Research Highlights Social Security’s Significant Economic Impact on Communities

Out of their research, the Social Security Spotlight online research tool was born. The site provides easily accessible information about Social Security’s economic impact at the state, county, and congressional district levels, detailing data on beneficiaries by race and ethnicity, age, and gender.

In 2014, 18% of the entire U.S. population, or 59 million Americans, received Social Security benefits, which amounted to 5% of the total national economy. Playing such a significant part in the economy, the importance of fully understanding the economic impact of Social Security benefits is crucial.

According to Drs. Maroko and Arno’s findings, $1.6 trillion of benefits are spent and cycle through the economy nationally, creating a critical economic stimulus effect in states and local communities. The economic stimulus impact varies from state to state, depending on factors such as the number of benefit recipients in a particular state and the state’s economic makeup.

Drs. Maroko and Arno also present another metric called the Regional Support Index (RSI), which measures Social Security’s support for the total resident populations for all counties and states. The RSI is computed using three variables: 1) percent of each state’s or county’s entire population that receives Social Security benefits; 2) percent of personal income in the state or county derived from Social Security; and 3) per capita Social Security income at the state or county level. A higher RSI value indicates a higher level of Social Security support for the population. Examining the change in RSI between 2008 and 2013, the overall national trend is increasing support by Social Security. This trend is important to note as Social Security has an automatic economic stabilizer effect as beneficiaries continue to receive benefits even during economic downturns. These dollars not only aid the direct recipients and their families, but also circulate in communities to help mitigate the effects of the business cycle.

Drs. Maroko and Arno’s research suggests Social Security is America’s most efficient anti-poverty program, with more than 99 cents of every dollar paid in benefits and low administrative expenses. Research estimates that the program lifts 21 million Americans out of poverty, including 14.5 million persons age 65 and older, 5.8 million between ages 18 and 64, and more than a million children.

The significant economic contribution of Social Security is too often misunderstood or ignored in public debate and Drs. Maroko and Arno seek to rectify that by making their research publicly and easily available.