For all the talk about Social Security, one thing you never hear is the vital role it plays as an engine of the U.S. economy.
Yet Social Security benefits do more than keep millions of families afloat and help middle-class workers stay independent after decades of labor. Those payments also fuel a vast amount of economic activity in North Carolina and throughout the nation, providing a little-noted economic benefit that helps us all.
In fact, Social Security’s $762 billion in benefits sparked almost 1.4 trillion in total spending last year, according to a new analysis by AARP’s Public Policy Institute – $25.2 billion in North Carolina alone. Individuals made a multitude of purchases with their benefits, boosting sales for local retailers, small business, big corporations, the whole gamut of goods and services.
Yet Social Security’s economic contribution didn’t end there. After consumers spent the money, businesses spent it once again, using it to finance jobs and make purchases and investments. In other words, the cash continued to ripple through the economy in a tremendous “multiplier effect” that enriched all kinds of enterprises.
Some of that revenue even paid for public services, in the form of local and state tax revenues – $2.5 billion in North Carolina.
Overall, each dollar in Social Security benefits generates about $2 in spending, the AARP study found. Social Security also helps younger people in ways that rarely get attention. For example, Social Security benefits support 309,000 jobs in North Carolina.
Impressive as the state data are, the national figures are remarkable. The $1.4 trillion in U.S. economic activity driven by Social Security meant about 9.2 million U.S. jobs in 2012 (many of them in retail, food services, real estate, health care and financial sectors). At a time of weak job creation, that’s an economic benefit worth applauding.
The fact is our nation needs a serious conversation about the future of Social Security – not just for today’s retirees but for generations to come. Social Security is becoming even more essential, as a growing number of older Americans struggle to stay financially secure in a weak job market, with meager savings and no employer pension to help with the monthly bills.
We already knew that Social Security accounts for about half the income of typical seniors, and substantially more than that for millions. But AARP’s analysis shows that Social Security helps everyone, whether you personally get a benefit or do not (yet).
The numbers illustrate – dramatically – that cutbacks to the program could have negative consequences for individuals, businesses and the entire economy. They underscore the importance of decisions to be made in Washington about how best to address Social Security’s finances and keep the program strong.
The critical value of Social Security to our economy is one more reason that AARP is calling for a national conversation on the future of this vital program. We urge members of Congress to keep these new economic findings in mind when they engage in this crucial debate.
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