does social security raise labor income?

Answer 1

It reduces it, by diverting potential investment in high-yielding assets into government coffers, where it yields esentially nothing. I ran a spreadsheet to compare the value of my Social Security with the value of a pot of common stocks, selected from the Dow Jones Industrials for the past fifty years. The stocks would have put me ahead by over $650,000. Extrapolating this suggests that the Social Security program has cost US taxpayers several trillions of dollars -- enough, indeed, to have paid off the entire national debt.

Answer 2

What is usually measured as income does not include benefits. Therefore the employers share of social security is not counted as income, so social security lowers measured income.
The average lifetime income including social security benefits after retirement is increased for low income workers, and decreased for High income workers. The current method of calculation of benefits produces an average return equal to wage growth, which in the past was equal to GDP growth, but over recent decades has been lagging GDP growth.