February 1, 2005

February 1, 2005 | News Releases on Social Security

Social Security Returns Lower in Some Congressional Districts Than in Others

WASHINGTON, FEBRUARY 1, 2005- In terms of "return on investment," Social Security is a bad deal for most American workers. But it's a worse deal in some congressional districts than in others, according to new research by The Heritage Foundation.

Heritage's Center for Data Analysis examined the retirement program's rate of return for taxpayers in two classes: a married, dual-earner, white couple, both born in 1970, and a single black male, also born in 1970. Breaking out the results by congressional district produced some stark contrasts.

Hawaii's 1st congressional District was the only one where the cohort of single black males was projected to receive a positive (+1.60 percent) rate of return. The married, dual-earner white couple reaped a positive rate of return in all districts. Even those returns were rather anemic, ranging from a high of 1.98 percent in West Virginia's 3rd District to a low of 0.14 percent in Washington, D.C.

Californians fared particularly poorly in both sets of analyses. Of the 10 districts featuring the worst rates of return, six were in the Golden State, for both the married couple and the single black man-and no district appeared on both lists.

Taxpayers can find out how their districts stack up in terms of rate-of-return by visiting heritage.org/Research/SocialSecurity/Social-Security-Rate-of-Return-by-Congressional-District.cfm.

CDA Director William Beach noted that the results vary by district due to factors such as life expectancy and average earnings (those who earn more benefit less from Social Security because of the progressive nature of the program). But, he added, even the rates of return for the best-performing districts make a compelling case for Social Security reform.

"Rate of return is a critical measure of Social Security's performance," Beach said. "Yes, Social Security is supposed to provide supplementary income, but the taxes workers pay into the program are so high they often prevent workers from putting aside money for private savings. So, if Social Security performs poorly, they have nothing to fall back on."

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