NCPA - National Center for Policy Analysis


October 27, 2004

The ability of workers to support the nation's retirees depends largely on what kind of jobs will be available for future employees, says Scott Burns. If the employment market trends toward low-skilled, minimum wage jobs, funding retirees' Social Security checks will present an even greater challenge.

According to Burns:

  • The average retirement check of $926.90 requires 9 full-time workers to produce, assuming the workers are earning the minimum wage of $5.15 per hour.
  • The average Wal-Mart employee earns $9.70 per hour and pays $1.20 per hour in employment taxes; therefore, it would require five full-time Wal-Mart employees working a total of 770 hours a month to produce the same retirement check.
  • The average national hourly earnings rate is $15.30, with $1.90 paid in employment taxes; hence, it would take more than 3 workers at the average hourly wage working a total of 489 hours a month to generate the same retirement check.
  • However, those earning a salary of $87,900 per year (which is the maximum wage for collecting employment tax) pay about $5.46 per hour in employment tax; in this case, only one worker would be required to generate the $926.90 retirement check.

The current ratio of workers to retirees is about 3-to-1, says Burns, indicating that many workers earn more than the minimum wage. But society must look ahead and beware of the danger in creating "McJobs" at the expense of ?Big Jobs.?

Source: Scott Burns, "Who Pays for You to Retire?" Dallas Morning News, October 24, 2004.


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