Stabilizing Social Security--Which Wage Measure would best Align Benefit Increases with Revenue Increases?
GENERAL ACCOUNTING OFFICE WASHINGTON DC INFORMATION MANAGEMENT AND TECHNOLOGY DIV
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The Social Security Amendments of 1983 included an automatic mechanism to help align Social Security benefit payment increases with revenue increases if Social Security reserves fall below a specified level. GAO was asked which of several wage measures would be the most timely and accurate to use in this alignment. GAO evaluated eight wage measures and found that two--the currently used Social Security Administration average wage index and the Bureau of Labor Statistics Employment Cost Index--would be the most timely and accurate to use as an automatic mechanism. Although the Employment Cost Index is slightly better at indicating revenue increases, the limited number of years of data that could be analyzed only 8 provided inconclusive evidence that it would be the clearly superior measure to use. The Department of Health and Human Services, the agency responsible for the Social Security program, generally agreed with GAOs overall findings and conclusions.
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