Social Security Benefits Increase in 2016: Zero

The federal government has announced that there will be no cost of living increase (COLA) for Social Security recipients in 2016.

“With consumer prices down over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016.”

The “annual” cost-of-living-adjustment (COLA) for Social Security recipients is designed to help them keep pace with inflation. But in truth there has been no COLA increase in benefits in three of the last five years.

“Does anyone believe for a minute that prices are down in 2015 for seniors?” asks Hotel Trades Council President Peter Ward. “Sure, the price of gasoline has fallen, but many seniors don’t drive. At the same time, rent, transit fares, food and other costs faced by seniors have surely risen in price in the last two years.”

Indeed, while the zero hike in benefits is an announcement that consumer costs are stable, it also seems to be part of the Republican-led efforts to reduce the future cost of Social Security by “adjusting” the cost of living adjustment, as some members of Congress have been proposing. This is almost farcical when one realizes that the current COLA formula already undercuts the price increases faced by seniors, Ward adds.

There are almost 60 million Social Security recipients in the U.S. The program is the major source of income for most Americans 65 and older, according to the Social Security Administration (SSA), and it is estimated that $750 billion in Social Security benefits will be paid out this year to retirees, people with disabilities, and surviving spouses and children. The average monthly Social Security benefit for retired workers is currently $1,300, or an annual income of $15,600.

But the number of Social Security recipients is expected to grow dramatically in the years ahead, as members of the baby boom generation retire in unprecedented numbers. In fact, it is estimated that the cost of the Social Security program will rise to $1.5 trillion annually in just the next ten years, an increase of 75 percent. This, of course, means that the federal government is looking for ways to slow the growth of Social Security or to offset its expense. Since an outright reduction in benefits would be extremely unpopular with the voting public, especially in 2016, a presidential election year, Congress is looking for less obvious ways to do the cutting. One method being suggested is tinkering with the cost of living adjustment.

The tinkering would entail calculating the cost of living adjustment according to something called “the chain weighted version of the Consumer Price Index (CPI)”. It may sound complicated, but it is actually very simple: it would result in a loss of benefits. That’s because even the most conservative estimates predict that such a change would result in “savings” of $100 billion over the next decade.

“The politicians can call it whatever they want, it is a cut in Social Security benefits,” Peter Ward adds. “First, they insult our seniors by telling them there was no increase in the cost of living in 2015. Then they neglect to mention that the zero increase in Social Security benefits becomes an actual negative because of an increase in Medicare premiums that is sure to take place.”

Others agree. The Alliance for Senior Citizens has noted often that the cost of living adjustment is an arbitrary figure that rarely matches the true rate of cost of living increases, especially for seniors. And, as many of us already know, that is only one problem with Social Security. A far more serious problem is the future of the program itself.

With political opinions varying widely, it is clear that Social Security is certain to be a major political issue in the 2016 campaigns for Congress and the White House. Unions across the country will be educating their members on this important issue. For now, working families and retirees should understand that the Social Security program is still operating at a surplus and will continue to do so for years. That’s why unions will oppose any efforts to balance the federal budget on the backs of seniors and the disabled through Social Security cuts.

“With Social Security operating at a surplus any legislation directed at the program should be directed at strengthening it and not reducing the federal budget deficit,” said former House Speaker Nancy Pelosi.

Unions across the country—including our own—readily agree with that stance.