COVID Effects on Social Secu

Demographic and Econom

Assumptions

Mark Bye, Kent Morgan, and Sven Sinclair

Social Security Administration, Office of the Chief Actua

MAAC Fall Meeting

November 15, 2022
Fertility
Birth Data Background

• Age-specific central birth rates

• Births during the year to mothers at the specified age divided by 

female population at that age.

• Births from National Center for Health Statistics (NCHS).• Resident population from Census Bureau.

• [Calendar Year] Total Fertility Rate (TFRx)

• Sum of the age-specific central birth rates during year x.• Can be interpreted as the average number of children that wou

woman if she were to experience, at each age of her life, the birobserved in, or assumed for, year x, and if she were to survive tchildbearing period.

• Cohort Total Fertility Rate (CTFR

y)

• Sum of the age-specific central birth rates during each childbear

group of women born in year y.

Flashback to 2020... • Half a million fewer children? The coming COVID baby bust

(https://www.brookings.edu/research/half-a-million-fewer-children-the-coming-bust/) • “The pandemic has thrust the country into an economic recession. Economic reasoning a

suggest that this will lead people to have fewer children. The decline in births could be o

300,000 to 500,000 fewer births next year. We base this expectation on lessons drawn frstudies of fertility behavior, along with data presented here from the Great Recession of 

1918 Spanish Flu.”

• “Such speculation is based on persistent myths about birth spikes occurring nine months 

major electricity blackouts. As it turns out, those stories tend not to hold up to statistica1970).”

• Will coronavirus cause a baby boom, or is that just a myth? Prepare for jokes, if n

(https://www.usatoday.com/story/life/parenting/2020/04/02/coronavirus-fact-ccovid-19-cause-baby-boom/5105448002/) • “Perhaps it's all an urban myth propagated (no pun intended) mostly by baby boomers, 

Americans born in the years after World War II when everyone came home and got busy 

• “The interest is such that people on Twitter are suggesting new names for this supposed 

cohort: Coronials. Quaranteens. Baby Zoomers.” 

• “Still, there's little data to support the claim that catastrophes – regional power blackou

snowstorms, terrorist attacks or global pandemics that force people to stay at home for lead inexorably, as night follows day, to a quantifiable jump in births months later.”
Flashforward to Early 2021...

• There's No Coronavirus Baby Boom — It's More Like a Baby Bu

(https://www.lx.com/community/theres-no-coronavirus-babymore-like-a-baby-bust/29596/) 

• Coronavirus Hasn't Lead To The Baby Boom That Was Anticipa

According To A New Study (https://www.forbes.com/sites/alicebroster/2021/02/03/corohasnt-lead-to-the-baby-boom-that-was-anticipated-accordingstudy/?sh=30402e8b4b79) “In June 2020, the Brookings Institestimated that the U.S. would see between 300,000 to 500,00births than in 2019. This came just a few months after restricbeen implemented across the States. After taking into considschool and daycare closures and the pressures of working froresearchers said that they think their estimation of 300,000 fis accurate.

”

Flashforward to Now...

THE COVID-19 BABY BUMP:THE UNEXPECTED INCREASE IN U.S. RATES IN RESPONSE TO THE PANDEMIC (https://www.nber.org/system/files/working_papers/w30569/w

•

“2020 declines began abruptly at the very beginning of the pandemthat they reflect sharp declines in the entry of foreign-born, non-resinto the U.S.—declines potentially reflecting travel restrictions, healand the sudden disappearance of economic opportunities for migran

•

“Among U.S.-born mothers, there is little evidence of a protracted bfrom a sharp reduction in births in January 2021 (9 months after the pandemic began in the U.S.), birth rates among U.S.-born women extrend level for 2021 and 2022, suggesting that conceptions soared in 2020 while the pandemic was still raging and have remained higher 

the pandemic began.

”

•

“Births to foreign-born women also began to recover months before reopened.

”



Mortality
Mortality Data Background

• Age-specific central death rates (m

x)

• Deaths during the year at the specified age (x) divided by the m

population at that age.

• Under 65

• Deaths from National Center for Health Statistics (NCHS).• Resident population from Census Bureau.

• 65 and Older: Deaths and exposure both come from the Centers 

and Medicaid Services (CMS).

• Probability of death (qx)

• Probability of dying at age x within one year.
2022 TR Mortality Probability of Death (qx) COVID Factors 

Year

Age 

0 

Ages 

1 – 14 

Ages 

15 – 64

2020 0.890 Actual: 0.981 1.008 Actual: 1.01 1.161 Actual: 1.187 2021 0.960 1.040 1.195 2022 0.990 1.010 1.059 2023 1.000 1.000 1.012 2024 1.000 1.000 1.000 




Source – CDC’s Wonder System at: https://wonder.cdc.gov/mcd-icd10-provisional.html
Immigration
Immigration: Data for Historical Pe

• Lawful Permanent Resident (LPR) immigration

• Persons granted authorization to live and work in the United States on a per

• New Arrivals: persons becoming LPR’s upon entry into US.• Adjustments of Status: persons who do not become LPR’s upon entry, but who later 

• Provided by Department of Homeland Security (DHS).

• Other-than-LPR immigration

• Persons entering the United States in a manner other than lawfully admitted 

residence.

• Nonimmigrants: persons authorized to stay in US temporary period (e.g. students, ex

temporary workers, diplomats, other representatives). 

• Unauthorized immigrants: persons who overstayed their visas or who were never leg

reside in the US.

• Calculated by taking the American Community Survey’s (ACS) total number o

entering US in given year, and then subtracting the number of new arrival LPthat year.
Immigration: Assumed Ultimate Valu

Projected Period

• Lawful Permanent Resident (LPR) immigration

• Assumed ultimate value (assumed to be reached within the first coup

projected period) is 1.05 million persons (0.60 million new arrivals an

adjustments of status) per year.

• This value is based on: (1) annual LPR immigration has averaged 1.05 

for years 2010-2019, and (2) belief that future number of LPR immigra“immediate relatives” category will approximate recent levels.

• Other-than-LPR immigration

• Assumed ultimate value (assumed to be reached within the first coup

projected period) is 1.35 million persons per year.

• This value is based on the average number of other-than-LPR immigra

leading up to the great recession.
Immigration: Assumed Initial Value

Projected Period

• For the first few years of the projected period, we need to 

appropriate “transition path” of values to bridge the gap bdata in the historical period and the assumed ultimate valprojected period.

• This needs to be done for both LPR immigration and othe

immigration.
Effect of COVID on Assumed Initial Val

Projected Period

• Due to new immigration restrictions that were made in respon

it was assumed there would be a significant decrease in immigyears 2020-2021.

• It was also assumed that, for years 2023-2024, immigration lev

jump so as to completely “cancel out” the decrease in 2020-20

• The latter assumption was based on:

• For “immediate relatives” category of LPR immigration, there are no a• For other categories of LPR immigration, unused visas in one year can 

increase the limits on the number issued in the following year.

• For other-than-LPR immigration, increased demand for immigrant wo

economy recovers from COVID.
0

100000200000300000400000500000600000700000800000900000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 

New Arrival LPR Immigrants

Historical Data (from DHS) assumed values w/o COVID assumed values w/ COVID
0

200000400000600000800000

100000012000001400000160000018000002000000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 

Other-than-LPR Immigrants

historical data (ACS-based estimate) assumed values w/o COVID assumed values w/ COVID
Economics
Overview of the Effects of COVID-19 

Economy

• Immediate: Severe Recession

• Record 1-quarter decreases in GDP and employment• Fortunately, also short-lived (2 months peak to trough)

• The following quarter had record increases in GDP and employment• Fast recovery continued for more than a year

• Not a “typical” recession

• Indirect / Longer Term

• Global recession and continuing pandemic led to supply shortag

• Combined with sustained aggregate demand, this caused inflationary pr• Measures to contain inflation may lead to another contraction

• Possible (but highly uncertain) long-term effects on labor produ
The Pandemic-Induced Recessio

(And Recovery)

• Recessions are among the most obvious reasons for chan

short-range economic assumptions

• Real GDP in 2020q2 decreased at a 30% annualized rate• Civilian employment decreased by 20 million (13%, or 42% annu• GDP exceeded pre-recession peak by 2021q1 and employment 

• Those milestones took 3 years and almost 7 years, respectively, after the 

• Projecting recovery requires estimating sustainable GDP 

• Was the economy around this “potential” GDP before the pande• Did the potential trajectory change due to the pandemic?
17

17.5

18

18.5

19

19.5

20

20.5

21

21.5

22

Real GDP (Trillions of 2012 Dollars)

2020 TR 2021 TR 2022 TR Latest
0.540.550.560.570.580.59

0.6

0.610.620.630.64

Employment-to-Population Ratio (Age-Sex-Adjusted)

2020 TR 2021 TR 2022 TR Latest
More Details on Recession and Reco

• Average earnings increased during the recession

• Lower-earning workers suffered a disproportionate share of job • Early in the pandemic, it seemed that average annual wages wo

• Denominator is the number who worked at any time during the year (in• Average annual wage growth determines the indexing of initial OASDI b

• Average wage increased 2.8% in 2020

• Within a percentage point of previous three years’ increases

• 2021 average wage increase also exceeded projections

• But this is related to the inflation being higher than projected
-6-4-2

02468

10

2020 TR Oct 2020 Update 2021 TR 2022 TR Lat

Percent Change in Average Wage for Indexing

2019 2020 2021
Indirect Effect: Inflationary Pressu

• Pandemic was a global supply shock

• Production of a broad range of goods and services declined sha• Closures, sick workers, travel restrictions affected not only prod

also shipping

• Production of microchips and other electronic components is ge

concentrated in East/Southeast Asia

• Stimulus in most of developed world kept demand relativ

• Excess of demand over supply causes prices to increase

• Eventually, central banks increased interest rates to cont

• This has contractionary effect on GDP and employment• “Soft landing” or a second recession?
-4-2

02468

101214

2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 202

Inflation Measures: Quarterly Percent Changes (Annualized Rate)

CPI-W GDP Deflator LR Assumption (CPI-W) LR Assumption (Deflator)
Possible Long-Term Effect: Labor Prod

• Productivity during the pandemic has behaved unusually

• Initially increased, partly as an artifact of uneven job losses• Recently decreased, partly as a reversal of previous increase as 

recovered

• Unclear what the “potential” productivity is right now, let alone 

• Will productivity be permanently lower?

• Recessions often cause permanent losses (but this one was unu• Did a cohort lose a year of education? Will the workforce be sic

• Will productivity be permanently higher?

• Pandemic forced innovations in work arrangements (possibly m
-6.0-3.0

0.03.06.09.0

12.015.018.0

Nonfarm Business Output per Hour

(Percent Change at Annual Rate)

LR Assumption