Once again, Congress has large numbers of sponsors for a common-sense bill to get rid of the outside earnings limit on Social Security beneficiaries. But that has been true in years past and the measure has failed just the same. If justice prevails, the outcome will be different this time.
The Depression-era limit on Social Security earnings makes no sense, it penalizes those who can least afford it, and the penalty can be heavier on usually low-income recipients than the tax rate levied on millionaires. What's fair about that?Under the law, people age 65 through 69 on Social Security can earn up to $9,720 without penalty. Beyond that, the working elderly lose $1 in Social Security for every $3 in earnings. A person between 62 and 65 on Social Security loses $1 in benefits for every $2 earned.
Those limits made some sense in the Depression era when as many as one out of every four working people was unemployed and the idea was to reduce the pool of workers by discouraging older people from working after retirement.
But things have changed. There is no need to force productive people out of the labor market. As the "baby boom" generation has aged, there are fewer young people as a percentage of the population and a correspondingly larger percentage of older citizens.
Many of those who have nominally retired still have a lot to offer employers and are willing to work part-time. Many companies are finding they need the hard-to-replace experience of such senior citizens. Many new workers are coming from population groups that have far less education and skills than the retirees.
Despite all this, the Social Security law discourages more effective use of senior citizens by penalizing their earnings.
The limit on earnings does not apply to Social Security recipients who have additional income from investments or other non-salary sources. Such people are apt to have a more comfortable financial cushion to start with. Yet those who have less money and want to work to supplement their Social Security income are the ones who are penalized.
If the limit on wage earnings for Social Security recipients were repealed, the nation's work force would be strengthened, the older wage earners also would be taxpayers, and both individuals and the general economy would benefit.
Congress will start holding hearings on the proposed changes in May. But there should be no reason to continue with Social Security earning limits that have stopped making sense in today's world.