Rome, NY Sucks

But At Least We're Not Utica

Saturday, June 11, 2005

AARP: Eat the Young

While most people are focusing on Howard Dean's newest stab at Republicans, I've been paying attention to the economic rhetoric. Along with the claims that more people in the US are uninsured than ever before (likely due to the rise in population, illegal immigration and medical litigation; ha) and wages are remaining flat while costs are rising, the claim has been forwarded that the next generation will have a lower standard of living than the previous one.

Similar claims were made at the depth of the early 90s recession when few could conceive of an information economy. Economic problems are more regional (like Central New York) than national. Economic indicators are often contradictory, where stocks go up after massive layoff news or higher oil prices show a booming economy. Even if the dire predictions are true, one thing puzzles me.

President Bush is continuing on his fixing Social Security tour. Democrats and the AARP are trying to head off his efforts by claiming that the system should stay the way it is. The only viable liberal "fix" is to raise taxes on people making over $90,000 a year. This may be a problem since the wealthy are mobile and can move to countries where 12% of their income will be safe from government hands. The greatest warning, however, was the claim that "Social Security has virtually eliminated poverty among the elderly."

So, under the zero sum economics where "the rich get richer and the poor get poorer" we could assume that people on Social Security are relatively rich while people who still pay into it are poorer. In my own case, I make far less than the median income and FICA is the largest chunk taken out before Federal tax (sometimes the largest). The down side is that I never get it back in a refund. Also, one time I got a paycheck for $20 and FICA was the only thing they took out.

Let's look at an example. Some poor shlub is working for $6 an hour. Raising minimum wage from $5.15 was New York's nod to the working poor. Too bad some stores in the area closed at the prospect. This person who kept his job is lucky enough to get 40 hours a week and 2000 hours a year. While they net $12,000 Uncle Sam takes out about $600 and Uncle Pataki gets $150. Medicare and SDI get another $200. Social Security gets the lion's share with $750 from your check. Yes, that is more than federal and state combined. Let's not forget the employer contribution is another $750. Now $1500 of your work product goes to Social Security.

With an income of $12,000 you can expect to get $500 of the tax withholding refunded. In that case, you've netted about $10,800. Where did your Social Security money go? Depending on the recipient, you've covered less than one month's Social Security check of a low middle income earner. Will you miss $750? You will if it equals 2 car payments, a few months of heating bills, a month of rent or an entire year of gas for a 30 mile total trip to work each day.

Since the mid 80's Social Security tax increase, a new generation has had to make due with less. While take home pay is stagnant, employer costs for labor are skyrocketing. Retirees in Oneida County are cashing their Social Security checks to gamble at the Turning Stone and the cashier at the gas station if footing the bill. I might not have an answer for this problem, but I have a pretty good idea how young people are finding it hard to get by.



Tags: Turning Stone, Social Security

2 Comments:

  • At June 11, 2005 9:44 PM, Blogger Martin said…

    Yeah, luckly for me Im living with the parents still. I have to pay them a so called "rent" but I still make money. If I was out alone by myself, theres no way I could survive on the paycheck I have.

     
  • At June 11, 2005 9:57 PM, Blogger RomeHater said…

    The weird irony is that kids and sometimes grandkids are moving in with retirees because they have an income, modest as it may be.

     

Post a Comment

Links to this post:

Create a Link

<< Home