As the battle over the future of Social Security heats up in Washington, some interesting data have emerged from the Center for Rural Strategies on how much Windham County depends on the program.
The Center, a nonprofit advocacy group based in Kentucky, took a look at rural counties around the country and the percentage of total-person income that comes from the monthly payments from the Social Security Administration (SSA).
Based on data from the SSA and the Bureau for Economic Analysis, Windham County is more dependent on Social Security payments than is the rest of the country.
Nationally, 5.5 percent of total personal income in 2009 came from Social Security payments. In Vermont, 6.5 percent did.
In Windham County, 7.4 percent of all income, a total of $127 million in 2009, came from Social Security. Almost 10,000 people receive some form of Social Security payment: either an old-age pension, a survivor benefit, or a disability check.
That percentage has been steadily rising over the past four decades. Social Security payments amounted to 4.9 percent of total county income in 1970, 6.9 percent in 1980, 5.6 percent in 1990, and 5.9 percent in 2000.
Social Security beneficiaries represent 22.3 percent of the total county population. Total Social Security payments in Windham County amounted to $2,925 per person in 2009. The national average was $2,199 per person, and in Vermont it was $2,583.
Social Security payments go to those over the age of 62 who have filed for benefits, to survivors of insured workers, and to those with disabilities. The program is mainly funded by payroll taxes.
In Windham County, 70.5 percent of recipients were retirees in 2009, 8.9 percent were survivors, and 20.6 percent were disabled.
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These numbers are not surprising, given the demographics of Vermont.
This state trails only Maine for having the oldest population in the United States. What is surprising is the impact that Social Security payments have on rural economies.
“The seniors who get these payments are primarily going to spend their money locally,” Mark Partridge, a rural economist at Ohio State University, told the Center.
“And they are a key reason why some communities are still viable,” Partridge said. “If this money dried up, there wouldn't be a lot of these small towns.”
Judith Stallmann, an economist at the University of Missouri, told the Center that Social Security payments help generate the sales that keep many rural businesses afloat.
“We find that Social Security income can be the difference between success and failure for some local businesses,” Stallmann said.
“If you took away, say, 10 percent of the demand, would that local business be able to remain open?” she continued. “Often it's that 10 percent that keeps them going.”
“Social Security is providing that margin,” she said.
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But that margin is what the politicians in Washington are talking about cutting.
Whether it's raising the retirement age, changing the way that cost-of-living adjustments are calculated, or reducing payments to recipients, the result would be the same - less money going to retirees, which in turn, would hurt rural economies that are more dependent on Social Security income than urban economies are.
Leaving aside the effects that cutting Social Security would have on Windham County, there is one huge reason why Congress should leave Social Security alone.
There is nothing wrong with the program.
Social Security is now solvent, and the program will remain that way for the next 26 years. Beyond that date, benefits would have to be reduced to 75 percent of current levels, but if you raised the current ceiling on annual income subject to the Social Security payroll tax from $106,800 to a higher level, the program's solvency would be guaranteed for another century.
Social Security is also not contributing to the federal budget deficit. If anything, the extra money collected in payroll taxes over the past 30 years - the money that ostensibly was earmarked for funding the Baby Boomers' retirements - has been instead used to paper over the true amount of the national debt.
If Congress is genuinely concerned about budget deficits, Social Security is one program they shouldn't cut. It is solvent, it is well-run, and it has helped greatly reduce poverty among the elderly.
And, in the case of Windham County, it is an important part of our local economy.