It’s not just retirees who depend on Social Security

Summary

Marketplace Morning Report: It’s Not Just Retirees Who Depend on Social Security

Release Date: February 10, 2025

In this insightful episode of the Marketplace Morning Report, host David Brancaccio delves into the multifaceted impact of Social Security beyond its traditional role of supporting retirees. Through an engaging discussion with senior economics contributor Chris Farrell, the episode uncovers how Social Security serves as a crucial financial backbone for younger generations living in multi-generational households.

1. Social Security’s Expanding Role in American Households

David Brancaccio introduces the topic by highlighting the foundational role Social Security has played in preventing retirees from falling into poverty. However, recent data suggests that the benefits of Social Security extend to younger family members as well.

“[Social Security] is about a safety net so that retirees don't live in abject poverty. And data show the program helps people younger than 62 as well when the children of retirees share a household with their elders.”
— David Brancaccio [04:17]

2. Rising Trends in Intergenerational Households

Chris Farrell presents compelling statistics indicating a significant rise in the number of children living in households with Social Security income.

“The fraction of children under 18 living in households with any exposure to Social Security income has risen from 6.8% in 2000 to 9.1% in 2019. That's an increase of about one-third in two decades.”
— Chris Farrell [04:27]

This increase, referred to as the growth in "grand families" or "kinship families," can be attributed to several societal challenges:

• Substance Abuse
• Incarceration
• Financial Hardship
• Military Deployment
• Illness and Death

3. Financial Dynamics Within Multi-Generational Households

The discussion reveals how Social Security payments are interwoven into the financial fabric of these households, effectively acting as a subsidy for younger members.

“The estimates are about 50% of retirement-age people live in households receiving at least half of their family income from Social Security. And you can file for benefits as early as age 62.”
— Chris Farrell [05:07]

Farrell explains that while Social Security may not significantly increase overall household income—since many beneficiaries are retired or semi-retired—the program plays a crucial role in mitigating the risk of children living in deep poverty.

4. Positive Outcomes for Children and Families

Beyond the financial aspects, Social Security contributions have notable social benefits:

“The payments are associated with less risk that children will live in deep poverty. Older adults receiving Social Security have more time available to spend with their grandchildren, which is good for their cognitive development and educational attainment.”
— Chris Farrell [05:28]

5. Empirical Evidence Supporting Social Security’s Broader Impact

Farrell references recent studies and Census Bureau data to underscore the tangible benefits of Social Security:

“One and a half million fewer children were in poverty in 2023 because of Social Security payments. As of 2019, children are more likely to live in a household receiving Social Security income than one receiving traditional cash welfare.”
— Chris Farrell [06:12]

These findings highlight the pivotal role Social Security plays not just in individual retirement, but in fostering economic stability and improved living conditions for younger generations.

6. Conclusion: Beyond Traditional Welfare Systems

The conversation concludes with a comparative analysis, emphasizing that Social Security now surpasses traditional welfare programs in its reach and effectiveness in supporting child households.

“Their study echoes data from a recent Census Bureau report which suggests that 1.4 million fewer children were in poverty in 2023 because of Social Security payments.”
— Chris Farrell [06:12]

David Brancaccio wraps up the segment by acknowledging the expansive influence of Social Security, extending its safety net to millions of American families beyond its original intent.

Key Takeaways

• Social Security's Expanded Role: Beyond aiding retirees, Social Security supports multi-generational households, significantly impacting children's economic well-being.

• Rising Dependency: The percentage of children living in households reliant on Social Security has increased by one-third over two decades, driven by various social and economic challenges.

• Financial and Social Benefits: Social Security not only reduces the risk of child poverty but also enhances familial relationships and developmental outcomes for children.

• Superior to Traditional Welfare: In recent years, Social Security has become a more prominent source of household income for children compared to traditional cash welfare programs.

This comprehensive exploration underscores the indispensable role of Social Security in shaping the economic and social landscape of American families, highlighting its significance far beyond its original mandate.

Transcript

[David Branch]

The latest from the AI summit. I'm David Branch of World Leaders Tech. CEOs and scientists are in Paris today and tomorrow for a summit on artificial intelligence. It's about forging common rules of the road and countries working to get a piece of the AI development pie. AI companies are also wondering about loosening some of Europe's AI rules. This after President Trump negated some Biden era rules marketplaces. Novasafo has more.

[Nova Safo]

The French government says it wants the AI Summit to result in broader access to artificial intelligence through more open source development and shared data sets. France is partnering with India on the summit, a sign it is trying to build a rival nexus of AI power. Compared to the US And China, the French government has lined up more than $100 billion in new private sector investments. The summit comes amid a dizzying array of AI developments. DeepSeek showed China is nearly caught up to the US In AI chatbot technology. Meanwhile, President Trump, in one of his first acts in office, reversed AI safety rules set by the Biden administration. Those rules were focused on setting testing standards for certain high risk AI systems. Now the EU is facing pressure to loosely enforce its own landmark AI regulations passed last year. They include prohibitions on social scoring systems and risk management requirements. I'm Nova Safo for Marketplace.

[David Branch]

President Trump told reporters yesterday he will announce new taxes on steel and aluminum imports today. Mexico, Canada and Brazil are the biggest exporters of these metals to the U.S. marketplace's Nancy Marshall Genser has that.

[Nancy Marshall Genser]

Trump told reporters the 25% tariff would apply to any steel or aluminum coming into the US he didn't say when the new tariffs would take effect. It's also not clear how the new tax would apply to China if it would be on top of the tariffs already in effect on Chinese imports. Julia Coronado is president and founder of Macro Policy perspectives. She says U.S. industries that use a lot of steel, like construction and manufacturers of planes and cars, would be hit especially hard by steel and aluminum tariffs and would probably pass some of the cost along to their customers. Some of it gets offset by currency adjustments, some of it gets absorbed into profit margins and something like half of it gets passed along to the final consumer. Trump also said yesterday he'll announce new reciprocal tariffs this week. He said they would match other countries tariffs on US Exports dollar for dollar. A spokesman for the European Commission says it will react to protect the interests of European businesses. Trump imposed tariffs on steel and aluminum from the EU during his first term. Europe retaliated with levies of its own on US Exports of Products like orange juice, bourbon and and Harley Davidson motorcycles. I'm Nancy Marshall Genser for Marketplace.

[Kai Rysdal]

Hi, I'm Kai Rysdal, the host of How We Survive. This season is all about the institution that shaped me, the US Military and how it could shape the future of climate tech. You've probably heard that 2024 was the hottest year on record, that wildfires devastated Los Angeles and that the US Withdrew from the Paris Agreement again. And while all that might feel pretty terrible, the climate crisis is not an inevitable reality. From simulated climate emergencies to micro grids and sustainable aviation fuel, we look at how the military is investing part of its $850 billion budget in a greener, more, more resilient future. Listen to How We Survive wherever you get your podcasts.

[David Branch]

Social Security, signed into law 90 years ago by President Franklin Roosevelt, is the financial foundation of retirement in America. It's about a safety net so that retirees don't live in abject poverty. And data show the program helps people younger than 62 as well when the children of retirees share a household with their elders. Marketplace's senior economics contributor Chris Farrell has been going through the studies for us. Hey, Chris.

[Chris Farrell]

Good morning.

[David Branch]

All right, so we have this data. More children living with older adults who are drawing Social Security, household income being fungible. What's behind this?

[Chris Farrell]

The numbers are really compelling, David. The fraction of children under 18 living in households with any exposure to Social Security income, It's risen from 6.8% in 2000 to 9.1% in 2019. So that's an increase of about 1/3 in two decades. And there are a number of factors that are behind the growth in grand families or kinship families, where grandparents are the primary caregivers. Among the most important, substance abuse, incarceration, financial hardship, military deployment, illness, and death.

[David Branch]

So the money comes in for the household expenses and it kind of gets all mixed up. So you have this kind of Social Security subsidy for younger people as well?

[Chris Farrell]

That's right. So the estimates are about 50% of retirement age. People live in households receiving at least half of their family income from Social Security. And you can file for benefits as early as age 62. And this recent study by several economists, they focus on children under age 18 who are living with grandparents with the oldest adult around that age of 62.

[David Branch]

And what they find.

[Chris Farrell]

Social Security has a meaningful and positive impact on the economic circumstances of children and grand families. Now, Social Security doesn't increase household income on average, probably because the older adults are retired or they're semi retired. But the payments are associated with less risk that children will live in deep poverty. The economists also point out that older adults receiving Social Security have more time available to them to spend with their grandchildren, which is good for their cognitive development and educational attainment.

[David Branch]

It's been studied and shown that the poverty rate among the elderly has plunged because of Social Security. Can we say the same thing for the children that are benefiting?

[Chris Farrell]

I think so. So their study echoes data from a recent Census Bureau report which suggests that 1.4 million fewer children were in poverty in 2023 because of Social Security payments. And here's the number that really took me by surprise, David. As of 2019, children are more likely to live in a household receiving Social Security income than one receiving traditional cash welfare.

[David Branch]

Marketplace's senior economics contributor Chris Farrell in St. Paul, thank you very much.

[Chris Farrell]

Thanks a lot.

[David Branch]

And I missed it early in the game, but my director saw it, a Super bowl ad addressing U.S. canada economic relations. It was an ad paid by Ontario highlighting that the Canadian province is America's third largest trading partner and the number one export destination for 17 US states. The voiceover said, our long standing partnership keeps millions of Americans working. It's unlikely President Trump saw it. He was at the game and prior to it, he told Fox News he's serious about Canada becoming a 51st US state. I'm David Brancaccio, Marketplace Morning Report.

[Nova Safo]

From.

[David Branch]

APM American Public Media. Hi, it's David. We have an exciting offer for you. Now through Valentine's Day, you can show off your love of Marketplace by grabbing and investor T shirt when you donate $5 a month. Invest in the nonprofit journalism you love and get a shirt to show off your support. Give now at marketplace. Org. Donate.