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Social Security especially important in rural areas

The Daily Yonder, a great place for facts and information, had an article recently about the increased dependence on Social Security payments by those in rural areas of the country. The article argues that a higher percentage of residents receive benefits, and that the average payment is also higher than the national averages or the large cities figures.

Social Security has been under attack by the House in this congress. Every lame-brained idea you can think of. Privatize it. Change the eligibility age. And on and on. They see it as a ready source of money to paper over holes in their budgets. Millions of people see it as a significant portion of their retirement, paid into over the years of working.

There are interesting charts with the article, which illustrate the statistics. Here are a few of the many quotes:

Social Security payments are particularly important to rural counties and small cities because the money is largely spent in the community. “The seniors who get these payments are primarily going to spend their money locally,” said Mark Partridge, a rural economist at Ohio State University. “And they are a key reason why some communities are still viable. If this money dried up, there wouldn’t be a lot of these small towns.”

Judith Stallmann, an economist at the University of Missouri, explained that Social Security payments help generate the sales that keep a rural business afloat.

“We find that Social Security income can be the difference between success and failure for some local businesses,” Stallmann said. “If you took away, say, 10 percent of the demand, would that local business be able to remain open? Often it’s that 10 percent that keeps them going. Social Security is providing that margin.”

Here are some interesting links for you to check the figures yourself.

Missisippi State University findings for Virginia

Interactive map and downloads of information

One thought on “Social Security especially important in rural areas

  1. The study is making the classic mistake of looking at only half of the equation. As the article points out, Social Security accounts for 9.3% of the income of rural counties. On the other side of the equation is that, in rural counties, almost all of the other income is subject to the FICA taxes.

    Nationwide, about 6.3% of our total earnings are paid in FICA taxes. Corporate income is not subject to FICA taxes, nor is income over the Social Security Wage Base. Such income is less common in rural areas, so rural areas are hit harder by FICA taxes than are urban and suburban areas.

    Finally, I’d like to know how much of that Social Security income actually comes from wealthy retirees who have left the cities to retire in the country. Those people retired wealthy because they managed their money. How much MORE money would they have if they had not been paying FICA taxes all those years? That would be even MORE money spent in the rural regions by those retirees.

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