2020 OASDI Trustees Report

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B. ECONOMIC ASSUMPTIONS AND METHODS
The three alternative sets of economic assumptions provide a reasonable range for estimating the financial status of the trust funds. The intermediate assumptions reflect the Trustees’ consensus expectation of sustained moderate economic growth after completion of the recovery from the last recession and their best estimate for other economic parameters. The low-cost assumptions represent a more optimistic outlook with recovery to a higher level of economic output, stronger long-term economic growth, and relatively optimistic levels for other parameters. The high-cost assumptions represent a more pessimistic scenario with weaker economic growth interrupted by a recession in the near term, slower economic growth in the long term, and relatively pessimistic levels for other parameters.
Actual economic data were available through the third quarter of 2019 at the time the assumptions for this report were set. The data indicated that economic activity peaked in the fourth quarter of 2007.1 A severe recession followed, with a low point in the economic cycle reached in the second quarter of 2009 with gross domestic product (GDP) about 7 percent below the estimated sustainable trend level. The annual growth rate in real GDP has been positive in all years since then, but not as rapid as in most past recoveries.
Under the intermediate assumptions, the economy is estimated to have reached its sustainable trend level of output in 2019, two years earlier than in last year’s report, mainly because employment in 2019 exceeded projections from last year’s report and reached the estimated full-employment level. Under the low-cost assumptions, the economy is estimated to be still recovering and is projected to return to a higher sustainable trend level of output by 2022, one year later than in last year’s report. Under the high-cost assumptions, the estimated sustainable trend level of output is lower, and actual output has already exceeded that level. However, due to the assumed recession, GDP is projected to drop to 3.5 percent below the sustainable trend level in the first half of 2021, and the subsequent recovery is assumed to return GDP to the sustainable trend level in 2029. Complete economic cycles have little effect on the long-range estimates of financial status, so the assumptions do not include cycles beyond the short-range period (2020 through 2029).
The key economic assumptions underlying the three sets of projections of the future financial status of the OASI and DI Trust Funds are discussed in the remainder of this section.
1. Productivity Assumptions
Total U.S. economy productivity is defined as the ratio of real GDP to hours worked by all workers.2 The rate of change in total-economy productivity is a major determinant of the growth of average earnings. Over the last five complete economic cycles (1969-73, 1973-79, 1979-90, 1990-2001, and 2001-07, measured peak to peak), the annual increases in total-economy productivity averaged 2.66, 1.07, 1.41, 1.85, and 2.19 percent, respectively. For the period from 1969 to 2007, covering those last five complete economic cycles, the annual increase in total-economy productivity averaged 1.74 percent.
The assumed ultimate annual increases in total-economy productivity are 1.93, 1.63, and 1.33 percent for the low-cost, intermediate, and high-cost assumptions, respectively.3 These rates of increase are unchanged from the 2019 report.
The average annual rate of change in total-economy productivity from 2007 (the end of the last complete economic cycle) to 2019 is estimated to be 1.07 percent. For the intermediate assumptions, the annual change in productivity is 1.26 percent for 2020, 1.99 percent for 2021, and reaches its ultimate value of 1.63 percent for 2025 and thereafter. For the low-cost assumptions, the annual change in productivity is 1.61 percent for 2020, then increases to 2.64 percent for 2021, and then approaches its ultimate value of 1.93 percent for 2026. For the high-cost assumptions, the assumed recession slows the annual change in productivity to 0.55 percent for 2020 and 1.15 percent for 2021. The growth rate rebounds to 1.84 percent for 2022, averages 1.41 percent for 2023 through 2028, and stabilizes at its ultimate value of 1.33 thereafter.
2. Price Inflation Assumptions
Changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI) directly affect the OASDI program through the automatic cost-of-living benefit increases. Changes in the GDP price index (GDP deflator) affect the nominal levels of GDP, wages, self-employment income, average earnings, and taxable payroll. For a given real rate of growth in average earnings, a higher price inflation rate immediately results in a higher nominal rate of growth in both earnings and revenues, while the resulting added growth in nominal benefit levels occurs with a delay, causing an overall increase (improvement) in the actuarial balance. Similarly, a lower price inflation rate causes an overall decrease in the actuarial balance.
The annual increases in the CPI averaged 4.91, 8.54, 5.30, 2.73, and 2.63 percent over the economic cycles 1969-73, 1973-79, 1979-90, 1990‑2001, and 2001-07, respectively. The annual increases in the GDP deflator averaged 5.04, 7.54, 4.61, 2.08, and 2.49 percent for the respective economic cycles. For the period from 1969 to 2007, covering the last five complete economic cycles, the annual increases in the CPI and GDP deflator averaged 4.59 and 4.03 percent, respectively. The estimated average annual change from 2007 (the end of the last complete economic cycle) to 2019 is 1.73 percent for the CPI and 1.64 percent for the GDP deflator.
The assumed ultimate annual increases in the CPI are 3.00, 2.40, and 1.80 percent for the low-cost, intermediate, and high-cost assumptions, respectively.4 These assumptions are 0.2 percentage point lower than in the 2019 report, reflecting the Trustees’ expectation that the Federal Reserve Board’s inflation targets will remain unchanged.
For the intermediate assumptions, the annual change in the CPI is 2.27 percent for 2020, 2.43 percent for 2021, and reaches the ultimate growth rate of 2.40 percent for 2022 and later. For the low-cost assumptions, the annual change in the CPI is 2.96 percent for 2020, decreases to 2.85 percent for 2021, and reaches its ultimate growth rate of 3.00 percent for 2022 and later. For the high-cost assumptions, the annual rate of change in the CPI is 1.49 percent for 2020, decreases to 1.26 percent for 2021, and gradually rises to its ultimate growth rate of 1.80 percent for 2024 and later.
The annual increase in the GDP deflator differs from the annual increase in the CPI because the two indices are constructed using different computational methods and coverage. The difference between the rate of change in the CPI and the rate of change in the GDP deflator is called the price differential in this report. For the period including 1969 through 2007, covering the last five complete economic cycles, the average annual price differential was 0.57 percentage point. From 2007 (the end of the last complete economic cycle) to 2019, the average annual price differential is estimated to be 0.10 percentage point.
The assumed ultimate price differentials are 0.25, 0.35, and 0.45 percentage point for the low-cost, intermediate, and high-cost alternatives, respectively. Varying the ultimate projected price differential across alternatives recognizes the historical variation in this measure. Accordingly, the assumed ultimate annual increases in the GDP deflator are 2.75 (3.00 less 0.25), 2.05 (2.40 less 0.35), and 1.35 (1.80 less 0.45) percent for the low-cost, intermediate, and high-cost alternatives, respectively. The ultimate price differentials for the three alternatives are unchanged from the 2019 report.
The price differential was 0.15 percentage point in 2018, is estimated to be ‑0.16 in 2019, and is assumed to be 0.13 for 2020. The negative price differential estimated for 2019 primarily reflects a temporary decline in oil prices. Changes in oil prices affect the CPI much more than the GDP deflator because oil represents a much larger share of U.S. consumption than of U.S. production. For 2020 and later, oil prices are assumed to grow at a relatively stable rate. For the intermediate assumptions, the price differential is 0.30 percentage point for 2021 and 0.35 for 2022 and later.
3. Average Earnings Assumptions
The average level of nominal earnings in OASDI covered employment for each year has a direct effect on the size of the taxable payroll and on the future level of average benefits. In addition, under the automatic adjustment provisions in the law, growth in the average wage in the U.S. economy directly affects certain parameters used in the OASDI benefit formulas as well as the contribution and benefit base, the exempt amounts under the retirement earnings test, the amount of earnings required for a quarter of coverage, and in certain circumstances, the automatic cost-of-living benefit increases.
Projected growth rates in average covered earnings are derived from projections of the most inclusive measure, average U.S. earnings. Average U.S. earnings is defined as the ratio of the sum of total U.S. wages and net proprietors’ income to the sum of total U.S. civilian employment and Armed Forces. The growth rate in average U.S. earnings for any period is equal to the combined growth rates for total U.S. economy productivity, average hours worked, the ratio of earnings to total labor compensation (which includes fringe benefits), the ratio of total labor compensation to GDP, and the GDP deflator.
The average annual change in average hours worked was -0.26 percent over the last five complete economic cycles covering the period from 1969 to 2007. The annual change in average hours worked averaged -0.89, -0.55, ‑0.11, 0.10, and ‑0.50 percent over the economic cycles 1969-73, 1973-79, 1979-90, 1990‑2001, and 2001‑07, respectively. From 2007 (the end of the last complete economic cycle) to 2019, the average annual change in average hours worked is estimated to be -0.01 percent.
The assumed ultimate annual rates of change for average hours worked are 0.05, ‑0.05, and -0.15 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These values are unchanged from the 2019 report.
The average annual change in the ratio of earnings to total labor compensation was ‑0.20 percent from 1969 to 2007. Most of this decrease was due to the relative increase in the cost of employer-sponsored group health insurance (ESGHI) for wage workers. Assuming that the level of total employee compensation is not affected by the amount of ESGHI, any increase or decrease in the cost of ESGHI leads to a commensurate decrease or increase in other components of employee compensation, including wages. Projections of future ratios of earnings to total labor compensation follow this principle. The Trustees assume that the total amount of future ESGHI premiums will be affected by provisions of the Affordable Care Act of 2010 (ACA). A key provision of ACA affecting the projected growth in ESGHI premiums, the excise tax on ESGHI premiums (commonly referred to as the “Cadillac Tax”), was repealed in December 2019. As a result, the Trustees assume ESGHI premiums will increase faster, and wages therefore more slowly, than was assumed in the 2010 through 2019 reports. Data from BEA indicate that the other significant component of non-wage employee compensation is employer contributions to retirement plans. This component is assumed to grow faster than employee compensation in the future as life expectancy and potential time in retirement increase.
The average annual rates of change in the ratio of wages to employee compensation from 2029 to 2094 are about -0.03, ‑0.13, and ‑0.23 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These assumed rates are about 0.07 percentage point lower (more negative) than those assumed for the 2019 report. Under the intermediate assumptions, the ratio of wages to employee compensation declines from 0.814 for 2019 to 0.740 for 2094.
Because earnings and compensation are the same for self-employed workers, the ratio of earnings to total labor compensation includes self-employment income both in the numerator and in the denominator. As a result, the rate of decline in the ratio of earnings to total labor compensation (which, under the intermediate assumptions, averages 0.11 percent from 2029 to 2094) is less than the rate of decline in the ratio of wages to employee compensation.
The ratio of total labor compensation (i.e., employee compensation and net proprietors’ income) to GDP varies over the economic cycle and with changes in the relative sizes of different sectors of the economy. Over the last five economic cycles from 1969 to 2007, this ratio has averaged 0.627. The ratio declined from 0.649 for 2001 to 0.602 in 2009, increased to 0.612 in 2012, and is 0.608 in 2018. This ratio is assumed to rise to 0.631 for 2029. For years after 2029, relative sizes of different sectors of the economy are assumed to remain about constant,5 and therefore the ratio of total labor compensation to GDP remains at about the 2029 level for each set of assumptions.
The projected average annual growth rate in average nominal U.S. earnings from 2029 to 2094 is about 3.55 percent for the intermediate assumptions. This growth rate reflects the average annual growth rate of approximately ‑0.11 percent for the ratio of earnings to total labor compensation, and also reflects the assumed ultimate annual growth rates of 1.63 percent for productivity, ‑0.05 percent for average hours worked, and 2.05 percent for the GDP deflator. Similarly, the projected average annual growth rates in average nominal U.S. earnings are 4.76 percent for the low-cost assumptions and 2.35 percent for the high-cost assumptions.
Over long periods, the average annual growth rate in the average wage in OASDI covered employment (henceforth the “average covered wage”) is expected to be very close to the average annual growth rate in average U.S. earnings. The estimated annual rate of change in the average covered wage is 3.10 percent for 2019. From 2019 to 2029, the annual rate of change in the average covered wage averages 5.12, 3.88, and 2.57 percent for the low-cost, intermediate, and high-cost assumptions, respectively. The projected average annual growth rates in the average covered wage from 2029 to 2094 are 4.76, 3.54, and 2.32 percent for the low-cost, intermediate, and high-cost assumptions, respectively.
4. Assumed Real-Wage Differential
The real increase in the average covered wage has traditionally been expressed in the form of a real-wage differential — the annual percentage change in the average covered wage minus the annual percentage change in the CPI. For the period from 1969 to 2007, covering the last five complete economic cycles, the real-wage differential averaged 0.80 percentage point, the result of averages of 1.02, 0.05, 0.44, 1.47, and 0.83 percentage points over the economic cycles 1969-73, 1973-79, 1979-90, 1990-2001, and 2001‑07, respectively.
For the years 2030 through 2094, the projected average annual real-wage differentials for OASDI covered employment are 1.76, 1.14, and 0.52 percentage points for the low-cost, intermediate, and high-cost assumptions, respectively. The rounded average annual real-wage differentials are 0.08, 0.07, and 0.08 percentage point lower than in the 2019 report.
The estimated real-wage differential averaged 0.71 percentage point for 2008 through 2019 (the years since the peak of the last complete economic cycle). The real-wage differential was 1.08 percentage points in 2018 and is estimated to be 1.44 percentage points in 2019. For the intermediate assumptions, the real-wage differential is projected to rise from 1.23 percentage points in 2020 to 2.01 percentage points in 2021 before reaching its long-run average of 1.14 percentage points for 2030 through 2094. For the low-cost assumptions, the real-wage differential is 1.72 percentage points for 2020, increases to 2.94 percentage points in 2021, and reaches its long-run average of 1.76 percentage points for 2030 through 2094. For the high-cost assumptions, the real-wage differential is 0.06 percentage point for 2020 and ‑1.11 percentage points in 2021, due to the assumed recession. It then rises to 1.62 percentage points in 2022 before gradually declining to its long-run average of 0.52 percentage point for 2030 through 2094.
Annual percentage changea in—
Real-
wage
differ-
ential b
2019 d

a
For rows with a single year listed, the value is the annual percentage change from the prior year. For rows with a range of years listed, the value is the compound average annual percentage change.

b
For rows with a single year listed, the value is the annual percentage change in the average annual wage in covered employment less the annual percentage change in the Consumer Price Index. For rows with a range of years listed, the value is the average of annual values of the real wage differential, beginning with the year following the first year of the range. Values are rounded after all computations.

c
Economic cycles are shown from peak to peak, except for the last cycle, which is not yet complete.

d
Historical data are not available for the full year. Estimated values vary slightly by alternative and are shown for the intermediate assumptions.

e
Greater than -0.005 and less than 0.005.

5. Labor Force and Unemployment Projections
The model used by the Office of the Chief Actuary projects the civilian labor force by age, sex, marital status, and presence of children. Projections of the labor force participation rates reflect changes in disability prevalence, educational attainment, the average level of Social Security retirement benefits, the state of the economy, and the change in life expectancy. The projections also include a “cohort effect,” which reflects an upward trend in female participation rates across cohorts born through 1948.
The annual rate of growth in the size of the labor force decreased from an average of about 2.6 percent during the 1969-73 economic cycle and 2.7 percent during the 1973-79 cycle to 1.7 percent during the 1979-90 cycle, 1.2 percent during the 1990-2001 cycle, and 1.1 percent during the 2001‑07 cycle. Further slowing of labor force growth is expected to follow from a substantial slowing of growth in the working-age population in the future — a consequence of the baby-boom generation reaching retirement ages and succeeding lower-birth-rate cohorts reaching working ages. Under the intermediate assumptions, the labor force is projected to increase by an average of 0.7 percent per year from 2019 to 2029 and 0.4 percent per year over the remainder of the 75‑year projection period.
Labor force participation rates are projected with a model that uses demographic and economic assumptions specific to each alternative. More optimistic economic assumptions in the low-cost alternative are consistent with higher labor force participation rates, while demographic assumptions in the low-cost alternative (such as slower improvement in longevity) are consistent with lower labor force participation rates. These economic and demographic influences have largely offsetting effects. Therefore, the projected labor force participation rates do not vary substantially across alternatives.
Historically, labor force participation rates reflect trends in demographics and pensions. Between the mid‑1960s and the mid‑1980s, labor force participation rates at ages 50 and over declined for males but were fairly stable for females. During this period, the baby-boom generation reached working age and more women entered the labor force. This increasing supply of labor allowed employers to offer attractive early retirement options. Between the mid‑1980s and the mid‑1990s, participation rates at ages 55 and older roughly stabilized for males and increased for females. Since the mid‑1990s, however, participation rates for both sexes at ages 50 and over have generally risen.
Many economic and demographic factors, including longevity, health, disability prevalence, the business cycle, incentives for retirement in Social Security and private pensions, education, and marriage patterns, will influence future labor force participation rates. The Office of the Chief Actuary models some of these factors explicitly. To model the effects of other factors related to increases in life expectancy, projected participation rates are adjusted upward for mid-career and older ages to reflect projected increases in life expectancy. For the intermediate projections, this adjustment increases the total labor force by 2.9 percent for 2094.
For men age 16 and over, the projected age-adjusted labor force participation rates6 for 2094 are 73.0, 73.1, and 73.1 percent for the low-cost, intermediate, and high-cost assumptions, respectively. The low-cost assumptions result in a larger working-age population and a larger labor force when compared to the intermediate assumptions, but a slightly lower labor force participation rate for men. This occurs because the low-cost assumptions include shorter life expectancies and relatively higher numbers of never-married individuals in the population. Shorter life expectancies tend to reduce work at older ages, while labor force participation rates tend to be lower for never-married men and higher for never-married women compared to their married counterparts. For women age 16 and over, the projected age-adjusted labor force participation rates for 2094 are 62.1, 61.5, and 60.7 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These age-adjusted labor force participation rates for 2094 are higher under all three alternatives than the age-adjusted rates for 2018 of 71.0 percent for men and 58.8 percent for women (based on actual age-specific rates published by the Bureau of Labor Statistics), primarily due to the Trustees’ projected increases in life expectancy.
Projected labor force participation rates in this report are slightly lower than in the 2019 report. The Trustees believe that a structural shift has occurred in the unemployment rate, such that long-term unemployment rates and labor force participation rates will both remain somewhat below long-term past averages. Lowering both unemployment rates and labor force participation rates from levels in the 2019 report does not imply lower levels of employment; the projected ratio of employment to population for this report is similar to that in the 2019 report.
The total civilian unemployment rates are presented in table V.B2. For years through 2029, the table presents total civilian rates without adjustment for the changing age-sex distribution of the population. For years after 2029, the table presents age-sex-adjusted rates, using the age-sex distribution of the 2011 civilian labor force. Age-sex-adjusted rates allow for more meaningful comparisons across longer time periods.
The total civilian unemployment rate reflects the projected levels of unemployment for various age-sex groups of the population. Each group’s unemployment rate gradually approaches an assumed stable value within the first ten years of the projection period for all alternatives, and thus the total age-sex-adjusted civilian unemployment rate reaches its ultimate assumed value within the first ten years of the projection.
The assumed ultimate age-sex-adjusted unemployment rates are 4.0, 5.0, and 6.0 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These values are 0.5 percentage point lower than in the 2019 report, consistent with the Trustees’ belief that unemployment rates and labor force participation rates will both remain below long-term past averages, as mentioned above. The Trustees assume the current favorable labor market conditions will draw more nonparticipants back into the labor force and the unemployment rate will increase from an estimated 3.7 percent for 2019 to the assumed 5.0 percent for 2023 under the intermediate assumptions. Under the low-cost assumptions, the ultimate unemployment rate is reached in 2022. Under the high-cost assumptions, the ultimate unemployment rate is reached in 2028.7
6. Gross Domestic Product Projections
The value of real GDP equals the product of three components: (1) average weekly total employment,8 (2) productivity, and (3) average hours worked per week. Consequently, the growth rate in real GDP is approximately equal to the sum of the growth rates for total employment, productivity, and average hours worked. For the period from 1969 to 2007, which covers the last five complete economic cycles, the average growth rate in real GDP was 3.1 percent. This average growth rate approximately equals the sum of the average growth rates of 1.6 percent for total employment, 1.7 percent for productivity, and ‑0.3 percent for average hours worked. The real GDP for 2018 was 19.3 percent above the 2007 level. The estimated real GDP growth from 2018 to 2019 is 2.3 percent.
For the intermediate assumptions, the average annual growth in real GDP is 2.1 percent from 2019 to 2029, the approximate sum of component growth rates of 0.5 percent for total employment, 1.66 percent for productivity, and ‑0.04 percent for average hours worked. The projected average annual growth in real GDP of 2.1 percent for this period is equal to the underlying sustainable trend rate because the Trustees assume that the recovery from the last recession was complete in 2019. After 2029, the annual growth in real GDP averages 2.0 percent, based on the projected average annual growth rate of 0.4 percent for total employment and the assumed ultimate growth rates of 1.63 percent for productivity and ‑0.05 percent for average hours worked. The projected growth rate of real GDP is slower than the past average growth rate mainly because the working-age population is expected to grow more slowly than in the past.
For the low-cost assumptions, the annual growth in real GDP averages 2.9 percent over the decade ending in 2029. The relatively fast growth is due mostly to high assumed rates of growth for employment and worker productivity. For the high-cost assumptions, the annual growth in real GDP averages 1.4 percent for the decade ending in 2029.
7. Interest Rates
Table V.B2 presents average annual nominal and real interest rates for newly issued trust fund securities. The nominal rate is the average of the nominal interest rates for special U.S. Government obligations issuable to the trust funds in each of the 12 months of the year. Interest for these securities is generally compounded semiannually. The real interest rate is defined as the annual yield rate for investments in these securities divided by the annual rate of growth in the CPI for the first year after issuance. The real rate shown for each year reflects the actual realized (historical) or expected (future) real yield on securities issuable in the prior year.
To develop a reasonable range of assumed ultimate future real interest rates for the three alternatives, the Office of the Chief Actuary examined historical experience for the last five complete economic cycles. For the period from 1969 to 2007, the real interest rate averaged 2.9 percent per year. The real interest rates averaged 1.6, -1.0, 5.1, 4.1, and 2.0 percent per year over the economic cycles 1969-73, 1973-79, 1979-90, 1990-2001, and 2001-07, respectively. The assumed ultimate real interest rates are 2.8 percent, 2.3 percent, and 1.8 percent for the low-cost, intermediate, and high-cost assumptions, respectively. These rates are 0.2 percentage point lower than in the 2019 report.
The actual average annual nominal interest rate was approximately 2.9 percent for 2018, which means that securities newly issued in 2018 would yield 2.9 percent if held one year. Estimated average prices rose from 2018 to 2019 by approximately 1.7 percent. The annual real interest rate for 2019 is 1.2 percent, the approximate difference between the nominal interest rate and the rate of price increase. For the 10-year short-range projection period, projected nominal interest rates depend on changes in the economic cycle and in the CPI. When combined with the ultimate CPI assumptions of 3.0, 2.4, and 1.8 percent, the assumed ultimate real interest rates produce ultimate nominal interest rates of 5.8 percent for the low-cost assumptions, 4.7 percent for the intermediate assumptions, and 3.6 percent for the high-cost assumptions. These nominal rates for newly issued trust fund securities reach their ultimate levels by 2029, the end of the short-range period.
Average annual
unemployment rate a
Annual percentage changeb in—
Labor
force c
Total
employment d
Real
GDP e
Nominal f
Real g
2019 j

a
The Office of the Chief Actuary adjusts the civilian unemployment rates for 2030 and later to the age-sex distribution of the civilian labor force in 2011. For years through 2029, the values are the total rates without adjustment for the changing age-sex distribution.

b
For rows with a single year listed, the value is the annual percentage change from the prior year. For rows with a range of years listed, the value is the compounded average annual percentage change.

c
The U.S. civilian labor force.

d
Total U.S. military and civilian employment.

e
The value of the total output of goods and services in 2012 dollars.

f
The average of the nominal interest rates, compounded semiannually, for special public-debt obligations issuable to the trust funds in each of the 12 months of the year.

g
The realized or expected annual real yield for each year on securities issuable in the prior year.

h
Greater than -0.05 and less than 0.05 percent.

i
Economic cycles are shown from peak to peak, except for the last cycle, which is not yet complete.

j
Historical data are not available for the full year. Estimated values vary slightly by alternative and are shown for the intermediate assumptions.


1
See www.nber.org/cycles/cyclesmain.html.

2
Historical levels of real GDP are from the National Income and Product Accounts (NIPA) produced by the Bureau of Economic Analysis (BEA). Historical total hours worked are provided by the Bureau of Labor Statistics (BLS) and cover all U.S. Armed Forces and civilian employment.

3
These assumptions are consistent with ultimate annual increases in private nonfarm business productivity of 2.36, 2.00, and 1.63 percent. Compared to total-economy productivity, private nonfarm business productivity is a more widely known concept that excludes the farm, government, nonprofit institution, and private household sectors.

4
BLS produces a series called the Consumer Price Index Research Series Using Current Methods (CPI‑U‑RS) that approximates the measured rate of inflation over the 1978-2019 period had the method currently used been in effect since 1978. BLS does not revise the CPI values published in earlier years, for which different methods were used. These CPI published values are shown in table V.B1. The Trustees use an adjusted CPI series based on the CPI-U-RS when setting the ultimate price inflation assumption because it provides a time series that is consistent with the current method for computing the CPI.

5
However, employment in the uniformed military sector has declined in size over the last 40 years, and is assumed to remain at its 2018 level throughout the 75-year projection period.

6
The Office of the Chief Actuary adjusts the labor force participation rates to the 2011 age distribution of the civilian noninstitutional U.S. population.

7
The assumed ultimate unemployment rate is an age-sex-adjusted rate.

8
Total employment is the sum of the U.S. Armed Forces and total civilian employment, which depends on the total civilian labor force and unemployment rate.


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