If you make minimum wage - say $10,000 a year then you've paid $1230 a year in SS Taxes and get a benefit of about $6000 per year. 60% of your pre-retirement earnings and 4.87X your yearly SS tax. If you pay in at this rate for 40 years you will pay in $49.2K and if you collect for 11 years (78yr life expectancy - 67yr full retirement age) then you will collect $66K in benefits. You get back 134% of what you paid in, a 34% return on your investment.
$ 10K $ 1230 $ 6000 60% 487% $ 49.2K $ 66.0K 34.1%
$ 15K $ 1845 $ 7500 50% 406% $ 73.8K $ 82.5K 11.8%
$ 20K $ 2460 $ 8550 42% 347% $ 98.4K $ 94.0K 04.5-%
$ 30K $ 3690 $10700 36% 280% $147.6K $117.7K 20.3-%
$ 45K $ 5535 $13900 31% 251% $221.4K $152.9K 30.9-%
$ 60K $ 7380 $17000 28% 230% $295.2K $187.0K 36.6-%
$ 87K $10700 $20500 24% 191% $428.0K $225.5K 47.3-%
(numbers from the SSA Quick benefits calculator
http://www.ssa.gov/OACT/quickcalc/index.html )
So low wage earners take out more than they put in. High wage earners put in a lot more than they take out. The excess paid by the high earners subsidizes the excess paid to the low wage earners.
If you raised the minimum wage 50%, so that many people who make $10K were instead to make $15K : then those people would need only $8.7K in subsidy (82.5 - 73.8) instead of the $16.8K subsidy (66 - 49.2) needed at $10K wages saving $8.1K per.
When you hear that the SS program is progressive - this is what they mean. Lower income participants get a lot more for their dollar than higher income participants do. If you consider it an investment, then it's a really bad one for the higher earning contributers who loose a lot of money on the deal.
This is one of the basis of privatization. If a $87K contributor could invest 1/3 of his contribution and earn 0% over inflation, then he would be much better off than earning the -47% return he gets from the regular system. The low wage earner would be much worse off with a private investment than the 34% return he gets from the current SSA system.
So it is welfare for those with very low earnings, and a very bad deal for those with high earnings. Raising the income - and FICA contributions along with it - of the lowest earners, closer to the break-even point - would do a lot to fix the systems finances.
The other problem is that the $27K - $87K contributers are paying the full cost of subsidizing the under-27K earners. Consider it a social obligation to keep old people from starving, and these guys are paying a huge social burden while the $1mm and $10mm people pay a pittance.