OASI tax rate, it's sure to produce even more disappointing results.
