JOBS FOR ALL COALITION P.O.
Box 96, Lynbrook, NY 11563
UNCOMMON SENSE 24
© October 2000 #3
of a Social Security packet
Security Isn't Just for Seniors
by Jean TD Bandler, Assoc. Prof. (retired), Social
Work, New York University and founding member, National Academy
of Social Insurance
The National Jobs for All Coalition works for
enough living wage jobs for everyone who wants to work, and adequate,
secure income support for others such as the elderly, the disabled,
and persons caring for very young or infirm family members. Social
Security provides a measure of basic income security for most
workers and their families, and keeps millions out of poverty.
Despite the widespread misconception, there is no impending crisis
of Social Security nor must it be drastically altered to be "saved".
And good jobs for all would contribute mightily to the health
of Social Security because more people working means more Social
Security taxes flowing into the Trust Funds. The Coalition's Social
Security packet aims to insure that workers, advocates, policy
makers, and the media are better informed about these issues.
This Uncommon Sense stresses the special significance of Social
Security to young people and other workers before they retire.
Social Security has always been the nation's most popular social
program. But although it is not in "crisis" (see Uncommon
Sense 21), many, especially young people, have been convinced
that it is and that they will not benefit from the program. Few
are aware that they are already benefiting from Social Security
because of its major role in providing basic income security.
One reason for this misconception is that the present debate
about Social Security pays scant attention to the benefits provided
to current workers and their families. By focusing on senior beneficiaries,
the debate overlooks the protection that Social Security provides
for all workers during their working years and the benefits to
children and family dependents.
A multi-risk insurance plan. While Social Security
is commonly perceived as solely a retirement program, it is in
fact also is a multi-risk insurance plan that protects workers
when they no longer can work and earn a living. Besides offering
retirement benefits to workers and their spouses during old age,
the program also provides disability and survivors' insurance
to younger workers and to family members dependent on a worker's
earnings: minor children, care-taking parents, widows with disabilities
and adult children with disabilities.
Understanding the important, if often ignored, family protections
of social insurance is essential when assessing the criticisms
of Social Security and the proposals to revise it. By ignoring
the full range of benefits of Social Security, critics speciously
bolster their claim that workers will receive higher returns on
their Social Security contributions if the system is privatized
and workers have individual investment accounts. A shift to private
accounts would jeopardize Social Security's protections for current
workers and their family dependents.
Benefits for seniors. It is, of course, understandable
that Social Security debate centers on senior beneficiaries--those
62 years old and older. Social Security benefits reach nearly
all of the elderly, and the elderly comprise over three-quarters
of Social Security beneficiaries.
Social Security is crucial for the well-being of seniors. The
major source of income for the aged, Social Security has successfully
rescued more than two out of five elderly beneficiaries from poverty.
It provides dependable, earnings-related benefits for elderly
workers and their elderly spouses or survivors.
Further, most young workers do not know that before Social Security,
adult children often had to help support their elderly parents
as well as their own children. Today, by providing stigma-free
protection and dignity for the elderly, Social Security relieves
younger workers of much of the financial strain and intergenerational
tension caused by their responsibility for supporting their aging
Benefits for current workers and their families.
Critics fail to acknowledge that about 9 million beneficiaries
are not elderly. In fact, 4.5 million are workers with disabilities,
nearly 4 million are children, including disabled adult children
of beneficiaries, and half a million are care-taking parents.
For these beneficiaries, as for the elderly, Social Security replaces
a portion of past wages of workers who can no longer work.
Important as retirement benefits are for all workers and their
families, Social Security's disability and survivorship protections
are crucial as well. Like fire and flood insurance, the disability
and survivorship insurance means that workers are fortunate if
disaster does not strike and they are protected when it does.
Social Security provides more than $12 trillion in life insurance
protection, which exceeds the combined face value of all current
life insurance policies. Nor is anyone turned down for insurance
from Social Security because of health problems. For young workers,
this protection is substantial. Take a 27-year -old couple working
at average wages, with two small children. In the mid-1990's,
survivors' protection amounted to a $307,000 policy for this family,
with disability protection worth $207,000.1
Disability and early death coverage. Many workers
overlook these protections since few anticipate being struck with
a disability or early death--and most won't be faced with such
a tragedy. Yet a substantial number of workers become disabled
or die before their retirement age. The odds are that as many
as two in five workers will become disabled or die before retirement.2
Moreover, the chance of that happening increases with age. People
of color, low wage earners, and less educated workers are particularly
at risk and often lack the occupational income protections provided
to higher earners.
The disability coverage protects younger workers when they become
so ill or injured that they meet a state-tested criterion of being
"unable to perform any substantial gainful activity."
For a typical worker, this criterion is met when he or she is
physically impeded from earning over $500 a month. In 1997, over
4.5 million workers received Social Security benefits because
of a disability, with benefits averaging $721 a month.3 More than
half of the beneficiaries are age 50 or older. Although the possibility
of disability increases with age, 1.4 million of the disabled
recipients are actually 45 years of age or younger. Slightly over
a fifth are minority workers, reflecting the disproportionate
burden of disability on this group. Disability strikes low-wage
workers of all races. These workers report poorer health than
those at higher wage levels. They face greater physical and environmental
hazards, and, along with less educated workers, they are more
likely to become disabled and less likely to have employer-sponsored
disability plans. Social Security, therefore, provides a crucial
income support for these workers.
Expansion of benefits. Congress extended Social
Security's income protection for workers to family dependents
in 1939 with legislative amendments that revolutionized social
insurance. Originally established to provide benefits to the elderly,
Social Security began to provide support for young survivors of
deceased workers and dependents of elderly retired workers. The
amendments transformed Social Security from an individual insurance
plan to a family program. Besides elderly wives of retired workers
and elderly widows of insured workers, the new beneficiary groups
included the children of retired workers and the children and
child-caring widows of deceased workers.
In the 1950's and 1960's, benefits were extended to workers with
disabilities and their families as well as to other groups of
disabled kin--adult children disabled in childhood and disabled
widows at age 50.
Coverage of young families. For young families
who lost a breadwinner's earnings, Social Security now provided
a national uniform entitlement program and freed them from the
stigma of means tests to qualify for inadequate public assistance.
Today, younger care-taking parents and children of retired or
disabled beneficiaries receive a 50 percent benefit, and surviving
care-taking parents and children of deceased workers get one of
75%. Family maximums--limiting the amount of benefits a family
receives -- are set to keep total benefits below the worker's
While benefits are capped, they are based on progressive formulas
to provide help to low-income workers. For workers at the federal
minimum wage, the wage-related benefit is 97% for a disabled worker
with two entitled dependents, and 99% for a survivor family of
a widowed parent and two children. For the same workers with an
average wage, the benefit would replace 62% and 75.6% of their
respective pay. If workers were receiving the highest taxable
earnings to qualify for Social Security, the replacement ratios
would be 40% and 48%.4
Social Security reflects changes in family structure. The
dramatic changes in family structure and roles during the past
50 years are reflected in equally striking changes in Social Security.
Nowadays, couples marry later, have fewer children, divorce more
often, remarry more frequently, and have more dual earners. In
responding to both changed realities and constituent hardships,
policymakers and politicians have shown a special concern to meet
the needs of children. Broad parental definitions recognized by
the Social Security system now make benefits available to stepchildren,
adopted children, dependent grandchildren, and, in landmark 1967
legislative language, children of unmarried parents. Social Security
entitlements also recognize divorce and remarriage by providing
benefits for young divorced widows (and widowers) caring for children
who receive benefits because of the death of a parent from a previous
Today nearly all children who have lost the support of a working
parent due to retirement, death or disability (about 3.8 million)
are Social Security beneficiaries. Two-thirds are white and one-third
are minority. For a retired worker's family with one child, the
average monthly family benefit is $1,600. (Benefits also extend
to care-taking parents, as long as a stringent earnings test is
met.5) Here is an additional breakdown of this group of children.
- Nearly three million children are under the age of 18.
Children of retired workers (240,000 beneficiaries) are the
smallest and the oldest group. More than 50% are between the
ages of 14 and 18.
About 1.4 million of the covered children of deceased workers
are under 18 years; half are 12 years old or younger.
Minor children of disabled workers account for another 1.4
Another 96,000 children -- a small but important group --
are between the ages of 18-19; they are eligible because they
are finishing high school.
- Finally, over 700,000 are disabled adult children of workers
now retired, disabled or deceased; these adults were severely
disabled before the age of 22, were dependent on the worker
for support, and are now unable to work.
Misleading arguments for change are based on misconceptions.
Overlooking the protection Social Security offers workers and
their families leads to misleading arguments for change. Charges
that contributing to Social Security is "a bad deal"
-- that workers do not get their "money's worth" for
their investment -- ignore the survivor and disability entitlements.
They also discount the risks of alternate investment schemes and
the reality faced by most working families, who have inadequate
protection against death and disability. Social Security's important
non-retirement entitlements provide essential, predictable, inflation-adjusted,
and dignified benefits to young workers and their children should
death or disability occur. Only the very frugal and extremely
lucky could ever get a high enough return on their investment
through a private insurance plan to match the benefits that Social
Security provides to the surviving families of deceased or disabled
Good jobs bolster Social Security. In addition
to Social Security, workers need the assurance of jobs at livable
wages. The program of the National Jobs for All Coalition--jobs
for all at decent wages -- would help make that goal a reality.
It would also help to maintain the health of Social Security because
when more people work, more revenues flow into the Social Security
1. Report of the 1994-96 Advisory Council on
Social Security, v. 1, Washington, D.C., 1997, p.89.
2. Richard Du Boff, "Social Security is not in 'Crisis'",
Uncommon Sense 21.
3. Annual Statistical Supplement 1998 to the Social Security
Bulletin, 5A p. 184.
4. Information--private correspondence: Working Draft on Earnings
Replacement Ratios: Social Security Administration. C. Pauzenga.
5. There is a reduction of benefits of $1 for each $2 earned over
$9,120 and benefits stop when the youngest child reaches 16 years
Edited by Greg Heires, Assoc. Editor, Public Employee
Press; June Zaccone, Economics (Emer.), Hofstra
University; Helen Ginsburg, Economics (Emer), Brooklyn College,
© 2000 National Jobs for All Coalition