Social Security - a Local (Iowa) Perspective
There are approximately 675,000 Social Security beneficiaries in Iowa. They receive an average of about $21,200 per year or $1,765 per month. This adds approximately $1.2 billion per month to Iowa’s total personal income. Over the course of the year, this totals about $14.3 billion per year in Iowa total personal income that comes from Social Security payments.
Iowa’s total personal income is just over $201 billion per year. Social Security payments make up 7.1 percent of Iowa’s total personal income. That means for every $100 that is currently spent in Iowa businesses, there will be a little less than $93 if Social Security disappears.
According to the Iowa Department of Revenue, Iowa’s total retail sales in 2024 equaled $176.8 billion. Reducing this by 7.1 percent to reflect the disappearance of Social Security would result in an Iowa retail sales loss of $12.6 billion. This would devastate what is left of most small-town business districts. This would likely board up several urban shopping centers and malls.
Think about the other state-supported services you utilize. This would include streets and roads, water and sewer, police and security, fire protection, health facilities, and more. The State of Iowa collects about $4 billion in sales and use taxes per year. Cutting Social Security and its 7.1 percent of total Iowa consumer expenditures would cut $284 million of this revenue per year from state revenues. To put this in a local perspective, this is more than the sum total general fund revenues of the smallest 22 counties within the state.
But it would be more than just sales and use tax revenues. Cutting $14.3 billion from Iowa household incomes and the subsequent expenditures would cut about $5 billion from Iowa payrolls. This would eliminate about 100,000 Iowa jobs, including 20,000 jobs in healthcare, 20,000 in finance and real estate, and 19,000 in wholesale and retail trade.
In addition to cutting everyone’s access to goods and services, this would significantly cut into Iowa income tax collections. It would also significantly increase Iowa’s unemployment insurance burdens and increase Iowa’s unemployment insurance payroll deduction rates for everyone.
At a family level, a two-person household on Social Security with each individual drawing the average distribution of $1,765 per month would receive a household total of $3,530 per month or $42,360 per year.
Think about your elderly parents or grandparents. Would they be able to replace $42,360 per year for the rest of their lives. The majority of such households would struggle, at best, and possibly be pushed into poverty if facing that sort of loss to their planned retirement finances.
Think about yourself. Are you in a position (or even willing) to shoulder a portion of that loss in supporting your parents or grandparents? Would it be any easier if you lost your job due to the loss of $12.6 billion retail sales and $5 billion loss in payroll that would accompany the end of Social Security?
Breaking Social Security would remove $14.3 billion in Iowa personal income annually. This would not be a game. It would devastate wide swaths of the Iowa economy.
It would, however, generate a massive windfall for the nation’s richest people. That is the only reason it is seriously being considered.