There is a lot of talk about Social Security in Washington lately. But one thing you seldom hear is the vital role it plays as an engine of our economy.
Social Security benefits do more than keep millions of families afloat and help middle-class workers stay independent after a lifetime of their labor. Those payments also fuel a vast amount of economic activity in Florida and throughout the nation, providing an unrecognized economic benefit that helps us all.
In fact, Social Security’s $762 biillion in benefits sparked almost 1.4 trillion in total spending last year, according to a new analysis by AARP’s Public Policy Institute – $107.8 billion in Florida 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.
The economic contribution doesn’t stop there. Every dollar of Social Security benefits paid impacts the economy in two ways -- people who receive Social Security spend their benefits, and the companies, and their employees, who receive this spending in-turn spend their wages and profits. The combination of these two creates tremendous “multiplier effect” that enriches all kinds of enterprises.
A sizable chunk of that revenue even paid for public services in the form of local and state tax revenues to the tune of $5.6 billion in Florida.
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 738,000 jobs in Florida.
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. In today’s economy where we have high unemployment, a low personal savings rate and rising health care costs, keeping Social Security strong is becoming even more essential.
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.
The stakes are enormous – for all of us.