The millions of Americans who get social security will not see their payments rise next year and probably not the year after. The cost of living increases that have been in place for thirty years are being undermined by the lack of inflation.
Government numbers show that about 50 million citizens get payments from the fund.
Those who get social securities payments may find that the lack of a “pay raise” hurts them because many of their costs are rising. Those could be energy expenses, medicine, or food costs. The lack of overall inflation does not mean that none of the expenses of an average American are rising. On the contrary, energy prices are increasing rapidly now, particularly for people who drive or use home heating oil.
The lack of an increase in social securities benefits will also hurt consumer spending. Recipients who are not getting more money each month are unlikely to have much, if any, disposable income. These people can be added to the unemployed and under-employed as groups that will keep whatever tiny sums of money that they have in their pockets.
The stimulus package still has as its stated goal that it will add or save 3 million to 3.5 million jobs. It does not appear to aim any of its efforts at keeping living wages or benefits at levels that allow people to remain part of the consuming population. As the number of people who can spend money beyond essential living costs decreases, so does the chance of improvements in consumer spending, which makes up 70% of GDP.
Flat social securities payments may help save a fund that is quickly disappearing, but it also hurts that economy when the economy cannot afford to be hurt.
Douglas A. McIntyre