Social Security's Flat Line

Yesterday, the Social Security Administration released an extraordinary amount of data – all the way to the ZIP code-level – focused on Social Security beneficiaries (categorized by the government within three groupings: Old Age, Survivor and Disability). The data lets us see not only the number of folks in a particular area receiving Social Security support, but also the reason for that support.

This comes, of course, on the heels of last week's announcement that there would be no cost of living increase (or COLA) for millions of Social Security recipients for FY2011, the second year in a row. NPP's President's Budget analysis captured this projection noting in February that the pending budget projected no COLA for Social Security until FY 2012.

Until last year, Social Security benefits have increased through COLAs every year since 1975. COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In 2008, the Social Security COLA was 5.8%, the largest increase in over 25 years. The big increase in 2008 was largely a result of timing: the COLA was based on third-quarter 2008 inflation numbers that increased due to soaring energy prices.

What people are saying about “no COLA” for Social Security


Given current economic conditions and past COLA increases, there is no economic justification for providing a COLA this coming year. Although consumer prices increased slightly this year, they have not returned to the peak levels they reached in the third quarter of 2008 when the 2009 COLA was set. Because of the high adjustment in 2008, Social Security benefits are protected from deflation. Although prices fell, seniors are receiving more in benefits than actual inflation increases have warranted. If benefits were adjusted in both directions, benefit levels this year would have been roughly $250 lower on average for each retired beneficiary and his or her family. (Committee for a Responsible Federal Budget)


AARP Executive Vice President Nancy LeaMond issued the following statement on October 14, 2010: “For over three decades, millions of older Americans have counted on annual Social Security benefit increases to help them afford their basic needs...Many Americans who rely on Social Security as their primary source of income continue to face financial hardship today. Over the past two years, older Americans have paid more for utilities and food, experienced a decline in housing values, tried to recover from deep retirement account losses, struggled with rising health and prescription drug costs, and faced longer periods of unemployment for those who need to work. AARP is asking Congress to provide relief to millions of older Americans in the post-election session.” (American Association of Retired Persons)

A CNN reportSeniors Feel the Pinch of No Benefit Increase – began to touch on the unique realities of seniors noting that one of their biggest costs, medical care – doctors visits, hospital bills and nursing homes – is up 2.6%. According to the Kaiser Family Foundation, the average monthly prescription drug premiums under Medicare will rise 10% in 2011. Utilities such as electricity and gas have increased 1.5% over last year, food has increased 1.4% and gas prices have gone up 5.1%.

White House and Congress Respond

In response to the announcement about COLA, President Obama renewed his call for an Economic Recovery Payment – one-time payment of $250 to Social Security recipients to offset the absence of a cost-of-living adjustment this year. Speaker of the House Nancy Pelosi announced that she will bring the legislation necessary to make this happen to the floor following the November mid-term elections.

Seniors speak for themselves in a recent Associated Press story

“I think seniors are going to be upset because gas has gone up, food has gone up, things in the store are expensive to buy...Let's face it, prices are rising and I don't know how they do the cost of living." – Betty Dizik, 83-year-old retired tax preparer and social worker from Tamarac, Florida who relies solely on her $1,200 monthly Social Security payment.

"I can't understand why the Congress hasn't seen that there's been an increase in everything...They say that nothing went up last year? What's the matter with them?” – Claire Edelman, 83-year-old resident of Monroe Township, New Jersey who applied for a temporary job as a census taker for the 2010 Census. She did not get the job. She lives on a small pension from her job with the state and a monthly Social Security payment of $1,060.