Older Americans Need a Raise!
By Jessie Gibbons, Senior Policy Analyst
By now, you’ve probably noticed that your Social Security benefit hasn’t increased with inflation as it usually does each January. That’s because annual cost-of-living adjustments (COLAs) are based on the way young, urban workers spend their money — instead of the spending patterns of retirees. The COLA is indexed using the Consumer Price Index for Urban Wage Earners and Clerical workers (CPI-W) – and low prices at the fuel pumps drove down the spending of younger workers last year. But, since older Americans don’t tend to drive as much as younger folks, Social Security beneficiaries do not benefit from plunging gas prices in the same way. And they need a raise!
According to data from the Bureau of Labor Statistics (BLS), seniors actually did experience inflation last year. The data show that if the COLA were based on the Consumer Price Index for the Elderly (CPI-E) – an inflation index that tracks the spending patterns of only those over the age of sixty-two – seniors would have received a COLA of 0.6 percentage point this year; not much, but not zero either. While the CPI-E would be worth an extra $7.20 for someone with average benefits, it would compound over the course of a retirement and people would receive higher monthly benefits in time.
The CPI-E is higher this year because it puts a greater weight on expenses like medical care, housing, and prescription drugs, which are on the rise. We asked our members how this year’s zero COLA would affect them, and we received countless replies about soaring prescription drug prices, higher utility costs, increased property taxes, Medicare premium hikes, and other major expenses. Since the CPI-E better tracks the inflation of most of these, it more accurately reflects the spending patterns of seniors.
To lessen the negative impact of this year’s zero COLA, The Senior Citizens League (TSCL) has been busier than ever urging lawmakers to do two key things.
First, we’re asking Members of Congress to provide beneficiaries with an emergency COLA, either in the form of a one-time $250 payment, or as a percentage increase. For example, Congressman Alan Grayson’s (FL-9) Seniors Deserve a Raise Act (H.R. 3761) would give seniors a 2.9 percent COLA this year in order to make up for years of insufficient increases. TSCL feels strongly that a modest emergency COLA would give seniors much-needed relief this year, and we hope to see this legislation passed as soon as possible.
Second, we’re urging Members of Congress to consider legislation that would result in more accurate COLAs in the future. Several bills before Congress would accomplish this, including the CPI-E Act (H.R. 3351), which Congressman Mike Honda (CA-17) sponsored. Congressman Alan Grayson’s Seniors Deserve a Raise Act would also base COLAs on the index for the elderly whenever it would result in a higher COLA than the CPI-W. TSCL feels that both of these bills would go a long way in ensuring the retirement security seniors have earned and deserve.
This year’s zero COLA will have a devastating impact on the long-term adequacy of Social Security benefits for seniors, and TSCL believes Congress must act swiftly and responsibly to provide relief. In the months ahead, we will continue to advocate tirelessly for H.R. 3761 and H.R. 3351, and we encourage our supporters to call their Members of Congress to request their support for them too. You can find contact information and follow our progress on our website.