Entitlements Now Account for One-Third of All US Wages

Wednesday, 09 Mar 2011 12:55 PM

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Government benefits such as Social Security, Medicare, and unemployment insurance now account for more than a third of all wages in the United States. The social welfare benefits accounted for 35 percent of wages and salaries this year, compared to 21 percent in 2000, CNBC reported.

In 1960, they made up just 10 percent, according to a study of Bureau of Economic Analysis data conducted by TrimTabs Investment Research. The situation is expected to get worse as waves of baby boomers begin to retire.

TrimTabs’ Madeline Schnapp said the “U.S. economy has become alarmingly dependent on government stimulus. Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits,” CNBC said.

In order to get back to a pre-recession rate of 26 percent, Schnapp said “either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion.”

Nonetheless, the United States still trails European countries. As a comparison, Schnapp notes that in the United Kingdom, social welfare benefits make up 44 percent of wages and salaries, CNBC said.

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