Social Security beneficiaries to see cost-of-living increase

Delaine Fragnoli
Managing Editor

Plumas County residents who receive Social Security or Supplemental Security Income will see an increase in their checks in 2012. That’s because of a larger-than-expected 3.6 percent cost-of-living increase to benefits. This is the first such increase since 2009.

In March 2011, Social Security trustees estimated the increase would be 1.2 percent. But inflation proved higher, leading to the higher benefit. Social Security COLA is based on increases to the Consumer Price Index for Urban Wage Earners and Clerical Workers. Officials compare inflation in the third quarter of a year with the same period in the prior year.

There was good news on the Medicare front, too. Officials had projected that Medicare Part B premiums, deducted from benefit payments, would rise from $96.40 to $113.80 a month. Instead, the basic monthly Medicare premium will be $99.90 per month. The $96.40 amount had not changed since 2008.SSCOLA

The increase in Social Security benefits is good news for Plumas County because Plumas residents are more dependent on these payments than are residents elsewhere in the country. In Plumas, 9 percent of all personal income comes in the form of Social Security payments. Nationally, that number is 5.5 percent, and 4 percent in California.

In 2009, Social Security income in Plumas amounted to $70 million, or $3,467 per person. The national average was $2,199 per person, and in California it was $1,704.

In Plumas County, 5,515 people receive some form of Social Security payment: an old age pension, a survivor benefit or a disability check, according to the Social Security Administration and the Bureau of Economic Analysis. Social Security beneficiaries represent 27.4 percent of the total county population.

Such figures are not surprising given that Plumas County consistently has one of the oldest populations in the state — if not the oldest. As Plumas County’s population has aged, the percent of total income derived from Social Security payments in Plumas has risen from 4.9 percent in 1970 to 6.3 percent in 1980 and 7.6 percent in 1990. It dropped slightly, to 7.4 percent in 2000, before rising to 9 percent in 2009.

Although Plumas County’s figure is higher than the national average, it is consistent with other rural counties. Social Security payments amount to 5 percent of the total income in urban counties, 8.2 percent in counties with small cities, and 9.3 percent in rural counties. More than one out of five Americans living in small cities and rural counties received some kind of Social Security check in 2009.

Social Security payments are particularly important to rural counties and small cities because the money is largely circulated in the community. “The seniors who get these payments are primarily going to spend their money locally,” said Mark Partridge, a rural economist at Ohio State University. “And they are a key reason why some communities are still viable. If this money dried up, there wouldn’t be a lot of these small towns.”

Judith Stallmann, an economist at the University of Missouri, explained that Social Security payments help generate the sales that keep a rural business afloat.

“We find that Social Security income can be the difference between success and failure for some local businesses,” Stallmann said. “If you took away, say, 10 percent of the demand, would that local business be able to remain open? Often it’s that 10 percent that keeps them going. Social Security is providing that margin.”

Social Security payments go to those over the age of 62 who have filed for benefits, to survivors of insured workers and to those with disabilities. The program is mainly funded by payroll taxes. In Plumas County, 72.8 percent of recipients were retirees in 2009, 9.3 percent were survivors and 17.8 percent were disabled.



While the COLA increase to Social Security benefits is welcome economic news, the latest unemployment numbers are less encouraging. November numbers from the California Employment Development Department show Plumas at 14.5 percent unemployment (not seasonally adjusted).

That is a 1.3 percent increase over October’s rate, but 4.3 percent less than a year ago, when unemployment was 18.8 percent.

Statewide, unemployment dropped from 11.7 percent in October to 11.3 in November, down from 12.5 percent last November.

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