How Social Security deals with inflation

Make Me Smart July 14, 2022 transcript

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Kimberly Adams: Yeah, here we go. We’re ready. We got this. Just in time. I’m Kimberly Adams. Welcome back to Make Me Smart, where we make today make sense. Hey, everybody.

Amy Scott: Hey, and I’m Amy Scott, in for Kai Ryssdal. Thanks for joining us, it is Thursday. So we’re gonna get smarter about the news and hopefully make you smile by the end of this. So with that, let’s do the news fix. What you got Kimberly?

Kimberly Adams: Okay, I’ll go first. Um, I saw the story in The New York Times today that I think it’s a good thing for people to read. The New York Times has these focus groups where they just talk to different people about their feelings on controversial news topics. And so, in this case, they talk to 12 pro-life voters, and ask them amongst many other things, how they feel about people who disagree with them. And I feel like on the issue of abortion, people get so caught up in their own echo chambers, and only talking to people who think how they think about a topic, that it’s hard to see where other people are coming from. Now, I am not saying that you should like both sides of reproductive rights, and you know, the autonomy over people’s bodies and things like that. But what I am saying is that, if you can’t even hear what the other person has to say, and you don’t even understand where their arguments are coming from, then there’s no way to bridge the gap. And it’s just very thoughtful. And they do also have interviews with pro-choice voters, and they say the 10 pro-choice voters are angry, and they have thoughts on who to blame for the end of Roe. And so just hearing from these folks, about the nuanced views that I think so many people have about abortion is really valuable. As this debate has been going on, since the draft document was leaked. You know, I just, I’ve been really astonished to hear how many people in my own life have had an abortion, that I didn’t know about, that are just now feeling comfortable talking about it, and many of them still believe abortion is wrong. And both of those things can exist in the same place, and in the same way. And I think all of us have to kind of lean into the nuance with some kindness and care to move through this debate.

Amy Scott: Hmm, what I thought was interesting also was some of the lack of information, or just lack of understanding about the reality of abortion. They were asked things like, you know, is abortion more dangerous than childbirth, and some people thought it was, which is not true, in terms of risks to a woman’s health. And the lack of understanding about medication abortion, and how common it is for abortions to happen after the first trimester, which is quite rare. And so I thought it raised the question of, you know, with better information, would people have different opinions about this? And so you’re right, it speaks to the need for conversation, which sadly, does not happen enough.

Kimberly Adams: Yeah, I mean, even things like about when a heartbeat can be sensed, you know, just inaccurate information that people have been provided and believe and use that as the basis for their arguments. And it’s, um, you know, misinformation and disinformation in some cases, but also sometimes people’s real beliefs. All right. What’s yours, Amy?

Amy Scott: All right. So I saw this on CNN today. If inflation trends continue, people with social security benefits could see a 10.5% increase in their payments next year. That’s the COLA – the cost of living adjustment. And that’s based on a projection from an advocacy group called the Senior Citizens League. The increase would add about $175 to the average monthly payment, which is now $1,668. And this is just a projection, we won’t know until fall what the official adjustment will be. Because, of course, it depends on what happens with inflation from here and the Fed is, you know, raising rates to try to bring that pace of price increases down. But one thing I learned, one thing I feel like I’m a little smarter about is, if the Social Security Administration bases its annual COLA on average inflation during the third quarter, and uses a measure called the consumer price index for urban wage earners and clerical workers known as CPI-W, which is a little bit different than what we report monthly on marketplace, the CPI for all urban consumers. So the CPI-W was up 9.8% last month, year over year, compared to the 9.1% we reported yesterday for the CPI-U. Which I thought was just kind of an interesting tidbit.

Kimberly Adams:  Do you know why they use that?

Amy Scott: Why they use that? You know, I started to read that and it got a little bit close to deadline so… Why clerical workers? I feel like that’s something I want to know.

Kimberly Adams: I’m Googling it right now.

Amy Scott: But I think they think it’s more representative for the seniors and disabled people who draw on Social Security benefits. Um, but anyway, whatever the final number, it’s likely to be the largest increase since the early 80s. But still, you know, some people say not enough to cover bills. And this year, for example, the adjustment was 5.9%. But inflation, of course, has been much higher than that. So the Senior Citizens League says a lot of seniors, half of them had to spend emergency savings in the past year, nearly half said they had to visit a food pantry or apply for food stamps, which is more than double the share who said that last year. So it just shows, you know, getting that number right can make a real difference for people.

Kimberly Adams: And what is right, you know. Your choice of which index to use makes a difference in this case,

Amy Scott: Right. Absolutely.

Kimberly Adams: Okay, hold on. I’m sorry. I definitely googled and Duck Duck Go-ed while you were talking…

Amy Scott: Oh, good. We want to know why.

Kimberly Adams: Okay, um, BLS initially announced in 1974 its intention to replace the urban wage earners and clerical worker definition of the CPI with the broader CPI-U population. That decision, however, was criticized by some labor union leaders, members of Congress, and members of other organizations who are CPI data users. Some users did not oppose the new index, but did object to discontinuing using the older index – here we go: these users were worried that the broader index would no longer be firmly grounded in the experience of low and middle income workers. And they promoted the creation of a separate index covering additional workers. So it looks like this was a read on including clerical workers. Because at the time these indexes were developed, these were low wage workers and I imagine pretty much entirely women. And so I wonder if this was a way to make sure that they included women in the index.

Amy Scott: Hmm. Yeah, all right. That’s an interesting topic for another make me smart.

Kimberly Adams: So that’s it, we should probably find a make me smile now that we’ve gone deep down this rabbit hole.

Amy Scott: Into the weeds.

Kimberly Adams: Speaking of nerd stuff, I’ll go first, because if you have been on social media in the last I guess a year or so, you have probably seen people’s Wordle scores. And so for people who are fans of the game, Wordle is now getting an official party game. So there’s a story in Polygon which has I think a chef’s kiss headline. Wordle is now getting an official party game. Now you can guess words, with friends. So yeah, it’s a Hasbro and New York Times collaboration. It’s getting a physical board game edition, that you can purchase starting in October, and Hasbro promises the classic Wordle gameplay rules and a couple of variations, including a beat-the-clock mode and team-based word guessing action. So I just thought that was very entertaining. So like what is the physical, in person version of posting your Wordle score online?

Amy Scott: Right, exactly. That’s what our producer on the PM show Sean McHenry said, what’s the point if you can’t tweet out your score. Although, I mean, honestly, every time someone tweets out their score, which is just some boxes, I’m like, what? This tells me nothing. I don’t know what words you started with, I don’t know what you ended with. Anyway, for those of us who like old school games, it is always fun to spread out a good old-fashioned board game on the dining room table.

Kimberly Adams: I do. I haven’t played scrabble in a while. I want to play Scrabble. I used to kill at Scrabble.

Amy Scott: Oh, I bet! That would be something I could try. Next time.

Kimberly Adams: Yes. What’s your make me smile?

Amy Scott: So this one’s about ferries – not the flying kind, the boat kind. Yeah, so I saw on Bloomberg…

Kimberly Adams: I totally, my brain immediately went to fairies like…

Amy Scott: What, the other kind of fairies? I’m sorry.

Kimberly Adams: A hundred percent.

Amy Scott: Yeah, okay, well, that will be a make me smile for another time. But this is about the boat, F-E-R-R-I-E-S. New York City has a new plan to make its ferries more accessible. Mayor Eric Adams announced it today, starting in September, fares will be cut for low-income riders, seniors and people with disabilities to just a $1.35 for a one way ticket. That’s half the current cost of a full price ticket. Frequent riders who don’t qualify can also get discounted tickets by buying in bulk and then rates for everybody else – as in, you know, tourists and the rich people who live in New York and might occasionally use the ferry will increase to $4. And I think the idea here is to make people who don’t necessarily rely on the ferry cover more of the cost because the system has been heavily taxed heavily, subsidized by taxpayers, and yet pretty unaffordable to average New Yorkers. Also, they’re eliminating the $1 fee to take your bike on the ferry, which I think is good for the planet and good for bikers and just makes me want to go and ride the boat, you know.

Kimberly Adams: Have you ever ridden those ferries?

Amy Scott: I have ridden the Staten Island Ferry. Not as a commuter though I imagine. My feelings about it are probably more romantic than someone who has to write it every day to work.

Kimberly Adams: Yeah, I rode one time when I was going to the Statue of Liberty.

Amy Scott: Yeah. Which is lovely trip.

Kimberly Adams: It is, it is. Okay. Well, that’s it. That’s all I’ve got. You got anything else? All right. Well, that’s it for us today. Kai and I will be back tomorrow for economics on tap. You can join us on the YouTube live stream starting at 6:30 Eastern on my side of the country, 3:30 Pacific on his side. We will have more news, drinks, and play a game of half full half empty. So bring your glasses and your drinks, alcoholic and non, and we’ll look forward to seeing you and hearing you or just, you know, existing in the same virtual space together.

Amy Scott: It sounds lovely really. And please keep sending us your thoughts or questions, our email is makemesmart@marketplace.org. Or you can leave us a message at 508-U-B-SMART.

Kimberly Adams: Make Me Smart is produced by Marissa Cabrera. Olivia Zhao is our intern. Today’s episode was engineered by Charlton Thorp.

Amy Scott: Bridget Bodnar is the senior producer, and the director of on demand is Donna Tam.

Kimberly Adams: What a day. What a day. We went deep down that rabbit hole didn’t we.

Amy Scott: I hope people learned something.