Millions defenseless in the grip of rising costs

By Will Parry

The nation’s Social Security beneficiaries – more than 58.7 million men, women and children in all – find their standard of living, never luxurious, shrinking year after year because of an outdated and grossly inadequate formula for calculating the annual cost of living adjustment (COLA).

The inadequacy of the formula has been made freshly obvious by its failure to provide any COLA at all either in the current year or in 2011, despite the widespread recognition that living costs continue to rise.

Now a new UCLA study has revealed that “a whole hidden group of adults” over age 65, hitherto not recognized, are in actual need despite their Social Security checks.

Social Security was the primary source of income for 64% of retirees in 2008. One in every three relied on the benefit for at least 90% of their income.

The average Social Security benefit is currently about $1,072 a month, or $12,864 a year. Millions of women, confined to low-wage jobs or out of the labor market entirely as family caregivers, receive substantially less than that amount. Many of those millions are officially living in poverty, as measured by the federal government, with incomes under $10,830 a year.

Now the UCLA study has found that, in California, single persons over age 65, renting a one-bedroom apartment, actually need, not $10,830, but $21,763 -- twice the federal government standard -- to make ends meet.

“There is this whole hidden group of adults in need,” said Susan Smith, program director at the Insight Center for Community Economic Development, which commissioned the research. What’s economic reality in California has validity in Washington State and across the U.S., despite state-to-state variations.

The government’s official poverty measure has been criticized for years because it is based on spending patterns when about a third of a family’s income went toward food.

The official poverty threshold was first calculated in the 1950s, using the cost of a nutrition plan described by the U.S. Department of Agriculture as the bare minimum needed to survive an emergency. It is adjusted annually for inflation, but it doesn’t take into account changing standards of living, regional cost differences, or public benefits and tax credits.

“We don’t spend a third of our income on food,” said Gerald McIntyre, an attorney for the National Senior Citizens Law Center. “If we did, we’d have no place to live.”

Advocates for the elderly emphasize the failure of the standard to take into account out-of-pocket medical costs, which have risen much faster than the overall cost of living.

Advocates, including the Washington Association of Area Agencies on Aging (W4A) and Wider Opportunities for Women (WOW), have been lobbying for the adoption of a measure known as the Elder Economic Security Standard Index. Developed by researchers at the University of Massachusetts Boston’s Gerontology Institute, the index is calculated using the latest government data on food, housing, transportation and medical costs.

Attempts to incorporate the index into state and federal law have run into resistance from those worried about the costs of social services.

Governmental inaction leaves older Americans splitting pills, borrowing money from friends and maxing out their credit cards. And relying on Social Security checks that won’t see a COLA in two full years.

For the thousands of ‘Christinas’

By Roberta Riley

I thought of Christina when I read the latest studies showing that an increasing number of older Americans, especially single women and women of color, are slipping into poverty. Christina died a couple years ago with $15 in her bank account.

My parents first met her in the kitchen of their church, where together they made sandwiches for the homeless. When the residents of Tent City asked to set up camp in the church parking lot after the earthquake of February 2001, an angry mob packed the public meeting. They shouted and screamed, for well over an hour, that the homeless would bring crime, drugs and filth to the neighborhood. Then this tiny, birdlike woman stepped up to the microphone, and told her story.

She was born in Serbia. The ravages of World War II destroyed her home, killing her husband and displacing her and their baby girl to a series of refugee camps. America welcomed mother and child when they emigrated in the 1950s. Soon she found work as a server at Manhattan's Waldorf Astoria hotel. "I love this country,” she said, "but the way we are acting tonight makes me feel ashamed. If this earthquake had destroyed your home, would you want the church to help?"

By the time she finished, you could hear a pin drop.

"It was the most amazing transformation I've ever witnessed," recalls Pastor Rich Lang. She completely changed the tone of the evening, nobody said another word against the homeless, and Tent City was allowed in.

Compassion triumphed over fear because Christina stood up for the less fortunate. She refused to let her own poverty impoverish her spirit. Her kind face, chin length gray hair, and Slavic accent seem to rise from the pages as I pore through Fixing Social Security: Adequate Benefits, Adequate Finances, by the National Academy of Social Insurance.

She was one of thousands of women in the “most vulnerable” category, whose years of paid work were interrupted because she also cared for others. Her altruism was penalized with minimal Social Security benefits. Yet Fixing Social Security and other studies demonstrate that we have plenty of good options to increase Social Security revenues, securely finance current benefits, and pay for benefit improvements for those most in need.

A related study, by Wider Opportunities for Women (WOW), establishes just how critical it is that we update the way we measure poverty in this country, which sets the baseline for Social Security benefits. The antiquated formula, which is based on the cost of food, little else, assumes one person living alone in 2008 could get by on $10,400. But at that level, Christina suffered. She couldn’t afford her medications and pay rent and utilities. The cupboards of her tiny apartment were bare by the third week of the month.

The new, updated measure developed by WOW takes health and other necessary expenses into account. It finds that an older American who lives alone and enjoys good health actually needs about $16,300 to make ends meet if she owns a home mortgage-free. A renter like Christina needs about $20,250, and a homeowner still paying off a mortgage needs approximately $24,000.

We could pay for the benefit increases WOW calls for simply by requiring higher income workers to pay Social Security taxes on ALL of their wages. There is no good reason to exempt income above $106,800 from the payroll tax. It is just another tax break for the wealthy.

As this article goes to press, we do not know the outcome of this month’s election, but the latest posturing and misinformation by enemies of Social Security signals that Republicans will soon claim we must raid the Social Security Trust Fund and impose “entitlement reform” to reduce the federal deficit.

Paul Krugman, the Nobel Laureate economist, debunks such myths, penciling out the numbers to show that we can secure the existing program for generations to come by simply undoing President Bush's tax cuts for the rich. Fixing Social Security and WOW further demonstrate that we can, and should, not only secure Social Security, but improve it.

But in politics it’s never enough to have truth on one’s side. It will take an army, thousands of people just like Christina, braving the fear and vitriol and standing up for the less fortunate, to transform the debate.

(Roberta Riley is a PSARA member.)