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Do Workers with Low Lifetime Earnings Really Have Low-Earnings Every Year? Implications for Social Security Reform

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  • Thomas L. Hungerford

    (The Levy Economics Institute)

Abstract

When it comes to retirement income policy, there is a general perception that workers have full 40-year working careers before retiring. Further, it is generally assumed that workers with low lifetime earnings have low earnings in each year during a normal working career. The basic research question is why do some workers have low lifetime earnings? Is it due to low earnings in every year, or is it due to some years of no earnings combined with years of relatively modest earnings? The key findings from this paper are: (1) most individuals with minimum (and subminimum) wage lifetime average earnings are women, and (2) most of these women have low lifetime average earnings because of fewer years with earnings, rather than low earnings in each year of a 40-year working career.

Suggested Citation

  • Thomas L. Hungerford, 2003. "Do Workers with Low Lifetime Earnings Really Have Low-Earnings Every Year? Implications for Social Security Reform," Labor and Demography 0309007, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpla:0309007
    Note: Type of Document - word; prepared on PC; to print on PostScript; pages: 21; figures: included
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    References listed on IDEAS

    as
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    2. Dimitri B. Papadimitriou & L. Randall Wray, "undated". "Does Social Security Need Saving? Providing for Retirees throughout the Twenty-first Century," Economics Public Policy Brief Archive ppb_55, Levy Economics Institute.
    3. L. Randall Wray, "undated". "Killing Social Security Softly with faux Kindness," Economics Policy Note Archive 01-6, Levy Economics Institute.
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    Cited by:

    1. Wade D. Pfau, 2009. "How Representative are Representative Workers? An Assessment of the Hypothetical Workers Commonly Used in Social Security Studies," Journal of Income Distribution, Ad libros publications inc., vol. 18(2), pages 92-117, June.
    2. Wade D. Pfau, 2008. "Assessing the Applicability of Hypothetical Workers for Defined-Contribution Pensions," GRIPS Discussion Papers 07-11, National Graduate Institute for Policy Studies.

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    More about this item

    Keywords

    Earning Patterns; Social Security; Low-wage Workers;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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