The economic disaster that accompanied the coronavirus pandemic didn’t just hurt workers and businesses. The Social Security program also suffered. Unemployment rates skyrocketed in 2020 and didn’t return to pre-pandemic levels until July 2022, and in August 2022 the size of the labor force was still slightly diminished. As a result, there simply weren’t enough workers kicking in to Social Security.
With fewer workers earning a wage and contributing payroll taxes, Social Security revenues have been dramatically lowered. This “black swan” event appears to be receding, and payroll taxes are anticipated to eventually normalize, but nothing can make up for the payroll taxes that were lost during the pandemic.
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