Just Do It

Hidden in the sound-and-fury of debate over social security is one factor important to African American males: few African American males collect cash retirement benefits from the system. They die early. “. . . in 1991 the life expectancy at birth for Caucasian men was 72.9 years; Caucasian women, 79.6 years; African American men 64.6 years and African American women 73.8 years” (U.S. Bureau of the Census, 1996. In Beckett & Dungee-Anderson, 2000). The life expectancy differential for African American males is also reflected in other aspects of their economic and social life course. “Overall, life expectancy differentials will disadvantage African Americans relative to the general population in terms of their Social Security retirement benefits” (Gist, 1998, pp. 2-3).

Shorter life expectancy and life-span, discrimination in the job market, differential wage rate, all greatly affect African American male’s relation to the Social Security system. Schiller (1995) notes that “in 1993 median family income among black and Hispanic Americans was around $22,000 while among white Americans it was nearly $39,000” (p. 147). He goes on to state that “minority workers are not robbed of their earnings outright . . . . Rather, minority workers are hired less often, for fewer hours, for less desirable jobs, and at lower wages” (p. 195). While there is a $17,000 income differential between white and Americans of color each group is required to pay 7.65% of their wages into the social security system under the Federal Insurance Contribution Act (FICA).

It has been argued that even though a disproportionate number of African American males may die before reaching age 65 years of age they nevertheless do not leave a surplus of their FICA contributions to the system which may serve to help underwrite cash retirement benefits for those who live well beyond sixty-five. The argument tends to go as follows: while they are alive, as a group, African American males draw heavily on other Social Security tax funded benefits such as disability and health care (Gist, 1998, Social Security Fact Sheet, 6/7/05). Such arguments tend to omit or disregard the fact that under the Social Security Act Supplemental Security Insurance (SSI) and Disability Insurance (DI) are different insurance distributions separate from the cash retirement benefits. Schiller (1995) notes that “in 1994 the total FICA payroll tax was 7.65 percent.” That tax is distributed as follows:

PROGRAM TAX RATE

OASI (old age and survivors’ insurance) 5.60

DI (disability insurance) 0.60%

Subtotal, OASDI 6.20%

HI (health insurance) 1.45%

Total FICA tax 7.65%______

“The OASI and DI tax receipts pay for retirement and disability benefits; HI tax receipts fund Medicare” (p. 242). Additionally, a Social Security fact sheet (12/15/05) clearly states that “Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability. . . . Disability under Social Security is based on (a person’s) inability to work. . . . (A person’s) disability must also last or be expected to last for at least one year or to result in death”(Social Security Administration, 12/15/05).

To suggest that somehow there is a quid pro quo between African American males’ contributions to the Social Security trust fund, and their use of disability benefits is, in a way, blaming the victim for structural causes of his disability, and overlook the fact that persons who qualify for disability “. . . are pre-disposed to live shorter lives, and this factor reduces the number of years of their benefit receipt, especially of OASI after age 65” (Cohen, Steuerle & Carasso, 2002, p. 8). In addition:

. . . since OASDI automatically annuitizes benefits, differences in mortality among individuals and groups are a key source of redistribution. This “forced” annuitization, where a population-wide life expectancy calculation drives benefits, means that groups disposed to longer life derive greater benefits than those groups disposed to shorter lives, e.g., women relative to men, higher earners relative to lower earners, and White non-Hispanics relative to non-Whites (pp. 7-8).

Spriggs (2004) has noted that “while African Americans make up 12% of the U.S. population, 23% of children receiving Social Security survivor benefits are African American, as are about 17% of disability beneficiaries” (pp. 5-6). However, to suggest that during their lives African American males recover from Social Security returns that are equal to or greater than their contributions through their use of health care and disability payments is seductive, but spurious. Two points should to be noted here. First, Disability (DI) is covered by a part of the FICA tax that is separate from old-age and survivors’ insurance (OASI) (see table above). Second, if the disabled were not covered by a portion of the FICA tax they would be covered by other public assistance programs (e.g., TANF, SSI).

Privatization of Social Security

Privatization of Social Security is at best a misguided proposal that primarily benefits financial brokers, not retirees, and it insinuates the existence of the mythical notion of ‘rugged individualism’ in a capitalist society that survives on collectivist practices. At worst, it is a cynical scheme to get the government out of the business of ‘entitled’ protection for its older citizens at the time when they have reached the end of their productive years. Privatization all or part of the Social Security Trust Fund would move tax funds out of governmental supervision and into the predatorial world of private financiers.

Baker (1998), offers a compelling analysis of why privatization is a bad idea. He notes that:

The Social Security tax has been raining more money than is needed to pay for current benefits, in order to build up a surplus to help finance the retirement of the Baby Boom generation. All of this surplus is lent to the U.S. Treasury when the Social Security Trust Fund buys bonds from it. The money is then used to finance the federal deficit, just like any other money the government borrows. Then bonds held by the fund pay the same interest as bonds held by the public. . . . Thus, the fund has very real secure assets (p. 34).

The question then is ‘why not have the U.S. Treasury repay the Social Security Trust Fund at market rates? And further, why use Social Security Trust Fund surpluses to lower the national debt?’ The national debt should be paid out of general tax revenue, not social security funds. Is the use of social security (FICA) tax dollars to pay the national debt a form of double taxation for senior citizens? Were they not already taxed for that purpose?

A Modest Proposal

How can it be presumed that part of African American males FICA contributions serve to underwrite the retirement of White male through Social Security cash retirement benefits? According to Thurow (1996), a nationally know economist:

. . . most of the elderly have convinced themselves that they have “paid for” their current (Social Security) benefits and are not on welfare. . . . Nothing could be further from the truth. The average elderly male now is repaid all of his social security tax payments plus interest in less than four years. After that he is on welfare in exactly the same sense that a welfare mother is on welfare (p. 109).

The quid pro quo is that African American males have a shorter life expectancy at birth (64.6 years) than White American males (72.9 years), The current Social Security retirement age is 65, but is moving upward by two months per year until it reach the age of 67. “That means probably the majority of black males will never even receive Social Security retirement benefits” (Spriggs, 2004, p. 6).

African American males have a shorter life-expectancy and a shorter life-span than do white males. Economic discrimination in the labor force and differential wages lead to poorer life-chances, and account for a plethora of economic and social stresses that are attributed to a poorer quality of life, poorer health, and shorter lives.

The first recommendation of this modest proposal is that the federal government should no longer have access to the Social Security Trust Fund surplus. Second, the federal government should be mandated by congress to repay every penny that it has taken from the Social Security Trust Fund over the year at the prevailing market interest rate. Third, congress should pass legislation that institutionalize former Vice President Gore’s “lock box” concept. And finally, reform the structure of the Social Security system to take into account differential life-chances of large well-defined groups of its citizenry such as historically documented differential life expectancy and life-span, and documented disabilities related to workforce discrimination for various groups of it citizens. For example, longitudinal data shows that both life-expectancy and life-span are different for various oppressed groups of U.S. citizens.

The system should be designed and developed to address group differentials, not a one-size-fit-all Social Security system as we have today that is based on white Euro-Americans. Such a system would not preclude privatizing a small portion of FICA tax; however, it should preclude any management and/or oversight by any sector of the private market: a wall of separation should exist. The Social Security Administration (SSA) already possesses the structural mechanism to make investments in the private sector market. It does that now with the surpluses – when the surpluses are not usurped by the federal administration.

Direct all responses to:

Eddie Davis, DSW, ACSW davise@buffalostate.edu

Associate Professor (716) 878-5709

Social Work Department (716) 878-3240 FAX

1300 Elmwood Avenue

Buffalo, NY 14222-1095

References

Baker, D. (1998). Nine misconceptions about social security. In The Atlantic monthly. July. Pp. 34-39.

Beckett, J. O. and Dungee-Anderson, D. (2000). Older persons of color: Asian/pacific islander Americans, African Americans, Hispanic Americans, and American Indians. In R. L. Schneider, N. P. Dropf, & A. J. Kisor (Eds.), Gerontological social work: Knowledge, service settings, and special populations (pp. 257-301). Belmont, CA: Brooks/Cole.

Gist, J. R. (1998, September). Social security reform: How do minorities fare under social security? A response to two heritage foundation reports. American Association of Retired Persons Research Center. (2003). Retrieved August 8, 2003 from http://www.wysiwyg://19http://research.aarp.ort/econ/ib34_ssmindd_1.html

Schiller, B. R. (1995). The economics of poverty & discrimination. Sixth Edition. Englewood Cliffs, NJ: Prentice Hall.

Social Security Administration. (December 15, 2005). What we mean by disability: Disability planner. http://www.socialsecurity.gov/dibplan/dqualify4.htm Retrieved 10 February 2006.

Spriggs, W.E. (2004). African Americans and social security: Why the privatization advocates are wrong. In Dollars & Sense: The Magazine of Economic Justice.

http://www.dollarsandsense.org/archives/2004/1104spriggs.html Retrieved

6/26/2006.

Thurow, L.C. (1996). The future of capitalism: How today’s economic forces shape tomorrow’s world. New York: William Morrow and Company, Inc.