Posted Jun 20, 2011 12:04 pm CDT
Labor lawyer Thomas Geoghegan has a problem with Social Security.
Some people worry that the program is too expensive, but Geoghegan worries that it’s too cheap. Some elderly people survive on Social Security with earnings of less than $10,000 a year, he writes in an op-ed for the New York Times. Thirty-four percent of Americans have saved nothing for retirement, and the percentage is likely to increase.
Right now Social Security pays out 39 percent of the average worker’s preretirement earnings. Geoghegan says the figure should be 50 percent, and it could be financed by raising the cap on high earners, raising the payroll tax by about 1 percent on both employees and employers, and covering new public employees.
“Retirees today are shortchanged on Social Security because they have been shortchanged on wages for their entire working lives,” Geoghegan writes. Productivity increased at least 55 percent from 1973 to 2005, even as hourly earnings dropped by 8 percent. “And where has the money from the extra productivity gone?” he asks. “It’s gone right to the top, to the top few percent. If wages had been paid fairly based on productivity, there would have been enough money subject to the payroll tax to avoid even a modest shortfall.”
“A bigger pension—a raise in Social Security benefits—is the stimulus this demoralized country needs,” Geoghegan writes.