In Montcalm County, 11.5 percent of all income comes from social security


By Daily News • Last Updated 9:46 am on Tuesday, November 01, 2011

If Montcalm County residents didn’t receive their monthly payments from the Social Security Administration, 11.5 percent of total personal income in the county would be lost, a total of $170,888,348 in 2009.
Montcalm 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 Michigan, 7.7 percent of all income comes from these payments.
In Montcalm County, 13,220 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 21.1 percent of the total county population.
In rural counties such as Montcalm and counties 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 Montcalm County amounted to $2,724 per person in 2009. The national average was $2,199 per person, and in Michigan it was $2,681.
Social Security payments in Montcalm County have been changing as a proportion of total income. These payments amounted to 5.9 percent of total income in 1970, 7.7 percent in 1980, 8.9 percent in 1990, 8.3 percent in 2000 and 11.5 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, these payments amount to 8.2 percent of total income, and in rural counties such as Montcalm County, 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 Montcalm County, 68.0 percent of recipients were retirees in 2009, 10.9 percent were survivors and 21.1 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.”

 

The numbers

 

Local Social Security Income
Per capita income from Social Security
Montcalm County$2,724
Michigan$2,681
Nation$2,199
Source: Bureau of Economic Analysis
2009 data adjusted for inflation to 2010

Percent of all income from Social Security
Montcalm County11.5
Michigan7.7
Nation5.5
Source: Bureau of Economic Analysis

About the Authors

 
Bill Bishop is co-editor of The Daily Yonder (www.dailyyonder.com), an online publication covering rural America, published by the Center for Rural Strategies (www.ruralstrategies.org). He has owned a weekly newspaper in rural Texas and he has worked for newspapers in Texas and Kentucky. Dr. Roberto Gallardo is a research associate with the Southern Rural Development Center at Mississippi State University (srdc.msstate.edu). This study was made possible with a grant from the National Academy of Social Insurance.

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