For all the talk about Social Security, one thing you seldom hear is the vital role it plays as an engine of the U.S. economy.

Yet the fact is that Social Security benefits do more than keep millions of families afloat and help middle-class workers stay independent beyond their working years.

Those payments also fuel a vast amount of economic activity in California and throughout the nation, providing a huge (but little-noted) economic benefit that helps us all.

In fact, Social Security's $762 billion in benefits sparked almost $1.4 trillion in total spending last year, according to a new analysis by AARP's Public Policy Institute -- $71 billion in California alone.

Individuals make a multitude of purchases using their benefits, which in turn boosts sales for local retailers and small businesses throughout California and the nation.

But Social Security's contribution to the economy doesn't end there. When consumers spend money, businesses then plow that money back into the economy, using it to hire new workers and make purchases and investments.

In other words, the cash from Social Security benefits continues to ripple through the economy with a tremendous "multiplier effect" that enriches all kinds of enterprises. Indeed, it's an example of the very essence of our market economy.

Overall, each dollar paid out in Social Security benefits generates about $2 in spending, the AARP study found.


Advertisement

Social Security also helps younger people in ways that rarely get attention. For example, Social Security benefits support nearly 900,000 jobs in California.

Impressive as the state data are, the national figures are even more remarkable.

The $1.4 trillion in U.S. economic activity driven by Social Security means about 9.2 million U.S. jobs in 2012 (many of them in retail, food services, real estate, health care and financial sectors). In a time of weak job creation, that's an economic benefit that's worth applauding.

The fact is that our nation needs to engaged in a serious conversation about the future of Social Security -- not just for today's retirees but for generations to come.

Social Security is becoming more essential than ever before, as a growing number of older Americans struggle to stay financially secure in a weak job market and with meager savings and often no employer pension to help with the monthly bills.

We already knew that Social Security accounts for about half the income for most seniors, and substantially more than that for millions of others.

But AARP's analysis shows that Social Security helps everyone, regardless of whether they personally receive benefits.

The numbers dramatically illustrate that cutbacks to Social Security could have severe negative consequences for individuals, businesses and the entire economy. This underscores the importance of decisions being made in Washington about how best to address Social Security's finances and keep the program strong for the future.

The critical value of Social Security to our economy is one more reason that AARP is calling for a national conversation on the future of this vital program.

We urge members of Congress to keep these new economic findings in mind when they engage in this crucial debate.

The stakes are enormous -- for all of us.

Katie Hirning is the California state director of the American Association of Retired Persons.