Implications of the COVID-19 Pandemic 

for the US Social Security Program

Steve Goss, Chief Actuary

Karen Glenn, Deputy Chief Actuary

Social Security Administration

NBER Summer Institute / Economics of Social Security Workshop

July 28, 2021
COVID-19: Background

2
1918: Three Waves COVID-19: So Far

COVID-19: Background 3

Source: The Spanish Flu and the Stock Market: The Pandemic of 1919

by Bryan Taylor | Feb 27, 2020 | Economics, Historical, Insights

Figure 1. Death Rates of the Spanish Flu, June 1918 to May 1919

Source: https://covid.cdc.gov/covid-data-tracker
Effects on Social Security: 

Our Estimates to Date

4
Updated Baseline Published in November 2020

• The 2020 Trustees Report was released on April 2020, and did not reflect any 

effects of the COVID-19 pandemic or ensuing recession

• In September/October 2020, we developed an updated baseline, modifying the 

2020 Trustees Report assumptions to reflect pandemic and recession effects

• The updated baseline reflected our expectations at that time

• We released a memo in November 2020 with some details on the assumptions 

and cost effects 

(https://www.ssa.gov/OACT/solvency/UpdatedBaseline_20201124.pdf)

• Importantly—we are using this updated baseline as the basis for scoring any 

new legislative proposals, until the 2021 Trustees Report is released

Effects on Social Security: Office of the Chief Actuary Estimates 5
Implications of COVID-19 on Social Security: 

Our Thinking in September 2020

•Over the 75-year long-range projection period, effects are likely minor

• The pandemic itself, and the pandemic-induced recession, may be largely recovered by 

2023 with little permanent effect

• Note that Trustees Reports have incorporated the likelihood of periodic negative events

• For example, we have assumed an ultimate annual improvement in death rates of around 0.73 percent 

on average; others have persistently assumed 1.0 percent or higher with no deceleration

• The Trustees Reports have also assumed long-term unemployment rates will be higher on average than 

“forecasters”, reflecting occasional downturns

• However, there are clearly near-term considerations due to the pandemic

• Stay tuned for the 2021 Trustees Report release and our updated thinking...

Effects on Social Security: Office of the Chief Actuary Estimates 6
Year of Reserve 

Depletion 

(Fall 2020 Updated 

Baseline)

Under the updated baseline, 

OASDI and OASI reserves are 

projected to become depleted 

in 2034 and 2033, respectively, 

one year earlier than in the 

2020 Trustees Report

DI reserves are projected to 

become depleted in 2059, six 

years earlier than in the 2020 

Trustees Report

What will the 2021 Trustees 

Report show?

Effects on Social Security: Office of the Chief Actuary Estimates7
Effects on Social Security: 

Demographic

Demographic factors will influence responses in the near term, but 

Social Security financial status will be affected only in the long term

8
Mortality: Our Thinking in September 2020 and Now

• Assuming that there would be only a modest increase in deaths above 

typical levels in the fall of 2020, we estimated that overall mortality rates 

for calendar year 2020 would be about 12 percent higher than would have 

been projected in the absence of the pandemic (~350K excess deaths)

• For 2021 and 2022, we assumed temporary increases in the levels of deaths 

of about 6 percent and 2 percent, respectively, due to COVID-19 effects

• For years after 2022, we assumed no significant net effect from COVID-19

• What do we know now? Deaths overall for 2020 were about 16 percent 

higher and will likely be close to that for 2021 

• Mortality rates in 2020 were actually lower for those under about age 15

Effects on Social Security: Demographic 9
Mortality: Potential COVID Effects Going Forward

• Will increases in death rates continue to be similar across all adult ages?

• Will there be persistent effects on mortality in the longer term?

• Direct virus-related immediate deaths

• Indirect deaths due to deferred care

• Increased deaths of despair/violence—suicide, homicide?

• Decreased life expectancy from compromise for COVID survivors; how much?

• Data available to date and medical implications are still unclear

Effects on Social Security: Demographic 10
Fertility: Our Thinking in September 2020 and Now

• We assumed that the COVID-19 pandemic will affect birth rates in years 

2021 through 2025

• We assumed lower birth rates, resulting in a total fertility rate (TFR) of 1.57 

in 2021 (~340K fewer births) and 1.65 (~200K fewer births) in 2022

• We assumed that these low rates in 2021 and 2022 will be fully made up 

for by increased rates in 2023 through 2025, before returning to the “no 

pandemic” rates starting in 2026

• In other words, the pandemic will cause a number of women to defer 

childbearing from 2021-2022 to 2023-2025

• What do we know now? Not too much more...

Effects on Social Security: Demographic 11
Effects on Social Security: 

Economic

In the near term, effects are largely due to reduced payroll tax, which in 

turn is due to reduced employment and GDP

Longer term effects are highly uncertain; will the economy and society 

return to the same as before; how fully and how soon?

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Direct GDP Effects

• What were we and 

other experts 

projecting last fall, 

when we developed 

our updated baseline 

(solid lines)?

• What about now 

(dashed lines)?

• Projections are more 

optimistic now than a 

few months ago

Effects on Social Security: Economic 13

17,000

18,000

19,000

20,000

21,000

22,000

Real GDP Levels ($ Billions)

CBO Jul20

IHS Sep20

Moody's Sep20

2020TR Update Fall20

FY22 Budget May21

CBO Jul21

IHS Jul21

Moody's Jul21

2020TR Update (red)
Labor Force and Employment

• How severe and 

prolonged will declines 

in LFPR be?

• Employment has a direct 

effect on Social Security 

payroll tax revenue

• Future expectations of 

LFPR and employment 

vary widely!

Effects on Social Security: Economic 14

60.5

61.0

61.5

62.0

62.5

63.0

63.5

Labor Force Participation Rates (Percent)

CBO Jul20

IHS Sep20

Moody's Sep20

2020TR Update Fall20

FY22 Budget May21

CBO Jul21

IHS Jul21

Moody's Jul21

2020TR Update (red)
Earnings and Payroll Tax Revenue

• Lower earnings means 

lower payroll tax 

revenue for the trust 

funds

• What do we know now? 

Stronger recovery in 

2020Q3 through 

2021Q2

Effects on Social Security: Economic 15

8,500

9,500

10,500

11,500

12,500

Nominal Wages and Salaries ($ Billions)

CBO Jul20

IHS Sep20

Moody's Sep20

2020TR Update Fall20

FY22 Budget May21

CBO Jul21

IHS Jul21

Moody's Jul21 2020TR Update (red)
Trends in Employment by Occupation

• Employment effects in all 

areas in 2020 

(BLS cpsaat09)

• Will trends of 2010-19 

return, and continue? 

Effects on Social Security: Economic 16
Trends in Employment by Occupation

• Employment distribution 

more revealing

• Share for management 

and professional, highly 

paid, increased in 2020

• Will these shifts continue 

with technology, 

automation, and 

increasing education 

levels?

• Might increases in 

infrastructure spending 

change these trends?

Effects on Social Security: Economic 17
Effects on Social Security: 

Program-Specific

18
Earnings, Employment, and the Average Wage Index: 

Our Thinking in September 2020 and Now

• The national average wage index (AWI) is determined based on the ratio of 

total wages paid in the year to the total number of at-any-time workers in 

the year

• In September 2020, we expected that total wages in 2020 would be 

substantially below the level in 2019, and that the AWI for 2020 would 

decline by about 4 percent from 2019—meaning lower Social Security 

benefits for those who become “newly eligible” in 2022

• What do we know now? Because the economy rebounded so quickly, and 

those who lost jobs or had decreased earnings in 2020 were mainly parttime and/or lower paid workers, total wages in 2020 increased and the AWI 

is now expected to increase for 2020

Effects on Social Security: Program-Specific 19
Timing of Benefit Applications: Retirement (OASI)

• There has been speculation that job losses in the COVID-induced recession 

will cause workers to apply for retirement benefits earlier than they would 

have otherwise

• We are not seeing this in the data—yet

• It may be that workers are delaying start of retirement benefits, relying on 

extended unemployment benefits

• Note that earlier benefit start for those with age-reduced benefits actually 

tends to lower longer-term cost

Effects on Social Security: Program-Specific 20
Timing of Benefit Applications: Disability (DI)

• Similarly, we aren’t yet seeing 

evidence of increased DI 

applications

• Recessions tend to have a 

delayed impact on applications 

• Applications for disabled worker 

benefits increased rapidly in the 

last recession from 1.5 million in 

2007 and 2008 to 1.8 million in 

2009 and 1.9 million in 2010

• Note the consistent drop since 

then

Disabled worker data through June 2021 (numbers in thousands)

Source: https://www.ssa.gov/oact/STATS/dibGraphs.html

Effects on Social Security: Program-Specific 21
Effects on Social Security: 

Bottom Line

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Effects from Employment and Other Factors: Questions

• To what extent will the nature and conditions of employment change in 

the future—and to what extent will COVID affect the pre-pandemic 

trends? How about “gig” employment?

• Will remote work for many occupations that have been less affected by 

the pandemic persist? Or will these changes diminish over time?

• Will the reductions in productivity and employment in some areas 

recover?

• The degree of longer-term persistent effects on the level of economic 

activity and on demographic factors is as yet unknowable

Effects on Social Security: Bottom Line 23
Questions?

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