"Race, Poverty and Social Security: Racing the Social Security Debate,"by john a. powell September/October 2000 issue of Poverty & Race
Since the presidency of Ronald Reagan, politicians have attacked and undermined this country’s hard-won social safety net. This attack has been color- and class-conscious: they have slashed and burned programs for low-income Americans, especially people of color. Meanwhile, Social Security remains sacrosanct. There is heated debate over Social Security, but it focuses on how to finance it and distribute its benefits, not how to cut or eliminate it.
This sacred cow status may seem odd, because Old Age Insurance (OAI), the heart of Social Security, redistributes more wealth and costs far more than any other government benefit program. Perhaps this popularity is owing to the fact that OAI and Medicare are the only welfare programs that benefit people regardless of income: retired migrant farmworkers and retired Fortune 500 CEOs alike receive OAI benefits.
One key factor obscured in the national debate about how to reform this popular government program is race. The reason so many politicians and voters support Social Security — even as they dismantle other, much less expensive social programs — is surely related to the fact that most of its beneficiaries are white and middle-class.
The Social Security Act, originally passed in 1935 in the middle of the Great Depression, was the nation’s most serious foray into the area of social rights and the welfare state. Yet from the outset the program was racially exclusionary.
At the time of the Act’s passage, influential Southern and Western Congressmen opposed any program that would grant payments to black, Mexican or Asian agricultural workers, for fear of undermining the oppressive Southern plantation economy or Western agribusiness. To win the support of affluent whites, the Act also shut out domestic workers, most of whom were black women.
The exclusion of domestic, agricultural and government workers — the other major sector of black employment — from OAI and Unemployment Insurance (UI) meant that many, maybe even a majority, of black, Latino and Asian workers were ineligible.
Struggles for civil and labor rights have since corrected the Social Security system’s most egregious forms of racial and gender inequity. Virtually all workers now pay into and are eligible for OAI and UI. Government workers have their own retirement systems, and medical insurance, missing from the Act, was added in the 1960s. Benefits to widows have been expanded and increased.
Despite these improvements, the Social Security system still perpetuates racial, class and gender disparities, though in somewhat disguised form.
First, Social Security taxes are regressive: a payroll tax of 12.7% is taken, regardless of whether a person makes the minimum wage and works for only one week of the year or makes $76,200 — no Social Security taxes at all are paid on income above that level. Recent tax law changes have made matters worse by lowering income tax rates (which are progressive because the more you earn, the greater percentage of taxes you pay) and increasing Social Security taxes (which tax rate, as noted, is flat).
Once they retire, poorer folk also get smaller monthly payouts than the affluent. OAI benefits begin upon retirement no earlier than age 62, and the amount received is based on the total amount paid in by the recipient over his/her lifetime: the less you pay in, the less you receive. People of color have lower incomes than whites. They thus put fewer total dollars into the system and receive lower benefits. In 1997, the median income of Latino families was $28,142; for African American families, $28,602; and for whites, $46,754. Similarly, women earn only about 60% as much as men.
Finally, people of color receive OAI benefits for a significantly shorter amount of time than whites, because they retire older and die younger. The life expectancy for African American males is only 65 years, compared to 73 for white men. A huge number of people of color die before ever receiving Social Security benefits, even though they pay taxes into the system throughout their working lives.
Notwithstanding these inequities, Social Security represents the most important source of retirement income for most people of color. Because people of color have far fewer assets than whites and are much less likely to be covered by private pension programs, they tend to be more dependent on Social Security at retirement.
The Race of Age
Dramatic changes in our national demographics threaten the viability of the Social Security system. As baby boomers reach retirement, the U.S. population is rapidly aging. In 1960, there were nine active workers paying into the system for each beneficiary. By 1996, the ratio of workers to beneficiaries had plummeted to 5.33.
This trend, together with an increasing life expectancy and a declining birth rate, means that a larger number of longer-living retirees will be supported by a shrinking number of younger workers. Unless substantial changes are made in the way Social Security is structured, many project that the system will go broke by 2037.
Yet, with a booming economy and a huge budget surplus, politicians still insist on cutting taxes to corporations and the rich and returning money to middle-class taxpayers, instead of funding Social Security for the long run. Recently, George W. Bush proposed to transform the current guaranteed benefits program into individual stock accounts, a move that threatens to deprive millions of inexperienced investors of benefits and subject all recipients to tremendous stock market volatility.
The parties in the current debate, from left to right, completely skirt the important racial issues involved. The aging baby boomers are disproportionately white, while younger and new workers are increasingly people of color. This trend is reflected in school enrollment statistics. In 1996, students of color were 36% of the total K-12 enrollment nationally — a 50% increase since 1976 and still rising rapidly.
When these students become young workers of color, they will pay into a system in which most of the beneficiaries are white.
Racial Time Bomb
Starting with the Great Depression, the U.S. government created a social compact, promising that the society would support the young in becoming productive citizens and workers, especially through quality public education. Those productive workers would in turn pay taxes to support the young and the retired elderly. No one segment would thereby be forced to bear more than its fair social share.
However, today government is abandoning youth of color. Inner-city schools suffer from inadequate investment, and racist housing and zoning practices continue the segregation and concentration of low-income students of color. Current tax policies have left low-income, largely minority communities to try to do the impossible—provide fiscal support to maintain their cities and take care of their young.
Taken together, these facts make it clear why the Social Security problem is a racialized time bomb. Youth of color are inadequately prepared to enter the workforce, condemning many of them to low-wage, dead-end service jobs —and to prison. In the not-too-distant future, this same poorly educated, underpaid population of color may be asked to accept an even higher rate of taxation to benefit elderly white baby boomers and to replace a crumbling infrastructure of school buildings, parks, sewers, bridges and roads. And, as the boomers continue to age, they will have to invite these young workers into their nursing homes and gated communities to attend to their aging bodies and failing health.
The solution to these inter-generational and racial tensions is not to cut benefits to the elderly or to refuse to invest in our children. Corporations, which have enjoyed major tax cuts, and workers, especially those at higher income levels, must be made to assume their fair share of taxes. We must insist that existing budget surpluses be used to shore up Social Security and to finance infrastructure and educational improvements, especially in the inner cities. And we must demand that Social Security benefits, upon which retirees of color are so dependent, continue to be guaranteed.
Failure to live up to the social compact because of a shortsighted racial gaze will hurl us into a perilous future.
john a. powell is Secretary of PRRAC's Board, is on the faculty of the University of Minnesota Law School, where he directs the Institute on Race & Poverty (415 Law Ctr., 229 19th Ave. S., Minneapolis, MN 55455. 612/625-5529, E-mail: email@example.com.
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