Answer Man

Social Security started with a flat rate

Chicago Tribune Service

Q: We seniors were quite disappointed when the government announced there would be no cost-of-living raise to our Social Security next year. A few of us want to know how and when these raises started and how many times in the past there was no increase.

D.M. Murphy, of East St. Louis

A: Just weeks before President Barack Obama took over the Oval Office, the Social Security Administration played Santa Claus by announcing a whopping 5.8 percent cost-of-living adjustment (COLA) for 2009, the largest annual increase since 1981.

But as the U.S. economy continued to tank, ol’ Kriss Kringle became more like the Grinch who stole Christmas. In the seven years since, seniors were given empty stockings back to back in 2010 and 2011 and now again for 2016. They are the only three times in COLA history when seniors saw no increase in their checks for an entire year.

On the bright side, of course, it means inflation is being held in check because that’s how the Social Security COLA is figured. According to the index that Social Security uses, prices have remained relatively flat. If you think it’s bad for you now, consider the initial plight of Ida May Fuller and millions of others like her.

On Jan. 31, 1940, Fuller, a retired legal secretary, received the first Social Security check ever issued. It was for the princely sum of $22.54, which happened to be just $2 less than all of what she had paid into the system for three years after it began in 1937.

She eventually made out like a bandit, collecting nearly $23,000 on her $25 investment by the time she died in 1975 at age 100. But here’s the thing: As 1950 began, she was still getting $22.54 a month. No provision in the law had been made for increases, annual or otherwise. As it stood, she and everyone else who had retired during the ’40s expected their first benefit check to be the amount they would receive every month for the rest of their lives. How would you like to face that kind of system today? Even one year without a raise is troublesome enough, right?

That’s what President Harry Truman thought when he signed the Social Security Act Amendments of 1950 into law. After the elderly went an entire decade without a raise, Congress thought it was high time to help the elderly keep pace with prices by increasing benefits 77 percent. Ida May saw her checks leap from $22.54 to $41.30.

“The act will ultimately reduce dependence on public charity,” Truman said in signing the bill. “This measure demonstrates our determination to achieve real economic security for the American family This kind of progressive, forward-looking legislation is the best possible way to prove that our democratic institutions can provide both freedom and security for all our citizens.”

From then on, lawmakers realized they would have to help seniors deal with the ever-increasing cost of living. So, over the next 25 years, Congress upped Social Security benefits eight times — and usually by double-digit amounts. In 1952, for example, recipients saw a 12.5 percent bump followed by a 12 percent rise just two years later. Then, after just two increases in the ’60s, checks went up 15 percent in 1970, 10 percent in 1971 and 20 percent in 1972.

But though the raises were welcomed, the system still had a major flaw: Because there still was no provision in the law that mandated a rate increase, it always took a special act of Congress to raise benefits. With the partisan divide in Congress today, you probably can see how seniors might wait for years for an increase now.

Instead, Congress in 1972 enacted a revolutionary change in the Social Security benefit structure. It provided that starting in 1975, Social Security recipients would be given a cost-of-living adjustment each year based on the annual increase in consumer prices. So, in 38 of the past 41 years, recipients have seen checks increase. In times of rampant inflation, they’ve shot up by as much as 14 percent as in 1980. Nine times there has been less than a 2 percent jump.

Many likely would argue that this system is fairer than one in which seniors constantly had to depend on the kindness of Congress. Others, however, say the system still needs at least one major tweak. Currently, Social Security bases its COLA on the CPI-W — the Consumer Price Index for Urban Wage Earners and Clerical Workers. Opponents argue this index does not include the very people Social Security serves — the retired, the disabled and survivors. However, it was the only measure available in 1972.

“The shortcomings of the measure for Social Security are obvious,” Nancy Altman, the founding co-director of Social Security Works, wrote recently. “People who are working and, indeed, the general population, have substantially different spending patterns than seniors and people with disabilities. Seniors and people with disabilities spend more on health care and long-term care — where prices rise faster — and less on clothing, recreation, and other items — where prices tend to rise more slowly — than younger, healthier Americans.”

In effect, she argues, Social Security benefits are still eroding because of an inadequate COLA, and she encourages both the elderly and those who will eventually come to rely on Social Security to scrutinize candidates’ positions on changes to the system next year before heading into the voting booth.

Today’s trivia

With the force having reawakened in a big way, what role did St. Louis play in launching the “Star Wars” character of Darth Vader to the universe?

Answer to Sunday’s trivia: If you’ve ever been curious about just how many miles Metro Transit logs in a year around the St. Louis area, here’s your answer: In fiscal year 2013, its 382 buses covered 18.5 million miles on 76 routes, its 87 MetroLink cars rolled over 3.1 million miles and its 116 Call-A-Ride vans added another 5.2 million miles for a grand total of 26.8 million revenue miles. It saw 47.1 million passenger boardings for an average daily ridership of 147,590 within its 558-square-mile service area. And to keep everything moving, the vans and buses consumed nearly 5.6 million gallons of diesel fuel.

Roger Schlueter: 618-239-2465, @RogerAnswer