I came across a column this weekend that approached the social security debate from a perspective I had never heard before: the Social Security system, as administered, discriminates against blacks (especially black men).
Summing up the points:
Because of a lower life expectancy, about half of all black men will never collect a SS check. On average, a black man will collect $13,400 less in benefits than paid into the plan.
By comparison, the same amount invested in low-rate T-bills would gain nearly $100,000.
Because money put into the plan is appropriated into a general fund (instead of a private investment a person can call his own, and will to family members), basically the system is a conduit from the pockets of working class blacks to older white women (who tend to have the longest life expectancy).
According to the Rand Corporation (whoever they are), the income transfer from blacks to whites can be as high as $10,000 per person.
The inception of the SS system was based in part on racist, paternalistic attitudes. The author contends that the 1937-38 Social Security Advisory Council engaged in stereotypical and elitist discussions as to why blacks, women, and farmers should not be entrusted with the responsibility of making their own retirement investments.
I found these points to be very thought-provoking. Is this justified, or is the columnist all wet?
The true history of Social Security would indicate that this is very far into left field. Although the way SS now works today may well favor white women - I don’t think you can argue that it was designed to be so and retain any credibility.
SS was of course initiated during the depression - and started paying benefits immediately. The idea was that they take care of the current eldery retired with the current contributions of wage earners, the surplus of which would go into the fund that would help fund their retirements later.
SS is not a savings program. It is a tax. To think of it any other way is to be mislead. The government has greatly confused the issue by basing the entitlement on the level of contribution - though in no way promising to repay the investment or admitting any true capitalization. It is true that anyone, black or white could do better investing their money privately, but the fact is hardly anyone, black or white does so.
America is a society sickened by consumerism, and I don’t think it is elitest to recognize that fact.
I don’t expect to see anything near what I have had to put into it, so I tend to think it is pretty much biased against any of us that are younger than the baby boom generation.
Of course, if people were allowed to invest their own social security money it would be a different story. But, that would also be a different thread.
Well, shut my mouth. It’s also illegal to put squirrels down your pants for the purposes of gambling.
That Marion Barry list of quotes is silly and most of them untrue.
Marion Barry said alot of dumb things in his career as DC mayor. He doesn’t need these new quotes attributed to him to make him look bad. He does just fine on his own.
I know you were only joking, Mjollnir, and the quotes around the names showed that. I just think to even mention the quote does a disservice to the truth. http://www.snopes.com/quotes/barry.htm
Actually, the longest-lived people (as an aggragate) are Asian women. So we think U.S. Social Security was set up to favor Asian women?
Any type of insurance (whether social or private) is based on some people or groups of people being “winners” and some being “losers”, for the sake of the group as a whole. If you buy life insurance and live to be 120 years old, you’ve wasted all those premiums. If you buy life insurance and drop dead the next day, you won big financially (or your heirs did.)
Social security, like any retirement vehicle, works in reverse. If you live longer, you “win” by collecting more in benefits. If you die early, you “lose” by paying more in premiums than you receive in benefits. So, yes, social security favors the longer-lived persons.
There is no remedy for this, except to have each individual retire ONLY on his/her own savings, with no element of social insurance at all. You think that would be MORE favorable to the lower economic groups??
This is a very old idea. It’s often dropped in the news now and then. Probably on slow news days.
SS covers much more than that. It covers their children too. I don’t have the statistics right now but don’t black people have more children on average than white people? At any rate, SS is like insurance, its there for you & your CHILDREN if they every need it…
One additional thought: The U.S. social security benefit formula very heavily favors the lower paid. The percentage of pay provided (for retirees in the year 2000) will be:
90% of the first $531 of Average Indexed Monthly Earnings (AIME), plus
32% of the next $2,671 of AIME plus
15% of AIME in excess of $3,202 up to the ceiling
Thus, someone earning $1000 a month (ignorning the averaging and indexing) receives about 63% of pay; someone earning $2000 a month receives about 47%; someone earning $4000 a month receives about 35%, etc.
The benefits are geared to be higher (as a percent of pay) for the lower-paid, so there is an argument that says that social security is biased in FAVOR of the lower economic classes. To the extent that lower financial situation is linked to race, social security would favor the lower-income race(s).
I’ve never heard of this at all. My father is in the Army, he pays SS. My mother was a federal government employee for awhile, and she paid SS. Farm workers as a group can hardly be said to have excellent high paying pension funds - it is ludicrous that you would say they do.
Also, even if its true, you are ignoring the fact that the entitlement is based on the number of years you pay into the fund, as well as the salary you pay. After 2 1/2 years (as you have said) even if you are eligible for anything, it is not much.
In answer to the original question: no, SS is not racist. Life is racist.
BTW, the original retirement age of 65 came from the 18th-century French pension system. It was figured that most people at the time did not live to that age, so paying a pension to those who did was no big deal. A comparable age today would probably be 85-95.
Maybe the answer is simply boosting the life expectancy of black men? And, remember, when life expectancy is calculated, deaths due to crime are factored into the equation.
And the horrible truth is that a black man is more likely to be a crime victim than any other American.
There’s your racism.
And why do people not want to invest privately? How do you know what the safest investment is? They all make the same claims. And, believe it or not, the stock market does go down on occaision.
Those who do not learn from the past are condemned to relive it. Georges Santayana
I think this is only true where minor children are concerned. Any money you had coming to you when you die goes to a surviving spouse. If none, then back into the system. As I understand it, your children over 18 will not be eligible for your SS.
Well, Welfare is biased against the rich. They pay in all of that money and don’t get any back!
But seriously, life expectancy is not evidence of racism so much as it is of lifestyle and genetics. It would be horrible for the government to get invloved with changing either.
If I die early and don’t get to collect my extra $13,000, I don’t think it will bother me too much at that point.
The only people I know of who’ve been legally permitted to “opt out” of paying into SS (and some other things as well) are the Amish.
May be others, I just don’t know of them.
As noted above, there was a period of time when railroad workers did not participate in Social Security (in the U.S.) … there was also a period of time when hospitals could opt out, by providing an equivalent benefit for their staff. It was a three or four year window of opportunity, where some hospitals saved some money (and employees had a gap in social security coverage.)
In the U.K., by the way, it is not only possible but quite common to “opt out” of a portion of U.K. social security… The company promises to provide benefits greater than what would have come from the earnings-related part of social security (National Insurance) and then both employer and employee are excused from that portion of social security contributions.
