Thereafter, projections of GDP were based on the projected increases in U.S. employment, labor productivity, average hours worked, and the GDP implicit price deflator. The ratio of wages to total employee compensation declined at an average annual rate of 0.28 percent for the 40 years 1958-96. Ultimate future annual rates of decline in the ratio of wages to employee compensation are assumed to be 0.1, 0.2, and 0.3 percent for alternatives I, II, and III, respectively. An additional factor that has made the overall ratio of taxable payroll to GDP decline in recent years is the decline in the ratio of taxable earnings to covered earnings, as a result of the relatively greater increases in earnings for persons with earnings above the benefit and contribution base. This decline in the taxable ratio is assumed to continue at a slower pace through 2008.
Income excludes interest on the trust funds.