The Social Security Primer

What Every Citizen Should Know

Paul E Peterson

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315501956
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Offers a clear understanding of what Social Security has accomplished in the past, challenges it now faces, and possibilities for the future. Outlines the full spectrum of current issues, policies, benefits, and proposed reforms.

1

Social Security: Is It an Endangered Species?

The belief that the future of Social Security is gravely threatened is rooted in a demographic fact—the enormous bulge in the nation’s population represented by the baby-boomer generation—and the fears aroused as the boomers proceed inexorably toward retirement sometime in the next century. Among the boomers themselves, many have doubts about the viability of the system, even to the point of believing that the system will be essentially bankrupt when they reach retirement. Books like The Coming Collapse of Social Security,¹ along with numerous articles in newspapers, the weekly newsmagazines, and other publications, add to these fears.

There is no doubt that the nation’s Social Security system is facing serious problems in the not-too-distant future, but whether these problems constitute a “crisis” that threatens the viability of the system is problematical. In this chapter we shall take a thorough and critical look at all dimensions of the problem, beginning with a thorough look at the population group that is the source of the concern—the baby boomers.

The Baby Boomers

The term “baby boomers” is the popular description of the group of people, some 75 to 76 million strong, born in the twenty-year span from 1945—the end of World War II—to 1965. This cascade of babies constitutes the largest single bulge ever recorded in America’s population structure. Most boomers are now approaching the 50–59–year-old age group, while the first boomers will reach retirement age around 2010, assuming 65 continues to be the standard retirement age. Table 1.1 traces that path of the boomers from birth through their retirement years, from 1945 until 2030, when most of the surviving boomers will be in their 80s. This table charts the life course of the approximately 37.5 million born in the first baby-boomer decade, 1945 through 1954. Persons born in 1954 will retire in 2019, but the last of the boomers (those born in 1964) won’t enter retirement until 2029. After 2029, the retirement-age population will begin a rapid decline as the “baby-bust” population approaches retirement.

Table 1.1

The Baby Boomers (age structure and activity by years)

Years	Ages	Activity
1945–1954	0–9 years	Infancy, grammar school
1955–1964	10–19 years	High school, college
1965–1974	20–29 years	College, marriage, family
1975–1984	30–39 years	Career, family, children
1985–1994	40–49 years	Midlife, career, family
1995–2004	50–59 years	Late career, family growth
2005–2014	60–69 years	Enter retirement
2015–2024	70–79 years	Early old age
2025–2029	80–84 years	Advanced old age

This explosion of babies took the nation by surprise, as most population experts expected that after World War II the century-long decline in America’s fertility rate (births per woman) would continue. What happened, as the Population Reference Bureau, a Washington, D.C. research institution, wryly describes it, was that American couples went on a “decade-and-half-long fertility splurge.”² From a depression low of 2.1 births per woman annually in the 1930s, the fertility rate jumped to a peak of 3.7 in 1957, falling to 3.0 by 1965, and to 1.8 by 1978.³ The drop in the birth rate gave rise to the baby bust, which followed the baby boom. For example, in 1961, the under-5 population was 20.5 million, but by 1977 it had dropped to 15.6 million, a decline of 23.9 percent.⁴

Contrary to what many people think, the baby boom did not represent a return to the very large families characteristic of America in the nineteenth century. Rather, it resulted from a combination of earlier marriages, fewer childless and one-child marriages, and a bunching together of births. Only a minor part of the baby boom was caused by families having four or more children.

Population experts (demographers) describe blocs of children born within a certain time frame—usually ten years—as a “cohort.” By identifying the baby boomers more narrowly as the cohort born between 1950 and 1959 and by comparing these numbers with the “Depression cohort” (1930–1939) and the “baby-bust cohort” (1970–1979), we get a sharper picture of the effects of the baby boom. The intermediate decades are seen as transition decades, the 1940s being the rise toward the baby boom, and the 1960s the decline to the baby bust. From this perspective, the baby-boom cohort totals 40 million, a 81.8 percent increase over the depression cohort of 22 million, while the baby-bust cohort equals 32 million, a 20 percent drop from the baby boom years.⁵

The Depression-era cohort was part of an earlier baby bust, one that saw annual births drop from an average of around 3 million from 1915 through 1929 to less than 2.4 million during the 1940s. Hard times were primarily responsible for this, although the depression years merely accelerated a drop in the fertility rate that was already under way.⁶ What is more remarkable is that the parents of the baby boomers largely came from the baby bust of the Great Depression.

What caused the baby boom? Actually, nobody is quite sure, including the population experts. Some think it was primarily an aftereffect of World War II, when millions of returning veterans were determined to pick up their lives, start families, and make a better life for their children than they had known during the depression years. This was no doubt true, aided significantly by prosperity that came with the end of the war. Most observers expected that the end of the war would bring another depression, as happened after World War I, but instead the nation entered into a long period of economic expansion and prosperity, one that carried on with only minor downturns until 1973. The GI Bill, with its aid for schooling for veterans and low-interest loans for housing, certainly contributed to marriage and family formation.

Probably of even greater significance was the cultural climate of the early postwar years. Sociologists point out that the baby boom came during a period of profoundly pro-child social values. Whether this caused the baby boom or was caused by it is uncertain, but it was a time when, as sociologist Paul Light described it, “those who didn’t want children were an embarrassed and embattled minority. It was almost evidence of a physical or mental deficiency.”⁷ Having kids was as much a factor in the “keeping up with the Joneses” mentality as owning the right car or living in a proper house in a proper suburb. So even if the returning veterans from the war started the baby boom, social and economic conformity played a role in its continuation.

On a more theoretical level, some experts believe that the post–World War II baby boom was simply part of a more basic cycle of fertility boom and bust. According to this theory, small generations follow large generations in a predictable pattern: the basic reason being that small generations can more easily afford children than can large generations. If this theory were correct, the baby-bust generation of the 1970s would be producing a new baby boom that would be large enough to take care of their grandparents—the baby boomers—when they enter retirement between 2010 and 2030. Unfortunately, this doesn’t seem to be happening. While it is true the baby boomers are having a large number of grandchildren simply because of their numbers, there has not been any upsurge in fertility rates. Currently, the fertility rate for the baby-bust cohort is barely at the replacement level (2.1 children per woman), where it is projected to remain through 2010.⁸

No sector of the nation’s economy has been unaffected as the enormous baby-boom cohort moved through the economy. In the beginning, hospitals, doctors, and nurses were overwhelmed with the flood of babies that reached 4.5 million by the mid-1950s. Then came the overcrowding of primary schools and teacher shortages as the boomers reached school age. Between 1950 and 1970, the primary school-age population (5–13) grew from 32 to 37 million, a 60.8 percent increase. After the primary schools, it was the turn for high schools to feel the boomer impact. High school enrollments doubled between 1950 and 1970, while by 1963 the first of the boomers were just entering college. Most astounding of all was the percentage growth in college enrollments because of the boomers. From 1960, when there were 2.3 million Americans in the nation’s colleges and universities, enrollment jumped by 213 percent to 7.2 million in 1975.⁹ Because of the baby-bust generation, primary school enrollments fell by 17.2 percent between 1970 and 1985, but the number of college students continued to grow through the 1980s and 1990s. The primary reason was an increase in the proportions of high school students enrolling in college, from 23.8 percent in 1960 to 42.3 percent in 1992.¹⁰

By the late 1960s the boomers were moving into the young adult, marriage, and household formation state of their lives. In 1960 there were 52.8 million households in the United States. (A “household” is all persons—including adult singles—who occupy a housing unit, which is a house, an apartment, a group of rooms, or even a single room.) By 1980, the number of households had soared to 80.8 million, a 53.0 percent increase. In the 1970s alone, the prime years of household formation by the boomers, the increase in households was over 17 million. This translated into a boom in housing construction; housing starts during the 1970s were 25.7 percent higher than in the 1960s. In the 1980s and 1990s, however, housing starts fell by 15.6 and 14.0 percent, respectively.¹¹

As the baby boomers matured, the nature of the American family changed drastically. To illustrate, in 1950, families made up 85.4 percent of households, and of all households, married couples accounted for 76.1 percent. But by 1993, families were only 70.7 percent of all households, and married couples had fallen to just 56.2 percent of the household total. (The term “family” refers to all persons living together who are related by birth, marriage, or adoption.) In these years, the promotion of households made up of adults living toge...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Tables and Figures
• Preface
• 1 Social Security: Is It an Endangered Species?
• 2 Getting from Here to There: A Capsule History of Social Security
• 3 Things Are Not What They Seem: How Social Security Works
• 4 Social Security and the Copernican Question
• 5 How to Save Social Security
• Appendices
• Notes
• Index