Every time Ive mentioned

Every time I’ve mentioned on my blog that faster productivity growth (and therefore faster wage growth) will shrink the Social Security deficit in come the emails complaining that this won’t work because wage growth increases Social Security’s costs as well as its revenues. You can also find this complaint being made by many a conservative pundit. Make the case to a bigger audience here on TPM, the number of complaints is only higher. But the complaint is wrong. Read the Social Security Administration’s annual report and you’ll see that it’s wrong. Faster productivity growth leads to an improvement in Social Security’s finances. That’s why one of the assumptions of the (historically more accurate) “low cost scenario” (under which no deficit whatsoever is projected) is that productivity growth will be faster. Read Brad Delong’s explanation if you want to know why. The short version is that while initial benefit levels are indexed to wage growth, annual benefits above the initial level increase only at the rate of price inflation.