Growing U.S. inequality is worsening Social Security's financial crunch, group says
MoneyWatch
Growing U.S. inequality is worsening Social Security's financial crunch, group says
By Aimee Picchi Associate Managing Editor, MoneyWatch Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports. Read Full Bio Aimee PicchiJune 22, 2026 / 10:00 AM EDT / CBS News
Add CBS News on GoogleSocial Security's looming funding crisis is usually blamed on demographics, with an aging U.S. population and declining birth rates leaving fewer workers to support retirees. But another force is also draining the program's finances: widening income inequality.
In the last few decades, incomes of higher-paid Americans have soared, far outpacing those of low- and middle-class workers. That's become a problem for Social Security because the program only taxes annual earnings up to $184,500, meaning it loses out on much of the faster income growth among top earners.
As a result, Social Security's revenue base is eroding, according to the program's latest trustees' report. The share of total wages subject to Social Security taxes has fallen from almost 87% in 1984 to roughly 83% today, largely because high earners' pay has grown much faster than everyone else's, lifting more of their income above the tax cap, the report found.
"The Social Security trust fund is under strain because Congress has failed to update the program for the economy we actually have," Elizabeth Wilkins, CEO of the Roosevelt Institute, a progressive think tank, said earlier this month. "Too much income now flows to the top, where it escapes Social Security taxation."
Eliminating the $184,500 tax cap, one proposal for fixing Social Security, could shore up the program's finances by requiring high-income Americans to contribute more to support the retirement and disability program, according to some policy experts.
Without an overhaul, Social Security's trust fund is on track to become insolvent by the end of 2032, the trustees' report said earlier this month. At that point, the program's roughly 70 million beneficiaries would see a 22% cut to their monthly Social Security checks, an average reduction of about $500 per month.
That's an outcome that experts say would lead to widespread financial hardship among seniors, disabled people, and children and spouses of deceased workers. Social Security has faced a financial shortfall before, when in the early 1980s its trust funds were on the brink of insolvency due to economic turbulence over the previous decade.
How inequality is weakening Social Security
In 1983, U.S. lawmakers overhauled Social Security by gradually increasing the retirement age and raising payroll taxes, among other changes. While the tax cap on wages adjusts each year to track inflation, it wasn't tweaked in the 1983 reforms to account for the labor market shifts that followed in ensuing years.
That was likely due to projections at the time that the distribution of wages and wage growth would remain similar to the past. Actuarial projections that Congress relied on in the 1980s assumed that the program would continue to tax the same share of wages for the next 75 years — about 87% — according to a January report from the Roosevelt Institute.
But as higher earners pulled ahead of other Americans, more of their income has escaped the Social Security payroll tax, the group's analysis found.
Real earnings for the top 6% of American workers rose 62% from 1983 through 2000, the Roosevelt report said. By comparison, the 94% of workers whose incomes were below the payroll tax cap saw average real earnings gains of 17%, the group found.
The trust fund has been "inadvertently starved of necessary revenue" since 1983, according to the Roosevelt Institute.
Removing the tax cap
The tax cap, which has been in place since the program debuted in the 1930s, is frequently mentioned in plans to strengthen Social Security. Some proposals would phase it out over time, while others would create a "donut hole" for people earning $184,500 to $250,000, or even $400,000.
Under that approach, earnings in the donut hole would not be subject to payroll taxes, but the tax would resume above the higher income threshold.
Removing or phasing out the tax cap could close between 22% and 67% of the program's funding gap, according to the Social Security Administration's scoring of these proposals.
Another option would be to include automatic triggers that kick in when revenue is below projections, the Roosevelt Institute said. For instance, if the share of wages subject to Social Security taxes fell below 87%, the taxable maximum could automatically adjust to keep the share at that level.
Social Security is "a very strong program that can be fixed," said Joel Eskovitz, a senior director of Social Security and savings at the AARP Public Policy Institute, in a recent conference call to discuss the program's funding issues. "Most Americans want it to be fixed by not cutting benefits."
Badenoch blasts 'moaning' female Labour MPs over Burnham jobs 'quota'
Kemi Badenoch has told Labour women to earn a job in Andy Burnham's Cabinet instead of demanding they are handed jobs because of their gender.
The Tory leader lashed out today amid reports that female MPs are demanding the de-facto new prime minister introduce a 50:50 gender split 'quota' in his government.
Amid reports that former foreign secretary David Miliband is being lined up to return to the role, possibly with his brother Ed as Chancellor, one female minister also complained that Burnham could not have 'more Milibands than women' in the top posts.
But in a scathing article in the Times today Mrs Badenoch told them to 'stop moaning' and get chosen on merit instead of retreating into 'more of the failed identity politics that is holding back our country'.
'There are many, many reasons why you shouldn't have any Milibands in the cabinet,' she said.
'But complaining that the boys haven't given them the right jobs or that the boys are taking all the jobs, just shows that Labour's women still don't get it.'
The idea of quotas was also attacked by Baroness Jacqui Smith, Labour's Skills Minister.
Asked by Times Radio if Mr Burnham should reserve jobs for women, she said: 'No, I think what Andy Burnham should be doing is building the very best team around him to change this country.'
A letter written by the Women's Parliamentary Labour Party has called on Mr Burnham to ensure a 50:50 split between men and women in government jobs
Amid reports that former foreign secretary David Miliband (above, right, in 2010) is being lined up to return to the role, possibly with his brother Ed as Chancellor, one female minister complained that Burnham could not have 'more Milibands than women' in the top posts
But Mrs Badenoch told them to pipe down and get chosen on merit instead of retreating into 'more of the failed identity politics that is holding back our country'
A letter written by the Women's Parliamentary Labour Party and seen by the BBC has called on Mr Burnham to ensure a 50:50 split between men and women in government jobs after he succeeds Sir Keir Starmer.
'We are asking you to demonstrate this change from day one and address the toxicity and misogyny within our own party and government,' it said.
Labour has never had a female leader, while the Conservatives have had three, and Mrs Badenoch urged the government to follow its meritocratic example.
'If you run a meritocracy, then you do not have to worry about jobs for the boys,' she wrote.
'Every woman who is a Conservative MP, every woman who has ever won the leadership, has had to fight to get where she is.
'By contrast, Labour women are demanding guarantees from Burnham. But the truth is he doesn't have to give any guarantees.
'If none of Labour's women are prepared to get their hands dirty and challenge him for the leadership, their demands are toothless.'
'In fact, it's quite revealing that the women's parliamentary Labour Party has written to Burnham asking him to commit himself to at least 50 per cent female ministers.
'This has nothing to do with meritocracy. It is yet more of the failed identity politics that is holding back our country.'
Venezuela Fury and Noah Price subsidising their life by livestreaming
Venezuela Fury and her husband Noah Price look to be making their own way in the world by raking it in from their lucrative social media accounts.
The influencer daughter of Tyson and Paris Fury, 16, has become an internet sensation after tying the knot with her husband Noah, 19, earlier this year.
Since getting married and moving in together the couple have been earning thousands of pounds a month, livestreaming their life as newlyweds in their static caravan in the East Riding of Yorkshire.
And fans can't get enough of their regular life updates on TikTok and Kick, which have proved to be very profitable for the pair.
They look to be supporting themselves after Noah denied that he was given £5million by Venezuela's family as a wedding gift.
Despite his wife's huge family wealth, an estimated combined £160 million, Noah recently told his Kick followers that he 'pays for everything' for the couple.
Making light of the claims about Venezuela's millionaire financial status, Noah said: 'I actually pay for everything unfortunately. You'd expect the millionaire to pay for it wouldn't you.'
Venezuela Fury and Noah Price are earning thousands livestreaming their caravan life - after her new groom insisted he pays all the bills and denied he had £5m handout from her dad
The influencer daughter of Tyson and Paris Fury , 16, has become an internet sensation after tying the knot with her husband Noah, 19, earlier this year
Venezuela then asked their fans: 'Do you think I am a millionaire?'
Noah joked: 'She isn't a secret millionaire guys', before she broke into song and sang: 'But I live like a millionaire!'
But it seems according to estimated calculations from their social media work, Noah and Venezuela can more than afford to support themselves.
Noah has been livestreaming on platforms such as Kick and TikTok, where viewers can send paid gifts or donations.
He was previously encouraging viewers to send gifts on his honeymoon during livestreams, suggesting this is one revenue stream.
Both Noah and Venezuela have built substantial followings on Instagram and TikTok. They can potentially earn money through sponsored posts, brand collaborations, affiliate links and creator payouts.
Kick allows its creators to take home 95 per cent of the £4.99 subscription cost that fans pay.
Streamers keep 100 per cent of direct tips and donations, minus minor standard payment processing fees.
It is unclear how many subscribers Noah currently has because this information is hidden, but he does have 7,200 followers which is publicly viewable.
An industry insider has suggested Noah is making around £400 per video on TikTok, while Venezuela is likely to make £2,000 due to her following count of 1.3 million.
An industry insider has suggested Noah is making around £400 per video on TikTok, while Venezuela is likely to make £2,000 due to her following count of 1.3 million
In one video on their honeymoon, Noah asked his followers if they'd give them some more gifts now that they were married.
In a TikTok live viewed by 20,000 he said: 'Keep liking our videos people, keep sending gifts.'
After saying thank you to several of his followers he joked they should stick around on the livestream and 'watch Venezuela punch me in the mouth'.
The other half of the honeymooning couple said: 'I am, honestly!'
Noah previously confirmed that the pair don't share their finances after they were asked whether they have a shared bank account.
'She earns her money, I earn mine,' said Noah, as Venezuela joked: 'Yeah, what you gonna do about it.'
Noah went on to debunk the rumour that Tyson gave him £5million when he tied the knot with his daughter as he insisted: 'No Tyson did not give me £5million'.
Meanwhile Venezuela is being eyed up by executives for a fly on the wall TV series.
Noah went on to debunk the rumour that Tyson gave him £5million when he tied the knot with his daughter as he insisted: 'No Tyson did not give me £5million'
Boasting 1.3 million TikTok followers, Venezuela is already entertaining fans with her honest musings and candid moments, from cooking to kitting out her and Noah's static caravan home.
And following the success of the Netflix series At Home With The Furys, it is no wonder bosses are wanting to draw on the Fury popularity.
A TV insider said: 'The couple are not A-list celebrities but everyone has become obsessed with their love story.
'People are genuinely intrigued by them. Whether it’s the fact they have married so young, Venezuela’s famous family or their gypsy lifestyle, they have the ‘X factor'.
'Several TV executives think a proper fly-on-the-wall series following their lives as newlyweds in the gypsy community would be fascinating,' they told The Sun.
It is thought Netflix would be likely to produce the series due to their already established relationship with the Furys.
Venezuela's representatives told The Daily Mail: 'We have many offers on the table regarding Venezuela which we are discussing.'
