Robert J. Myers
ROBERT J. MYERSRobert J. Myers served as the Social Security Administration's Chief Actuary in 1947-70 and Deputy Commissioner in 1981-82 Since retiring in 1982, he served as Executive Director of the National Commission on Social Security Reform in 1982-83.
My association with the program began because of a very fortuitous set of circumstances. In June 1934, I was graduated from the University of Iowa as an eager actuarial student, armed with a Master's Degree but no job. In September, I received an offer to be a junior actuary with a governmental organization which was not at all familiar--the Committee on Economic Security. As I learned, the COES had been established to make studies underlying a possible Social Security program. All of this came about because my professor was a member of the Actuarial Advisory Committee of the COES. As he frankly told me, I was the nearest of the unemployed graduates to Washington, and so I might be interested in what would be only a 2-month job. As it turned out, the tenure extended somewhat longer.
The economic changes over the 50 years since the Social Security Act was enacted are perhaps best exemplified by the increases in salary levels. My initial salary was $1,620 per year, whereas currently the Social Security Administration is hiring people with similar qualifications at $17,824. Looking at the other end of the scale, the top actuarial position with the Social Security Board in 1936 paid $8,000, whereas currently the Chief Actuary is paid $68,700.
Also, look at the growth of the old-age, survivors, and disability insurance program over the years (actually, only "old-age" originally). It was anticipated initially that about 30 million persons would be in covered employment each year, whereas currently there are about 120 million. The number of monthly beneficiaries has increased from only about 200,000 in December 1940 (the first year when benefits were paid) to about 37 million in 1985.
As a junior actuary (and, in fact, the only one ) for the COES, my responsibilities originally were to grind out projections of the total population of the United States, and the cost estimates for various plans being considered. This was at first done under the supervision of an experienced actuary, W. Rulon Williamson, although later the entire responsibility fell on me. I was duly impressed with the magnitude of the figures that I was cranking out--millions of people and even billions of dollars! In those days, the computations were made with electric rotary calculating machines, not electronic computers as now.
All of the projections made in 1934-35 extended out to that very distant future year of 1980. It was estimated that the balance in the trust fund (or, as it was then called, the Old-Age Reserve Account) would amount to $47 billion in 1980. At that time, this seemed an astronomical sum, because it was more than the National Debt. Even so, despite what is sometimes said, the program would not be on a completely fully-funded basis like private pension plans aim to do.
What was the actual experience? At the end of 1980, the OASI Trust Fund amounted to $23 billion, or only about half of the estimate. (Of course, there were many factors involved, so that complete comparability is by no means present--for example, inflation, expansion of coverage, and enlargement of the benefit structure.) In order to make the estimate look better, I might add the Dl Trust Fund and the two Medicare trust funds, which bring the 1980 balance up to $45 billion--quite close to the estimate!
If we look at the actual outgo of the program in 1980 as compared with the original estimate, the picture is not nearly as good. The estimate was $4 billion, whereas the actual figure for OASI was $108 billion. On the other hand, if we consider total outgo as a percentage of taxable payroll, the estimate for the original Act looks extremely good. Such estimate for 1980 was 9.65 percent of payroll, while the actual OASI outgo rate was 9.36 percent of payroll. This is certainly the most valid comparison of actual versus estimated that can be made--and not merely because it makes the original actuarial estimates look better! Rather, such a cost rate indicates the relative impact of the program on the economy.
We should not, however, always be looking back, but rather we should consider the future as well. The intermediate (or Alternative II-B) cost estimate in the 1985 OASDI Trustees Report contains some interesting figures as to the great growth in the OASDI program that is likely in the second 50 years of operation. In 2035, an estimated 80 million persons will be beneficiaries in a typical month. This is somewhat more than double the present number of beneficiaries and, in fact, is almost two-thirds as large as the total population of all ages in 1935. Benefit outgo is estimated at $5 trillion in 2035, or about 25 times as large as in 1985. However, once again, dollar figures are not nearly as significant as relative ones. The outgo in 2035 as a percentage of payroll is estimated at 15.9 percent, as compared with 11.3 percent currently; this is a sizable increase, but yet one that should not cause financial problems as it is eased into over a 50-year period.
In summary, the OASDI program is now not only alive and well, but also its prospects for the future are excellent. The Medicare program has some financing problems in the next decade or so (and thereafter), but these can be solved--in the same manner as the Nation does for health-care costs for the working populace and their dependents. I have every reason to believe that both programs will be around 50 years hence in the same general form as they are today. They provide a suitable basic floor of economic protection and deserve to be maintained over the years.