AR206

An Assembly Resolution urging the United States Congress to pass the “COVID-19 Emergency Social Security Cost of Living Increase Act of 2020.”

Whereas, The coronavirus disease 2019 (COVID-19) pandemic has disproportionately affected New Jersey’s senior citizens, not only causing scores of deaths, but also affecting the stock market and the State’s economy, thereby eroding seniors’ retirement income and savings; and

Whereas, According to the Social Security Administration, among elderly Social Security beneficiaries nationwide, 21 percent of married couples and 45 percent of unmarried individuals rely upon Social Security for 90 percent or more of their annual income; and

Whereas, As of December 2019, approximately 1.6 million New Jersey residents, or 18.8 percent of the State’s population, receive Social Security benefits; and

Whereas, Social Security benefits lifted nearly 400,000 New Jersey senior citizens out of poverty between 2016 and 2018, according the Center on Budget and Policy Priorities; and

Whereas, In 2018, the Social Security program also provided financial support to 66,000 New Jersey children under the age of 18 who were primarily the dependents of retired, disabled, or deceased adults; and

Whereas, The federal government annually increases the amount of Social Security benefits by a cost of living adjustment, or COLA, which increases the benefit to keep pace with the rising cost of widely-utilized goods and services, such as housing and medical care; and

Whereas, In October 2020, the Social Security Administration announced a 1.3 percent COLA increase for Social Security benefits for 2021, one of the lowest COLAs since legislation first mandated annual Social Security benefits adjustments in 1975; and

Whereas, The federal government bases the annual Social Security COLA on the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W), which is a measure of the average change over time in the price of a market basket of goods and services that working-age consumers purchase for daily living, such as clothing, food and beverages, and entertainment; and

Whereas, A more accurate measure of the average change over time in the price of goods and services that represent a larger share of senior citizens’ budgets, such as medical care and housing, is the Consumer Price Index for the Elderly (CPI-E); and

Whereas, The CPI-E, which the federal government developed in 1988, reflects the consumer spending patterns of households headed by individuals aged 62 or older, and is therefore a more accurate measure of annual increases in the cost of goods and services that represent a significant percentage of senior citizens’ annual expenditures; and

Whereas, The “COVID-19 Emergency Social Security Cost of Living Increase Act of 2020” would increase the Social Security COLA to three percent for 2020 and no less than three percent for 2021, and would require that the Social Security COLA be based on the CPI-E beginning in 2021; and

Whereas, In doing so, this bill would provide New Jersey’s senior citizens with an additional $545 in both 2020 and 2021, and secure a sustaining COLA in future years; now, therefore,

Be It Resolved by the General Assembly of the State of New Jersey:

1. This House respectfully urges the United States Congress to pass the “COVID-19 Emergency Social Security Cost of Living Increase Act of 2020.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly to the Majority Leader of the United States Senate, the Speaker of the United States House of Representatives, the Minority Leaders of both chambers of Congress, each member of Congress elected from New Jersey, and the Commissioner of the Social Security Administration.

STATEMENT

This resolution urges the United States Congress to pass the “COVID-19 Emergency Social Security Cost of Living Increase Act of 2020” (H.R.8600). This federal legislation would increase the annual Social Security benefits cost of living adjustment (COLA) to three percent for calendar year 2020 and no less than three percent for calendar year 2021. The bill would additionally revise the Social Security Administration’s formula for calculating the annual COLA increase, requiring that the COLA be based on the Consumer Price Index for the Elderly (CPI-E) rather than the current Consumer Price Index for Wage Earners and Clerical Workers (CPI-W).

On October 13, 2020, the Social Security Administration announced a 1.3 percent Social Security COLA for calendar year 2021. Given the disproportionate impact of the coronavirus disease 2019 (COVID-19) pandemic on the health and economic wellbeing of New Jersey’s seniors, the State’s senior citizens cannot afford to live on a nominal increase in their Social Security benefits in 2021.

Since 1975, Social Security benefits have been increased by an annual cost of living adjustment, which has been based on the Consumer Price Index for Wage Earners and Clerical Workers. The CPI-W measures the average change over time in the price of a market basket of goods and services that working-age consumers typically purchase on a regular basis, such as clothing or food and beverages However, the CPI-W does not accurately reflect inflation for certain goods and services that account for a large share of senior citizens’ expenditures, such as medical care or housing. Therefore, some policymakers and advocates argue that the Social Security COLA should be based on the Consumer Price Index for the Elderly (CPI-E), which the federal government developed in 1988. These policy makers and advocates argue that the CPI-E better reflects the consumer spending patterns of households headed by individuals aged 62 or older, and is therefore a more accurate measure of annual increases in the cost of living for senior citizens.