Food prices, COLAs, and Social Security
“Every time I go to the supermarket, I pay more.” “Food prices keep skyrocketing.” “When I was a kid, bread was a dime.” What’s wrong with these three statements? The first two are plain wrong and the third misleading, as it neglects inflation (i.e. wages were much less decades ago too). It’s like saying “put your coat on or you’ll catch a cold.” Just because you’ve been saying it for years does not make it so.
Consider the facts and data. Gauging food prices is difficult because prices vary so much by retailer. And, when pork prices jump, as one example, people can buy chicken or beef. We substitute all the time rather than just pay higher prices. But there are three staples that are used by so many households, that it makes sense to look at eggs, bread, and milk prices for the five year period 2015-2019.
According to the U.S Bureau of Labor Statistics, the price of eggs is now 12% lower than five years ago. Milk prices are 10.7% lower, and bread prices are up a scant 4.3% in five years, less than a percent a year. We would expect all prices to be much higher, because we all know that things get more expensive every year. Except they don’t. Seniors on Social Security have paychecks 6.7% higher today than five years ago, and that includes one year with a zero increase. Thus when it comes to these food basics, Social Security recipients are ahead of the game.
But what about housing, health care, and college costs? Everyone knows those items tend to outpace inflation. That is true, so let’s look at these one by one. College costs are not a requirement to survive like food, housing, and medicine and are less of a concern to seniors than they are to college-age students and their working parents.
As for medicine, not every senior utilizes health care to the same degree. Increased competition and availability of Medicare Advantage plans have lowered premiums for many. Fully 88% of Medicare Advantage enrollees are in plans that include prescription drug coverage, and about half of these beneficiaries pay no premium for their plan, other than Medicare Part B. On housing, a minority of Americans age 60 to 70 have a mortgage when they retire according to a survey by American Financing, a national mortgage banker.
What about gasoline? Surely that’s what’s keeping seniors down, as gas prices are always going up. But they aren’t. When a temporary price spike happens due to some event on the world stage, it invariably makes for alarming headlines. We spend the next few weeks searching out stations for the cheapest gas. But these events are always short-lived. The resulting price drops of a nickel a week don’t get the same coverage, as they’re hardly news. The fact is gasoline prices in inflation adjusted dollars are at near historic record lows, and they are actually below the prices during the Great Depression.
Sometimes it’s important to defend and be pleased with low inflation, as it benefits Americans overall. Inflation is a thief, robbing us of our money’s buying power the same way a burglar steals from our dresser drawer. Seniors would love to get a 7% raise in their Social Security benefits, but if prices increased at that same clip, they would be no better off. The Social Security cost of living adjustment, while not perfect (no calculation could ever be), was designed only to keep one from falling further behind. It was never created to allow one to get ahead. And who among us who lived through the long gas lines and “sticker shock” of the late 1970s and early 1980s would ever want to return to that? Better to get a dozen eggs now for 79 cents.