Social Security factors into local economies

By Morton Marcus

Some voters cast their ballots based on philosophical principles. Others are more concerned with the principals in their bank accounts. This week we’ll see how Hoosiers measure up in terms of Social Security payments from the federal government, as reported by the Census Bureau’s American Community Survey (2016 Vintage).

There’s not much difference between the entire United States and Indiana in terms of the percent of households receiving Social Security payments. For the nation it’s 30.2 percent with Indiana somewhat higher at 30.9 percent.

Likewise, the U.S. and Indiana are close on median age of the population with the U.S. a bit older at 37.7 years and Indiana a spritely 37.4 years. The median age is the number where 50 percent of the population is older and 50 percent younger.

The difference between our state and the nation appears when we examine the mean or average annual Social Security payments. Indiana’s average payments were $18,864 or 3.7 percent higher than the national average of $18,193. The reasons for this difference would take an entire column to explore and we still might not know the answer.

We can say if payments were reduced by two percent, either in dollar terms or in buying power through inflation, the money available to 772,500 Hoosier households would be cut by nearly $300 million.

Many in our country believe that Social Security payments are just like handouts, unwarranted dollars going to the least deserving and a host of fake claimants. These critics probably don’t have relatives or know their neighbors on Social Security.

Within Indiana, data are available for 31 counties with populations in excess of 45,000 persons. Grant and Wayne counties both exceed 40 percent of households receiving Social Security payments.

The counties least dependent on federal payments are Hamilton, Tippecanoe and Monroe (each at 24 percent of households or less). The latter two are college counties and Hamilton has the highest average earnings per household in the state ($114,778). Hamilton households also have the highest average Social Security payments in the state ($21,503).

This occurs because payments for each of us are linked to our work-life earnings. Counties with high average earnings tend to be high on the list of counties receiving high average Social Security payments. The top eight Indiana counties in such payments are all suburban counties.

Households with low earnings (the average for Grant is $52,086, the lowest of the 31 counties) then tend to have low average Social Security payments. Grant County, at $17,630, has the third lowest average Social Security payments in Indiana in our field of 31 counties.

Thus, Hamilton’s average earnings are double Grant’s while Hamilton’s average payments are 20 percent higher. Critics say Social Security favors those already well off. Others look at the program as a modified, forced savings plan, and see the 20 percent differential as a justified disparity.

Hence, the Social Security system is a factor in our income distribution debates.

Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to