How growing income inequality is hurting Social Security

By Michael A. Fletcher

Here’s another reason to be concerned about income inequality: it poses a direct threat to the already shaky fiscal health of Social Security, according to a report released Tuesday by the left-leaning Center for American Progress.

The nation’s old-age pension and disability insurance program is funded by a payroll tax that this year applies to wages of $118,500 and below. But the amount of revenue coming in is not as large as it could be, now that an increasing share of wage growth is going to people who make more than that, and the wages of many Americans are stagnant, or even in decline. That is adding fiscal stress to a program already struggling with the demands of an aging population.