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Column: An exhaustive debunking of the dumbest myths about Social Security

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Column: An exhaustive debunking of the dumbest myths about Social Security

Myths and canards about Social Security and its supposed fiscal troubles have steadily proliferated over the years. But it’s rare to find them all concentrated in one place as they were in a recent article on the online news site Slate.

Slate paired Eric Boehm, a writer for the conservative magazine Reason, with a writer named Celeste Headlee for a dialogue titled “Social Security Doesn’t Make Sense Anymore.” The roughly 2,000-word piece contained so many misconceptions, inaccuracies, misrepresentations, and flat-out lies about the program that I almost gave up counting. That said, it’s perhaps worthwhile to have a one-stop shop for all these solecisms, if only for the purpose of debunking them en masse.

Most people 65 and older receive the majority of their income from Social Security.

— Kathleen Romig tells the truth about Social Security that Slate missed

The article called for a “radical rethink” of Social Security to make it somehow more relevant to Americans in the modern world. Boehm and Headlee evidently think that’s a world in which America is on the brink of insolvency and can’t afford to spend another dime on the disadvantaged, that Social Security recipients are rich, and that older Americans can have their pick of jobs that will keep them happy and healthy indefinitely.

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Slate says their dialogue was “edited for clarity,” but the only thing it made clear is that neither of them knows the first thing about Social Security. More alarming, they showed no inclination to learn.

There isn’t space here or time for me to list every solecism in the piece, so I will focus on some of the most egregious errors.

“People who are young and working … are funding the retirement of generally wealthier Americans.” This notion was popularized by former Sen. Alan Simpson (R-Wyo.), who went around calling Social Security beneficiaries “greedy geezers” and disdained the program as “a milk cow with 310 million tits.”

The underlying idea is that the average Social Security beneficiaries are doing better than the poor souls in the working class who are paying for their lives of leisure through their payroll taxes. It’s commonly reported that retirees are, on average, the wealthiest cohort of Americans.

Here’s what’s wrong with that idea: The reason that so many seniors are able to live comfortably is because they receive Social Security.

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As Kathleen Romig of the Center on Budget and Policy Priorities has reported, “most people 65 and older receive the majority of their income from Social Security.” The poverty rate among Americans older than 65 is 10.3%. Without Social Security, it would be nearly 38%. To put it another way, Social Security keeps more than 15 million seniors out of poverty.

The average Social Security monthly check is $1,709.70, which works out to $20,516 a year. That’s about $800 more than the federal poverty line for a family of two.

The idea that cutting off the wealthiest seniors or at least reducing their benefits would help save Social Security is a popular myth, with recipients like Warren Buffett and Bill Gates the most common illustrative targets. The goal is to promote “means-testing” the program.

But myth it is. As of 2017, about 47,500 millionaires were receiving Social Security. Their total benefits came to about $1.4 billion, or about 15 hundredths of a percent of the $941 billion in benefits the system paid out that year. If you’re intent on “saving” Social Security by means-testing, you would need to start cutting off or reducing benefits for recipients earning about $70,000 a year in non-Social Security income — not millionaires.

Boehm backed up his thoughts on this topic with some suspect data. He cites the Federal Reserve in asserting that “the average value of a retired person’s assets” today is $538,000. Hmm. My reading of the Fed’s latest digest from its Survey of Consumer Finances, issued just last month, places the median net worth of those aged 65-74 at about $410,000; for those 75 and older, it’s $335,600.

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Does that make them rich? Using the common rule of thumb that one can spend 4% a year of retirement savings to have the best chance of not outliving your nest egg, $410,000 produces $16,400 a year. Not the basis of a lavish lifestyle. Even a nest egg of $538,000 doesn’t make for a life of leisure — in one’s first year of retirement the 4% rule would yield $21,520.

Just raise the retirement age? Boehm: “When Social Security began, you could get benefits at age 65, but the average life expectancy in this country was like 61. So the average person actually died before they qualified for Social Security.” This is another quacking canard from the Simpson duck pond.

Average life expectancy from birth in 1940, when the first Social Security checks went out, was about 63 and a half, which I suppose is “like” 61. But that figure was skewed lower by high infant mortality; Boehm acknowledges this, but doesn’t bother to explore its ramifications, perhaps because it explodes his take.

For Americans who made it to their first birthday back then, average life expectancy was nearly 66. For those entering their working careers, say at age 20—the relevant cohort for assessing the chances of collecting Social Security — it was nearly 69.

In other words, the average person did not actually die before qualifying for Social Security; the average person collected for years. Indeed, those who were 65 in the late 1930s lived on average nearly to 78.

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Anyway, life expectancy is closely connected to race, educational attainment and income. Those who live longest are whites, college graduates and the affluent. Raising the retirement age is a curse on those who don’t fall into those categories. White people aged 65 have gained more than six years of longevity since the 1930s; Black males only about four years.

By the way, what are workers supposed to do while they’re waiting longer to reach retirement age? Leaving aside the impact of age discrimination that makes it harder for older people to obtain or keep jobs, the Census Bureau has reported that more than half of all workers aged 58 or older were in physically demanding jobs or jobs with difficult working conditions — more than 13 million workers.

As economists Cherrie Bucknor and Dean Baker pointed out in a 2016 paper, “the workers who were most likely to be in these jobs were Latinos, the least educated (less than a high school diploma), immigrants, and the lowest wage earners.”

I don’t know what Boehm’s working conditions are like, but I’d bet they don’t “require dynamic, explosive, static, or trunk strength, bending or twisting of the body, stamina, maintaining balance, or kneeling or crouching” or involve “exposure to abnormal temperatures, contaminants, hazardous equipment, whole body vibration, or distracting or uncomfortable noise.” It’s easy to think that everyone else should work harder, if your frame of reference is your own office desk.

Social Security is “a welfare program”: Boehm pushed this idea hard. “You would never build a welfare program, you would never get Congress to approve the construction of a new welfare program, that took money directly from the paychecks of workers and transferred it to a wealthy cohort somewhere in this country,” he says.

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There’s a manifest danger in calling Social Security a welfare program. That’s because welfare programs are easiest to axe when conservatives go hunting for budget cuts — Americans typically view them as serving layabouts and malingerers at their expense.

Social Security is nothing like a welfare program, however. It’s a contributory system, funded entirely by its beneficiaries through the payroll tax. Its benefits are tied to lifetime contributions. That’s why billionaires get it, too — they contributed to it during their working lives. Nor is it only an old-age pension: It encompasses disability benefits and insurance to cover spouses and children when their breadwinner suffers an untimely death.

Before Republicans started casting “entitlements” as a dirty word, Americans saw their entitlement to Social Security benefits as a blessing — most still do. They’re entitled to it because they’ve paid for it with every paycheck.

The idea that the system represents a war between seniors and younger generations is just wrong. Whatever fiscal problems face Social Security, it’s because it’s exploited by the wealthy at the expense of everyone else.

In 1937, when the payroll tax was first collected, it applied to about 92% of all earned income. By 2020, that figure had fallen to 83%, largely because of an increase in income inequality. Were the payroll tax to be restructured to cover 90% of earnings, as the Congressional Budget Office reported last year, that would produce an additional $670 billion in revenue over 10 years; raise it to cover all annual earnings over $250,000, the gain would be $1.2 trillion — all without cutting benefits by even a penny.

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Social Security “is going to hit a brick wall in the 2030s.” This is Boehm’s gloss on the familiar projection that the program’s trust fund will run out some time in the middle of that decade. Is that a “brick wall”? Hardly: At that point, the program will still be guaranteed enough revenues to continue paying three-quarters of all scheduled benefits.

That’s a middle-of-the-road estimate. The system’s actuaries have also projected that given alternative demographic and economic assumptions — including assuming the unemployment rate and economy stay where they are today and immigration rises closer to its historical norm, the program might even be able to pay all benefits indefinitely.

—”The cost of Social Security is … ballooning quite rapidly”: This holds no water at all. The CBO projects that Social Security benefits as a share of gross domestic product, currently 5.1%, will rise to 6.2% by 2053. If that’s a balloon, it’s inflating pretty slowly.

In that time span, incidentally, GDP will more than triple to $79.5 trillion from $26.2 trillion, according to the CBO.

Boehm’s argument is that Social Security is becoming such a fiscal burden that it’s “killing the safety net.” He says, “There’s not enough money to go around,” which is absurd to say about the richest nation in world history. He says the cost of Social Security and Medicare, which he seems to think, erroneously, are related programs, is “pushing other things to the budget into a territory where we have to borrow more money to pay for them.”

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That’s obviously not so. We wouldn’t have to borrow if we took such reasonable steps as repealing the 2017 tax cuts for corporations and the rich that drove a hole into the federal budget, or started charging the wealthy for their fair share of Social Security. He mentions that Americans have experienced “decades of greater prosperity,” but not that the benefits of that prosperity have been collected overwhelmingly by the 1%.

Boehm and Headlee plainly intended to tell it like it is on Social Security. Unfortunately, their effort was hampered by lack of information. Would it have killed them to do even a little research?

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Column: They say San Francisco is coming back as a tech hub, but it never really left

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Column: They say San Francisco is coming back as a tech hub, but it never really left

Michael Suswal’s first eye-opening encounter with the vibrancy of San Francisco came in 2017.

That’s when he and his fellow co-founders of Standard AI, an artificial intelligence startup funded by the incubator Y Combinator, moved from New York to San Francisco for the summer.

“Initially we planned on going back to New York,” says Suswal, 44. “But after living in the Bay Area for two or three months, between us we had way more network contacts than we had had in our combined 50 years living in New York.”

Where else would you go that would have more support, more connections, the right type of environment and the right investors?

— Michael Suswal, Generation Lab

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When COVID hit, Suswal told me, he moved to Seattle and worked from home. Last year, when he and a partner opted to co-found a new company, they pondered the best place to start.

“We thought, where else would you go that would have more support, more connections, the right type of environment and the right investors? Building a company is hard. It takes everything you’ve got, and even then there’s an 80% chance of failure. So why would you stack the deck against yourself? It was a no-brainer to come back here.”

Generation Lab, which Suswal co-founded with longevity expert Alina Su and UC Berkeley bioengineering professor Irina Conboy, aims to market a technology that can help customers identify and manage long-term medical conditions.

Suswal’s take is different from what you might have heard from the news media and red-state politicians over the last few years. They spin a narrative of a region — indeed, the entire state of California — in secular decline. Of a Silicon Valley whose best days are behind it. Of wholesale flight of money and talent to new, welcoming places such as Miami and Austin.

But there has never been much truth to that narrative generally, and it’s more dubious than ever today, when the Bay Area has emerged as a center of artificial intelligence investing.

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There is no shortage of newsy nuggets to illustrate the “doom loop” narrative about San Francisco.

On Tuesday, for instance, Macy’s announced that it would close its gigantic store overlooking Union Square sometime in the next three years. But the closure is part of a major corporate retrenchment involving the closings of 150 stores nationwide, 30% of the total.

Nor is there anything historically new about San Francisco-bashing. The practice dates back to the Gold Rush, when the city’s powerful attraction as a jumping-off place for Forty-Niners seeking their fortunes in the nearby hills generated an equally potent counter-narrative.

Hinton R. Helper, a visitor from North Carolina who would eventually gain notoriety as a white supremacist, reported in 1855 on the city’s “rottenness and its corruption, its squalor and its misery, its crime and its shame, its gold and its dross…. Degradation, profligacy and vice confront us at every step.”

It’s a short distance from Helper’s screed to the map that Florida Gov. Ron DeSantis displayed during a televised debate with Gov. Gavin Newsom in November, purportedly showing deposits of human waste around San Francisco. (That didn’t help DeSantis’ presidential campaign avert an early demise, any more than Helper’s critique stemmed the flow of fortune-seekers into California.)

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It’s true that the frenzy in artificial intelligence investing has brought a jolt of capital to the entrepreneurial economy of the Bay Area, but that’s merely the latest iteration of a story that dates back to the emergence of Silicon Valley in the late 1960s — or even to the founding of Hewlett-Packard in Palo Alto in 1939.

The region has undergone a long sequence of technology booms and busts over the decades, but each bust has set the stage for the next boom. In the 1980s, the valley’s chipmakers lost their dominance in semiconductor memory to Japanese competitors.

But within a few years, as UC Berkeley economist and political scientist AnnaLee Saxenian observed in her definitive study of the region, “Regional Advantage,” in 1994, new semiconductor and computer startups such as Sun Microsystems had emerged and Silicon Valley had “regained its former vitality.” By 1990, Silicon Valley was home to “one-third of the 100 largest technology companies created in the United States since 1965,” Saxenian wrote.

The key to its enduring stature atop the innovation economy has been the Bay Area’s infrastructure of institutions (Stanford and UC Berkeley) and legal, technical and financial professionals, and its population of technology workers — all having created “dense social networks and open labor markets.”

By contrast, the Silicon wannabes tend to put all their eggs in one basket, and when that basket’s contents spill out, there’s little to fill it up again.

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Miami is a telling example. Its mayor, Francis X. Suarez, tried to establish the city as the center of cryptocurrency financing and innovation. The FTX crypto exchange bought naming rights to the arena where the NBA’s Miami Heat play. International conferences for bitcoin and crypto adherents filled the conference center in 2022.

Miami associated itself with the first “city coin,” a crypto token that Suarez claimed would help boost the municipal budget.

The effort hasn’t panned out. FTX collapsed as its founder, Sam Bankman-Fried, was indicted and subsequently convicted of fraud; the Heat’s arena now carries the name of Kaseya, a Miami software firm.

Attendance at crypto conferences has dwindled. MiamiCoin, which was valued at 5 cents when it came on the market in August 2021, now trades for about 16-thousandths of a cent, if anyone cares — there doesn’t seem to have been a trade in eight months. The city is searching for relevance in the modern technology landscape.

The same sources that talked up the flight of entrepreneurs from the Bay Area to Miami, Austin and other Silicon wannabes are now running articles about startup founders moving back; often the return is accompanied by complaints about the lack of a true innovation culture in their new homes, as well as traffic congestion and housing prices soaring out of reach — much the same as one would find in any large city.

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As my colleague Hannah Wiley reported recently, San Francisco’s adherents are trying to seize the narrative reins by reminding people that the city and region offer unique advantages to entrepreneurs, especially in technology-related fields.

One is Angela Hoover, 25, who launched her consumer-oriented AI search firm, Andi, in Miami with backing from Y Combinator. At first, Miami seemed inviting because it seemed to be host to a healthy startup community.

Attending AI events in San Francisco, however, made it “abundantly clear that the AI community was in San Francisco. It almost feels like you have a front-row seat to a play, and at the same time you’re in the play,” Hoover said.

“Despite what all the doom-and-gloom critics say, [the Bay Area] is still a hotbed of innovation,” Ali Diab, chief executive of Collective Health, told me. That’s what prompted the firm, which manages employer health plans, to return its headquarters to downtown San Francisco after allowing its workforce to disperse to a work-from-home system during the pandemic.

“Obviously, you have the AI revolution being driven from here,” Diab says, “but you also have powerhouse enterprise software companies like Salesforce and Slack.”

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Collective Health also discovered that the cost of office space in San Francisco was lower than elsewhere in the Bay Area, including Silicon Valley proper. About 120 of Collective Health’s 783 employees work in San Francisco, with the others distributed among offices in Chicago, Texas and Utah, or working remotely.

Diab was an early critic of the “doom loop” argument against San Francisco, observing in a mid-October op-ed in the San Francisco Chronicle that “as a Bay Area native, I’ve had to listen to people predict the demise of my city for my entire life.” In truth, he wrote, “the oft-cited challenges San Francisco faces are no different from those experienced by any other major city in the United States.”

Housing is “prohibitively expensive in almost every major American city,” he added. “New York, Chicago and Los Angeles haven’t solved their homelessness problems and neither have many other large cities.”

The story of a Bay Area exodus always was overstated. The image of Texas’ attraction for entrepreneurs has never moved much beyond three major tech companies that moved their headquarters there from California — Hewlett Packard Enterprise in Houston and Oracle and Tesla in Austin.

And the significance of these moves may be more imagined than real. In 2020, when Oracle announced its move to Austin from Redwood City, south of San Francisco, it said it was building a campus for 10,000 employees; the company has 164,000 workers worldwide.

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When Elon Musk sought a location for Tesla’s “global engineering headquarters,” the seat of the company’s innovative brainpower, he found it in Hewlett Packard’s former corporate headquarters — not in Austin, but Palo Alto. He announced his decision to move into that space in February 2023 at a joint event with Gov. Newsom.

Other states have never come close to California in the volume of their venture investments. In 2022, according to the National Venture Capital Assn., California firms raised $78.3 billion in venture funding, more than 40% higher than second-ranked New York. Florida ranked fifth with only $2.6 billion, followed by Texas with $2.4 billion (and Texas’ total fell by about half from the previous year).

San Francisco companies attracted nearly $31 billion in venture funding in 2022, according to CBRE. The Bay Area all told attracted $61 billion, accounting for 35% of all venture funding in the U.S.

Venture investing fell appreciably in 2023, and venture-backed companies experienced a spike in “down rounds” — in which their valuations are lower than they were in the previous round of venture infusions — starting in late 2022. But those trends appeared across the entire venture funding universe, and were more likely related to the run-up in interest rates and fears of a recession than to any California-centric phenomena.

In any case, AI was a distinct bright spot, accounting for about 1 in 5 of all venture deals in 2023 and one-third of all venture dollars invested, according to the accounting firm EisnerAmper.

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No one doubts that San Francisco and the Bay Area present challenges. Suswal says he was concerned that recruiting staffers to come to the area would be difficult. When he himself was considering moving back to San Francisco from Seattle last October, he “bought into a lot of the negative aspects of the city that were being published at the time,” he says. “But the city is in better shape than it gets credit for. … All the best people come here, because it’s well worth it.”

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Northrop Grumman could eliminate as many as 1,000 jobs in Southern California

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Northrop Grumman could eliminate as many as 1,000 jobs in Southern California

Defense contractor Northrop Grumman Corp. has told its employees that it could cut as many as 1,000 jobs in Southern California.

The affected employees are part of the company’s space sector and work at facilities in Redondo Beach, Manhattan Beach and Azusa. The company said it is working to match those employees with other, existing jobs within the company.

Although Northrop Grumman did not specify a reason for the cuts, the U.S. Space Force recently canceled a multibillion-dollar program to develop a classified military communications satellite with the company after cost overruns, a schedule delay and development difficulties, according to Bloomberg.

Recently, space has been a difficult place to do business. Earlier this month, NASA’s Jet Propulsion Laboratory laid off 530 employees, or 8% of its workforce, in anticipation of massive federal budget cuts.

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Northrop Grumman said it has notified the state’s Employment Development Department and filed a Worker Adjustment and Retraining Notification Act notice about the job cuts, as required by law.

“This is ongoing, and a higher number of employees will receive WARN notices than may ultimately be impacted,” the company said in a statement.

Although Northrop Grumman is based in Falls Church, Va., California is a major hub for the company. The defense contractor’s historic 110-acre Space Park facility in Redondo Beach was built at the height of the Cold War and is the birthplace of the intercontinental ballistic missile, as well as the rocket engines that lowered the first crew onto the moon and, more recently, the building of the James Webb Space Telescope.

The company also has a major aircraft facility in Palmdale, where it is building the new B-21 stealth bomber, the center fuselage for the F-35 fighter jet, the RQ-4 Global Hawk drone and the MQ-4C Triton drone.

Northrop Grumman also has facilities in San Diego, Sunnyvale, Northridge, Woodland Hills and Ventura County. In all, the company employs about 30,000 people across the state.

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Video shows burglar vandalizing East Hollywood restaurant, causing $80,000 in damage

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Video shows burglar vandalizing East Hollywood restaurant, causing $80,000 in damage

It was a typical Sunday at El Zarape.

Families enjoyed Mexican food and good vibes at the East Hollywood restaurant inside a strip mall on Melrose Avenue as CicLAvia shut the street down to traffic.

But the next morning, when the first cook of the day showed up Monday at the restaurant, an entirely different scene awaited. She called the owner, Beto Mendez, right away.

At first, Mendez thought it might be some graffiti on the outside of the restaurant. He was wrong.

El Zarape on Melrose remains closed after burglar vandalized the restaurant.

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(Jason Armond/Los Angeles Times)

“The minute I got there I was in shock,” Mendez told The Times in an interview. “I saw the place completely destroyed.”

Mendez said there was $80,000 worth of damage inside.

Chairs were flipped over and tables were askew. One bar had been bashed in with a hammer while all the TVs were spray-painted with graffiti. Spray paint covered one of the bar’s surveillance cameras and seemingly all of the restaurant’s walls. A safe with $20,000 was taken.

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The incident was first reported by L.A. Taco.

Surveillance video shows a man in a light-colored hoodie and dark pants and Nikes shaking a can of spray paint inside the bar before any damage was done. The man then sprays one of the surveillance cameras with paint, video shows. While Mendez could not see any other people in the videos, he assumed that there was more than one vandal, based on the amount of damage, which included “C14” tagged on the walls.

Alberto Mendez is the owner of El Zarape on Melrose.

Alberto Mendez, the owner of El Zarape on Melrose, stands in his restaurant which was recently damaged when burglars broke in and ransacked the place.

(Jason Armond/Los Angeles Times)

Police told Mendez that the vandalism was related to the C-14 gang, also known as Clanton, he said. The Los Angeles Police Department did not immediately provide comment on the situation.

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C-14 is a gang that has existed in Los Angeles for about a century, originating on Clanton Street, which was later renamed 14th Place, according to a website that documents street gangs.

The gang is active in the neighborhood, with tags up and down Melrose.

The group even tagged a local house of worship, Trinity Episcopal Church, scrawling “C14” on its marquee in spray paint.

“This area is like an epicenter for a couple gangs,” said a man who works near El Zarape, who asked to remain anonymous out of safety concerns. “MS-13 and C-14 as well as some other little local cliques. There’s a lot of tagging all around the neighborhood.”

“If someone tagged the inside of the restaurant, it’s pretty serious,” he said.

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For Mendez, the destruction of his restaurant could not come at a worse time. Just two weeks ago, his ex-wife died. Mendez shared custody of their two teen daughters with her and now has full custody of them.

“They have that pressure and that stress of losing their mom already and I haven’t really told them nothing about the restaurant right now,” he said. “I would rather keep it to myself and handle it.”

Mendez is trying to raise money to reopen the restaurant and fix the damage via GoFundMe.

While Mendez said that the restaurant has had relatively few problems in the seven years it has been open, there was an incident after the Super Bowl on Feb. 11, according to Mendez and the other person who worked at a nearby business.

That day, the two men said, after the Kansas City Chiefs beat the San Francisco 49ers in Las Vegas, a man fired a gun into the air near El Zarape, then barricaded himself inside and police SWAT teams had to respond to arrest him.

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