Ask anyone you pass on the street what comes to mind when they hear the term Social Security, and more often than not, they’ll refer to the program’s old age or retirement benefits.
But Social Security provides a great deal more than just old age benefits. It provides for disabled workers and children, too. In fact, a study released last month by the National Urban League shows that Social Security benefits given to poor families with children form a safety net that keeps one million children from poverty, and prevents another million children from extreme poverty; that is, it prevents their families from having annual incomes below half that of the poverty line.
It’s important to realize that Social Security’s formal name is the Old Age, Survivors and Disability Insurance Program. (The tax collected to support the program comes from the Federal Insurance Contribution Act, popularly known simply as FICA.)
In other words, Social Security is not merely a retirement program. It’s an insurance program as well. Social Security insures families against three things: one is a drop in earnings because of disability. The second is a loss in earnings because of the death of a family’s breadwinner. The third is a drop in earnings because of old age.
While most people focus on the old age benefit, Social Security actually does much more. By putting all American workers in the risk pool, it works to the benefit of all Americans. However, all Americans aren’t spread equally among all the risk pools.
Among African Americans, for example, one third of Social Security checks do go to retired workers. But another third go to disabled workers, and a final third go to children under 18. By contrast, Social Security’s overall profile looks quite different. Roughly three million insurance beneficiaries, less than one-tenth of all recipients, are children. About 30 million people get the Old Age insurance; seven million get the Survivors insurance, and six million more get the disability insurance.
Some have suggested that we should privatize Social Security. But that would change the balance and the nature of the program for the worse. It would, in effect, change what is now an insurance program, in which all American workers are in the risk pool, into an individual retirement plan that would leave out the families and children of the individual worker. This is an especially harsh prospect for Black America. Two thirds of the African-American children, compared to 31 percent of white children, live in low income families. About 9 percent of African-American children, compared to 6 percent for whites, live in a family receiving Social Security benefits. African-American children are almost four times more likely to be lifted out of poverty by Social Security than are white children.
Of low income families with children that receive Social Security benefits, Social Security provides over 55 percent of their income, and over 35 percent of income for lower-middle income families. In most American cities, the average family benefit is enough to pay the rent of an apartment for a year. That fact alone underscores the point that Social Security benefits make a difference.
Social Security is not a handout, as some crudely perceive welfare to be. The children receiving survivor’s benefits are collecting an insurance premium on the loss of a parent. Privatization of Social Security threatens this intergenerational aspect of the program, and instead of preventing a “young versus old” debate, would sharpen such a conflict, tearing at the fabric that binds Americans together. Americans like the current system of Social Security, because we like to think that it reflects the best of our values. Privatization however, reflects a lack of compassion, even greed. It casts aside societal efforts to support the family, as well as society’s obligations to spread the risk of misfortune, both of which makes us all part of the human race. Privatization would only heighten the divisions of young versus old, and because of the way the risk pools are divided, African Americans against whites. Most devastatingly, it would weaken the safety net that now keeps a million children out of poverty. That’s a step backward, not a step forward.
Valerie A. Rawlston