Our Social Safety Net - Using the race card to change it
In her “Final Word” for this issue, Jeanine Murray speaks of coming face-to-face with abject poverty for the first time. It made me wonder about our 70-year-old Social Security program—the safety net intended to ward off the kind of poverty Jeanine saw in her travels.
About one-third of the beneficiaries of Social Security are not retirees. In 2002, some 3 million children were beneficiaries. Twenty-three percent of children receiving survivor benefits are African-American, and so are about 17 percent of disability beneficiaries. The survivor benefit has lifted 1 million children out of poverty and helped another 1 million avoid extreme poverty, says a study by the National Urban League’s Institute for Opportunity and Equality.
The Bush administration proposes to change the program by cutting benefits and allowing workers to create individual, private accounts. Proponents have trotted out the race card, saying the change would benefit African-Americans. In his article, “African Americans and Social Security” (Dollars and Sense, November/December 2004), William E. Spriggs, senior research fellow at the Economic Policy Institute in Washington, D.C., and former executive director of the National Urban League Institute for Opportunity and Equality, says this is not so. Spriggs, who has a Ph.D. in economics from the University of Wisconsin, Madison, takes on the three “race” arguments.
Longevity: Social Security is a bad deal for African-Americans because of their lower life expectancies. “The shorter life expectancy of African-Americans compared to that of whites is the result of higher morbidity in mid-life, and is most acute for African-American men. The life expectancies of African-American women and white men are virtually equal. So the life expectancy argument can really only be made about African-American men,” Spriggs counters.
Education: African-Americans have less education, and so are in the workforce longer than whites, but Social Security only credits 35 years of work experience in figuring benefits. Spriggs responds, “The education argument fails to acknowledge that white teenagers have a significantly higher labor force participation rate (46 percent) than do African-American teens (29 percent). These differences in early labor market experiences mean that African-American men have more years of zero earnings than do whites. By taking only 35 years of work history into account in the benefit formula, the Social Security formula is progressive. It in effect ignores years of zero or very low earnings. This levels the playing field among longtime workers, putting African Americans with more years of zero earnings on par with whites. By contrast, a private system based on total years of earnings would exacerbate racial labor market disparities.”
Dependency: African-American retirees are more dependent on Social Security than whites. True, Social Security is the sole source of retirement income for 40 percent of elderly African-Americans. “This is a result of discrimination in the labor market that limits the share of African Americans with jobs that offer pension benefits. Privatizing Social Security would not change labor market discrimination or its effects. Privatizing Social Security would, however, exacerbate the earnings differences between African-Americans and whites, since benefits would be based solely on individual savings,” says Spriggs. Changing the redistributive aspects of Social Security to make it even more progressive, not privatization, would help African-American retirees, he says.
Would we be so lucky!
By Rosalind McLymont