In Marshall County, 8.9 Percent of All Income Comes From Social Security

October 30, 2011

10/31/11 If Marshall County residents didn’t receive their monthly payments from the Social Security Administration, 8.9 percent of total personal income in the county would be lost, a total of $120,099,857 in 2009.

Marshall County is more dependent on Social Security payments than is the rest of the country. Nationally, 5.5 percent of total personal income in 2009 came from Social Security payments. In Indiana, 7.1 percent of all income comes from these payments.

In Marshall County, 8,850 people receive some form of Social Security payment, either 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 18.9 percent of the total county population.

In rural counties and counties such as Marshall with smaller cities, Social Security payments constitute a much larger chunk of the local economy than in urban areas. A greater percentage of people in rural America receive these payments than in urban counties, and so rural counties have higher average payments per resident.

“In many rural places, Social Security is a very critical element of the local economic base,” said Peter Nelson, a geographer at Middlebury College in Vermont. “It’s less important to a place like Los Angeles because there is so much additional economic activity going on there.”

Total Social Security payments in Marshall County amounted to $2,561 per person in 2009. The national average was $2,199 per person and in Indiana it was $2,468.

Social Security payments in Marshall County have been changing as a proportion of total income. These payments amounted to 4.9 percent of total income in 1970, 6.5 percent in 1980, 6.6 percent in 1990, 6.5 percent in 2000 and 8.9 percent in 2009.

Social Security payments are particularly important to rural counties and small cities because the money is largely spent 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.”

Social Security payments amount to 5 percent of the total income in urban counties. In counties with small cities, such as Marshall County, these payments amount to 8.2 percent of total income, and in rural counties, Social Security totals 9.3 percent of all personal income. More than one out of five Americans living in small cities and rural counties received some kind of Social Security check in 2009.

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 Marshall County, 71.8 percent of recipients were retirees in 2009, 12.5 percent were survivors and 15.7 percent were disabled.

Changes to Social Security are being discussed in Congress, which is looking for ways to balance the larger federal budget. If benefits are cut — or if the eligibility age is increased — rural counties and small cities would be disproportionately affected, according to Peter Nelson.

“Cuts would have a bigger negative impact on rural places, absolutely,” Middlebury’s Professor Nelson said. “They are more dependent on Social Security.”

By Bill Bishop and Roberto Gallardo  The Daily Yonder