From Business Insider · Madison Hoff · · 2m
Retirees get bigger raise than workers staying put
Social Security recipients are getting a 3.6% boost in 2027, outpacing the 3.4% wage growth for employees who keep their jobs.
In brief
Social Security recipients are getting a 3.6% boost in 2027, outpacing the 3.4% wage growth for employees who keep their jobs. About seventy two million Social Security recipients will receive a three point six percent increase in January twenty twenty-seven, higher than the three point four percent wage growth for…
Seventy two million get bigger raise
About seventy two million Social Security recipients will receive a three point six percent increase in their benefits in January. This exceeds the three point four percent wage growth for employees staying in their jobs.
Retirees beat job stayers three times
Independent economist Aaron Terrazas said cost-of-living increases for Social Security beneficiaries exceeded job-stayers' increases in three of the past six years, most recently the eight point seven percent increase announced in twenty twenty-two.
Two different pay systems at work
Terrazas explained that retiree income adjusts with cost of living, while working people are compensated according to cost of labor. For decades this favored workers, but that dynamic is shifting.
“Retiree income is adjusted with the cost of living, whereas people who are working are mostly compensated according to the cost of labor.”
Inflation indexing fueled seventies spiral
Terrazas warned that indexing incomes to cost of living rather than labor cost fueled the wage-price spiral in the nineteen seventies. Most workers moved away from this practice, but retirees did not.
“Indexing incomes to the cost of living rather than cost of labor is a big part of what fueled inflation, the wage-price spiral in the 1970s.”
Growing retiree share drives spending
With more Americans in their retiring years, older consumers drive an outsize share of spending. Baby boomers are in their core retirement spending years, shaping consumer trends and holding up the economy.
Job switching pays better than staying
The three-month moving average for job switchers exceeded both job stayers and the announced cost-of-living adjustment. However, finding new opportunities is difficult, with white-collar job losses and volatile leisure and hospitality employment.
Low hiring makes job search harder
The US is in a low-hire, low-fire period. Layoffs are low, so employed workers are secure, but job openings and hiring are anemic, making it difficult for job seekers to find new positions.
The short version
About seventy two million Social Security recipients will receive a three point six percent increase in January twenty twenty-seven, higher than the three point four percent wage growth for job stayers, widening income gaps between retirees and working employees.
