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TABLE 7.-Median incomes of aged year-round full-time employed family heads and unrelated individuals and of all other aged persons, 1959

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As of 1960, less than one-fourth of all the aged were receiving income from full- and part-time employment, slightly less than 4 million (including nonworking wives of earners), and as reported by the subcommittee last year the major source of income for the aged, in terms of numbers covered, continues to be our system of old age and survivors insurance: as of October 1960, nearly 12 million older persons (men 65 and over, women 62 and over) were receiving such social security benefits. The average monthly amount received by retired workers under this program was $74.02 as of the same date; for those retiring in the month of October 1960, the average benefit amount was $79.08.

The other important public program of retirement income is that of old age assistance, covering less than 2.4 million persons. Of this number, about 700,000 are also receiving OASI benefits, since their social security benefit amounts need to be supplemented. average monthly payment as of October 1960 was $69.45.

The

TABLE 8.-Estimated number of persons aged 65 and over in the United States 1 with money income from employment or public programs, June 1960

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Veterans' payment and no earnings, social insurance or assistance..... Public assistance, total

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Public assistance and no payments under other public programs.. No income from employment or public programs..

15.3

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1 The 50 States, the District of Columbia, Puerto Rico, and the Virgin Islands.
2 Includes 3,030,000 earners and an estimated 850,000 nonworking wives of earners.

3 Includes persons with income from one or more of the following sources: old-age, survivors, and disability insurance, railroad retirement, and Government employees retirement (see table 1). Excludes persons with benefits under unemployment or temporary disability insurance or workmen's compensation programs.

Includes estimated number of beneficiaries' wives not in direct receipt of benefits.

Old-age assistance recipients and persons aged 65 and over receiving aid to the blind or to the permanently and totally disabled, including a small number receiving vendor payments for medical care but no direct cash payment.

Includes a small number with some earnings.

Source: U.S. Department of Health, Education, and Welfare, Social Security Administration, Division of Program Research.

TABLE 9.-Current social security program operations, October 1960

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1 Includes wife beneficiaries under age 65 with child beneficiaries in their care and other women aged 62-64about 152,000 and 893,000 respectively, as of the end of October 1960. There is still some duplication resulting from dual er titlements-persons receiving both an old-age benefit and a wife's or husband's benefit-an estimated 25,000 as of the end of June 1960.

2 In addition to widowed mothers under age 62, survivor children and children of retired and disabled workers, includes disabled children aged 18 and over with a total disability which began before age 18 (99,000 as of the end of October 1960).

Current-payment status; excludes adjustments for over and under payments, etc.

4 Except for general assistance, includes vendor payments for medical care and cases receiving only such payments. Recipients total not adjusted for persons receiving general assistance and other assistance. Payments total exceeds sum of items because of inclusion of vendor payments for medical care from general assistance and special medical funds; data for such expenditures partly estimated.

Source: U.S. Department of Health, Education, and Welfare, Social Security Administration, Division of Program Research.

TABLE 10.-Estimated total payments to persons aged 65 and over in the United States under public income-maintenance programs, 1950 and 1960

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No detailed estimates have yet been determined for what would be an adequate budget for all the various categories of aged persons. However, there is now available an interim revision of a budget for a retired elderly couple in reasonably good health for their age, requiring no unusual medical or other services, and keeping house by themselves in a 2- or 3-room rented unit in selected urban areas.2 But even this most recent study fails to provide complete enough information, since the proportion of retired elderly couples living in rented units makes up only a minority of all retired aged persons; most retired couples live in homes they own, and there are several million widowed men

"Budget for a Retired Elderly Couple: Interim Revision by the Bureau of Labor Statistics," Research and Statistics note 29, Social Security Administration, Division of Program Research, December 6, 1960.

and women over the age of 65. Nevertheless, the figures derived for the 20 large cities and suburbs (as of autumn 1959) for budget costs of this limited segment of the aged population indicate that they are higher than the actual incomes of most of the older retired couples living in rented housing.

One measure of income adequacy, however, might be approximated by comparing the median income of all aged-retired and employedfamily heads in urban areas with the range of budget costs among the 20 cities covered by the BLS study.

TABLE 11.-Annual costs of a budget for a retired elderly couple, 20 large cities and suburbs, autumn 1959

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1 In 1948, the Social Security Administration issued a budget for an elderly couple, to parallel that for a city worker's family issued by the Bureau of Labor Statistics. The food costs in the SSA budget were developed from the low-cost food plan, and the budget included no provision for owning and operating a car. The newly issued interim revision of this budget by the BLS includes 2 versions-1 comparable to the original SSA budget and the other comparable to the budget for the city worker's family; namely, computing food costs from an average of low- and moderate-cost food plans, including some allowance for alcoholic beverages, and automobile ownership by 14 percent of the couples in New York, Philadelphia, and Boston, and 22 percent in the remaining cities.

NOTE. For further details see Monthly Labor Review, November 1960, "The BLS Interim Budget for a Retired Couple," by Margaret S. Stotz, and Social Security Bulletin, December 1960, "Budget for an Elderly Couple: Interim Revision by the Bureau of Labor Statistics," by Mollie Orshansky. Source: Bureau of Labor Statistics.

Specifically, in 1959, the median income of urban heads of families aged 65 and over-including those in the labor force was $3,335. The range in budget costs in the BLS study of retired elderly couples in the 20 cities was from $2,390 to $3,112 in 1959 prices for a list of goods and services in a 1948 standard of living-not in a standard of living for the late 1950's. If the latter standard of living is used as a base of comparison, the range was from $2,641 to $3,366.

It should be emphasized that "budget costs" here refer not to what such retired elderly couples actually spent in these years, but rather to a standard of income deemed necessary for a "healthful, self-respecting manner of living which allows normal participation in community life," to quote the Bureau of Labor Statistics. Considering the fact that the $3,335 median income for urban aged family

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heads includes the greatly higher incomes of employed persons and, further, that frequently such families include additional income earners, it is reasonable to conclude that at least one-half of all retired aged urban couples live on incomes below the BLS budget.

If the relationship of the median income of aged urban family heads not employed year-round, full time, to the median income of those employed year-round, full time, is similar to the previously stated relationship (table 7) in the case of all aged heads, 47.3 percent, or even if it is a higher percentage, say, as much as 60 percent, the adequacy of actual income-as compared with the BLS budget-is quite obviously low.

Even with the arbitrarily granted 60 percent relationship, the median income of urban aged family heads not working year-round and full time ("retired") would be about $2,000, well below the BLS budget figure ranges for both the original and the current budgets. We feel fairly certain, however, that the 60 percent figure is a generous guess on our part and that, therefore, the actual figure is below $2,000. In the future, we hope that it will be possible to obtain precise figures from the Census Bureau. In other words, it is fairly well certain that more than one-half of our country's city-dwelling retired couples (including those not living in rented dwelling units) are living on incomes definitely below a standard of living defined as adequate but not ideal by the Bureau of Labor Statistics. The situation of unrelated aged individuals living in cities could be expressed in even stronger terms. In dealing with these attempts to determine adequacy of income of the aged the subcommittee has been struck by the fact that statistical and other data on the subject have not been collected and organized in such a way as to answer many of the questions of concern to the subcommittee. We strongly urge that steps be taken to remedy this.3

PROPOSALS TO RELIEVE THE INCOME PROBLEM

Among the major alternatives, not mutually exclusive, suggested for tackling the problem of the income of the aged, the subcommittee has chosen a few for discussion here.*

1. The subcommittee recommends, as it did a year ago, that there be a substantial increase in benefits under the system of old-age and survivors insurance for all beneficiaries. The present minimum of $33 per month (and there are some beneficiaries who actually receive less than this amount) should be raised to at least $50 per month. The importance of this recommendation is strengthened by our knowledge that beneficiaries with the lowest benefits typically have few, if any, additional sources of money income and few assets.

An increase in the minimum monthly benefit would be an important, even though modest, step toward attaining a level of income deemed in keeping with American standards in the latter half of this century. 2. There is the additional point that for those beneficiaries whose previous earnings were above average, the relationship between their benefits and previous earnings has not been adequately maintained, even with periodic changes in the law. Certainly for the future groups of retired Americans, as well as for those now retired, the taxable earnings base should be raised well beyond the present $4,800 limit.

For example, the Bureau of Census publishes median incomes for year-round, full time employed aged families and unrelated individuals, but not for part time and retired aged. The figures cited in table 7 were obtained by the subcommittee by special request.

For a lengthier discussion of these and other recommendations, see the subcommittee's 1960 report, and the "Background Paper/on Income Maintenance for the 1961 White House Conference on Aging.'

If we were to use the 1939 percentage, when 94 percent of all full-time employed males were earning below the 1939 maximum taxable base of $3,000, we would have to raise the base to about $9,000. At this time, the subcommittee recommends that the base be raised to at least $6,000.

3. While the previous recommendations constitute no truly new ideas in the field of income maintenance for the elderly, there is one proposal that has received scant attention, until the subcommittee's report of last year. This is the recommendation for the issuance by the U.S. Treasury of bonds redeemable at retirement at an amount adjusted to any increases in the cost of living in the period between time of purchase and time of redemption, plus a given interest rate on the face value. Such bonds could be redeemed before retirement but only with the latter rate of interest. Pension funds and retirement annuity companies could invest in such bonds, and would thus be able to adjust pension benefits to increases in living costs. Within certain limits, individuals could also purchase them. The subcommittee is firmly convinced that such a proposal would be a major contribution toward solving the problem of income maintenance during retirement.

The approach has been used in other countries under less restrictive conditions than those proposed by the subcommittee, and it has also been commented upon favorably by a number of economists in the United States. If such bonds became a substantial source of pension payments in programs established by employers and employees, many millions of future retirees could be potentially protected at levels well above those otherwise possible.

While the subcommittee is well aware of the arguments against the recommendation," it nevertheless believes that the positive advantages and byproducts, as well as the stated objective of the proposal outweigh such criticisms.

Since the proposal of a constant purchasing power bond is directly aimed at the problem of inflation and its impact on retired Americans, a comment on inflation at this point is in order. The crucial matter involved in the phenomenon of inflation in our type of society and economy is not whether there is an increase in the number of dollars and cents required to purchase a given commodity or service, but rather whether there is an increase in the numbers of people having an increased ability to purchase more commodities and serviceswhether there is an increase in the level of living. Our technology and social organization make possible an increase in productivity, an increase in the number of most goods and services per capita. Theoretically, these increases could be distributed among consumers through a decrease in prices, thus keeping constant the absolute level of wages but in practice this is difficult, if not impossible, to achieve in the case of all goods and services. In practice, through such forces as collective bargaining and the operation of labor market mechanisms of supply and demand, wages and salaries have increased, in varying degrees, thus making possible the acquisition of the increased benefits of our technology, that is, improvements in our national standard of living.

Contrary to a widespread belief, income in general has not failed to keep apace of price changes; in fact, real income (purchasing power)

For example, those mentioned in the background paper on impact of inflation on retired persons for the White House Conference on Aging, 1961, pp. 38-39; and the subcommittee's report, p. A95.

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