Government Transfers Making Up Ever-Growing Piece of the American Wage Pie

Smart and well-intentioned people can endlessly debate how much the government should be involved in ensuring a minimum standard of living for its citizens. Some advocate for a system where the government provides for all who need it, others believe that the government shouldn't be involved at all. As a practical matter however, most governments in developed states fall somewhere in between. Whether through programs or more direct payments, such governments provide some level of unemployment assistance and/or retirement income supplementation for citizens. In America, such government transfers are constituting an ever growing proportion of the overall wages and salaries of citizens; 35% to be exact.

If this number does not seem so significant on its own, it is an increase from 21% just 11 years ago and 10% in 1960. It is clear that in addition to 35% being a high historic number in the US in absolute terms, the rate at which government transfers as an overall piece of the pie is growing as well. Some readers might not be troubled by this; indeed some of our friends over in Europe might find 35% to be on the low side. However, whatever philosophical disagreements might exist, everyone should be able to agree that America has done little to plan for this scenario, and that the problems inherent in it will be exacerbated by the strengthening wave of baby boomers entering their retirement years. Unfortunately, at the current trajectory, this appears to be an unsustainable path.