Expand Social Security, Don't Cut It

Authored by Nancy Altman, Co-Director, Social Security Works

Social Security has transformed the nation, eradicating what once was a primary anxiety of the vast majority of workers -- the terror of growing old.   A writer in 1912 described the attitude people had about growing old:

 “After the age of sixty has been reached, the transition from non-dependence to dependence is an easy stage – property gone, friends passed away or removed, relatives become few, ambition collapsed, only a few short years left to live, with death a final and welcome end to it all – such conclusions inevitably sweep the wage-earners from the class of hopeful independent citizens into that of the helpless poor.”
Before the enactment of Social Security, people worked as long as they could hold jobs.   But this was an insecure state of affairs.   The fast pace of many jobs “wears out its workers with great rapidity,” a commentator noted in 1912.  “The young, the vigorous, the adaptable, the supple of limb, the alert of mind, are in demand,” he explained, adding, “Middle age is old age.”  
   
Once a job was lost, an older worker could seldom find a new one. Older people almost never had sufficient savings to last until death.  Indeed, though individual savings accounts are in vogue these days, their shortcomings have been shown time and again. What is needed in the event of lost wages as the result of old age, disability or death is insurance, not individual savings.
 
Older people invariably were forced to move in with their children.  Those who had no children or whose children were unable or unwilling to support them typically wound up in the poorhouse.  The poorhouse was not some ancient Dickensian invention; it was an all-too-real means of subsistence for the elderly in the world immediately preceding Social Security.  The vast majority of the residents were elderly.  Most of the “inmates,” as they were often labeled, entered the poorhouse late in life, having been independent wage earners until that point.
Destitute senior citizens were a fact of life before the enactment of Social Security.  Studies at the time found that nearly half of all those 65 or over had incomes below the subsistence level, even well before the Great Depression.  In contrast, the poverty rate among the elderly today is around 10 percent.  The reduction in the poverty rate of the elderly is directly due to Social Security.  The Center for Budget and Policy Priorities has found a strikingly similar percentage of seniors today have incomes below the poverty level, when Social Security is disregarded. 

Social Security is the difference.  About one-third of older Americans receive 90 percent or more of their income from Social Security, and a full two-thirds receive half or more of their income from Social Security.   The benefits are particularly important to women and minorities.   Social Security provided 90 percent or more of the income of almost half of all unmarried (including widowed) women aged 65 or over, in 2008.and for more than half of unmarried (including widowed) male and female African-Americans aged 65 or over.

Furthermore, Social Security is much more than a program for the elderly.   It also provides extremely important life insurance and disability insurance protection for workers and their families.  In that way, it has also transformed the world with respect to workers who become disabled or who die leaving spouses and dependent children. 

Nearly nine percent of the nation’s children either receive Social Security themselves or live in families where part of the household income is from Social Security.  It is of particular importance to children in low-income and in minority families.  It is the nation’s largest disability program.   It provides half or more of the income to 70 percent of those with disabilities.  Without that monthly check, 55 percent of disabled workers and their families would live in poverty. 

Despite its importance and its efficiency – it returns in benefits more than 99 cents of every dollar spent – too many policymakers are proposing to scale it back and increase its retirement age.  They fail to realize that future workers and their families will need its protections even more, given the termination of traditional private sector pensions and the failure of private accounts to do the job. 

The current focus on budget deficits has provided an excuse for proposed cutbacks in Social Security, despite the fact that by law Social Security does not add a penny to the deficit nor the federal debt.  Indeed, dispassionate policy analysis calls out for increasing Social Security’s benefits.  Its proven track record, widespread support, efficient administration, and clear superiority over private sector counterparts makes increasing Social Security the best way to go, if our goal is to improve the economic security of the nation’s workers and their families.  Let’s hope that sometime in the not-to-distant future our elected officials will recognize that increasing Social Security would not only be overwhelmingly popular but also the best possible policy, for women, families, those of low-income, younger Americans, and every other demographic one can imagine.

Portions of this blog post were excerpted from Nancy Altman’s book, The Battle for Social Security.

A Real Mother's Day Celebration

This Mother’s Day many of us will find ourselves celebrating with the important women in our lives in lots of fun ways.  Maybe we will be dining at a lovely restaurant or relaxing in a spa. Perhaps we will take a weekend vacation, staying in a hotel. Or maybe we will be visiting our mothers or grandmothers in a long-term care facility, bringing them fresh spring flowers. Certainly there are lots of wonderful ways to celebrate Mother’s Day, yet almost all of these ways are dependent on the work of other mothers. Indeed there are many mothers who will not be able to celebrate that day. These mothers will be at work on Sunday making sure our meals arrive on time for brunch; ensuring our hotel rooms are clean, watching our children so we can have a ‘quiet’ dinner; and bathing our grandmothers at their care facility. 

Whether they are hotel housekeepers, childcare workers, or home health aides, these women share a very precarious employment situation. These women are often not earning wages that provide economic security.  The jobs they perform are often characterized by hourly shift work and nonstandard hours (as defined as hours that deviate from the 8-4pm time schedule). This includes nights, weekends, evenings, and rotating shifts. As a result when these mothers have to take time out of work to deal with an unexpected family emergency, they risk losing their jobs and most likely lose pay.  And as they age, they become our grandmothers who have not been able to earn enough to retire, and instead move into an even deeper poverty. The great irony is that many of the women who work in jobs that care for others often find themselves without the workplace flexibility and benefits to care for themselves and families. They are caught in a cycle of low pay and resources, along with little control over their work lives, putting them in impossible position of having to choose between economically supporting their families and caring for them. No mother should have to make that choice, yet millions are forced to every day.

The care and service work that women perform both in the family and workplace, needs to be valued. And it needs to be valued in real ways---wages that allow for economic security, opportunities for workplace flexibility, paid family leave and sick time, safe workplaces, safe and affordable childcare, health care, and income education, and social supports. So on Mother’s Day let’s make a commitment to make this vision a reality for women who are caring for all of us.  It is time that we as a nation began to care for them.


Mary Gatta, Ph. D.
Senior Scholar
Wider Opportunities for Women

Launch of the Washington Elder Economic Security Initiative

Wider Opportunities for Women's Elder Economic Security Initiative has officially launched in 13 states, the latest of which is Washington. Watch the presentation to learn more about the Initiative and the Washington Elder Index, which measures on a county-by-county level what it costs for seniors to make ends meet in retirement.

NASI Discusses New Ways to Measure an Elder’s Cost-of-Living

Last week, I attended a briefing on Social Security’s cost-of-living adjustment (COLA), which has remained stagnant for the past two years. The National Academy on Social Insurance (NASI) hosted the briefing and released a new fact sheet which explains the COLA’s current purpose and presented on updating it to better reflect the cost-of-living for Social Security beneficiaries.

Currently Social Security benefits are adjusted each year through the Consumer Price Index for Workers (CPI-W). As NASI points out, however, the living costs for seniors are rising at a faster rate than other households, primarily because they use more medical care, the cost of which is rapidly increasing.  Medicare eligible elders in good health spend a significant amount of their budget on out-of-pocket health care expenses. According to WOW’s Elder Index, a single elder in good health spends $254 a month on health care, which represents 15% of overall expenses. For those with long-term care needs, their monthly expenses can double or even triple, depending on the level of care needed. It has been proposed to use the Consumer Price Index for the Elderly (CPI-E), instead, to make adjustments to Social Security benefits. The CPI-E weights health care expenses more than the CPI-W to better reflect an elder’s costs. WOW is supportive of efforts to improve the COLA for Social Security beneficiaries and recommends re-visiting the methodology and data collection for the experimental CPI-E prior to applying it as an adjustment to Social Security benefits.

The COLA freeze is hurting vulnerable seniors’ ability to make ends meet. The COLA should assist seniors in meeting the rising costs of necessities like food and health care. Something must be done to ensure seniors do not have to make tough choices in regards to their basic needs – a more accurate measure of the true costs of living and adjustment to the COLA are steps in the right direction.  

Alisha Howell

Communications & Program Coordinator

Elder Economic Security Initiative

New Jersey Summit Breaks Down Silos

The New Jersey Foundation for Aging, in partnership with the National Council on Aging (NCOA), held an Elder Economic Summit last week. The goal of the summit was to break down silos among groups working on behalf of the economic security of elders. 

The cost of living in New Jersey is among the highest in the nation. According to WOW’s Elder Index, it costs a single renter in New Jersey $24,452 to make ends meet each year. It costs even more for a senior with a mortgage – $34,947 – to meet basic needs and about 1 in 5 seniors in New Jersey is still paying off a mortgage. 

Many people are not saving enough for retirement; in fact, 1 in 4 people rely on Social Security for 90% of their income. The average Social Security payment for a woman in New Jersey is $12,741, providing only 36% to 52% of what she needs to make ends meet (depending on whether she is a renter, homeowner or has a mortgage). It is clear that many seniors need services to help close this large gap.

In addition to already stretched budgets, seniors are unfortunately often the target of financial predators. The summit brought together credit and debt counseling and money management programs to illustrate the importance of collaboration amongst all service providers and how working together benefits the entire financial picture for seniors. 

The leadership of the New Jersey Foundation on Aging and the outcomes of this summit will help unite service providers throughout the state to ultimately strengthen the economic security of elders.

Sadly, Equal Pay is Still an Issue

Today is Equal Pay Day.  I started my day at the American Planning Association’s national conference in Boston, where I joined colleagues to talk about the gender pay gap.  Of course, women have certainly made significant progress over the decades in terms of occupational access and educational attainment, yet these advances have not resulted in full equity in the labor market.  Instead one of the most significant markers of labor market success---equal pay---remains an elusive goal for women.  On average the pay gap stands at around 79 percent.  And this is not a one-time financial loss.  The pay gap leads to a lifetime of income and wealth loss.  The cumulative impacts of the pay gap reduce women’s benefits from Social Security and other pension plans and their ability to save for retirement, housing, college educations, etc.   The lost earnings are staggering- -according to the 2008 report of the American Association of University Women, over a 35 year working life, women can lose $210,000 simply because of gender.

While increased levels of education and training help women earn more income, it does not eliminate the gender pay gap.  In fact the pay gap not only continues to persist at all education levels, it is actually more pronounced at higher educational levels.  The gender pay gap is actually larger for women with college and graduate degrees than for women with less education (as compared to comparable men).  Such findings are particularly troubling, as they cast doubt on the idea that if women would simply invest in their education, and gain the human capital credentials, the pay gap would disappear. 

Eradicating the pay gap is truly a matter of fairness and economic survival for women. Women’s labor force participation has reached the 50 percent mark and substantial numbers of them are integral contributors to their family’s economic security.  In two-earner families the wife, on average contributes a third of the family income.  In addition, 76 percent of single mothers are in the labor force and these women, raising their children on their own, are their family’s only earner.  Women’s incomes are critical to their families’ economic well-being and equity in pay is a direct way that can help to decrease the number of women and children living in poverty.

As I left my presentation this morning I could not help but remember that one of my very first publications in graduate school back in 1990’s, was a book chapter, written with one of my mentors, Patricia Roos, on the pay gap.  And as I headed out into the streets of Boston after my talk, I realized that our paper is as relevant today as when we wrote it.  And then an even more disturbing thought crossed my mind.  Unless we make Equal Pay a priority and a reality, there will, unfortunately, be many more Equal Pay Days to come.


Mary Gatta, Ph. D.
Senior Scholar
Wider Opportunities for Women

WOW Holds National Partners Summit, Releases US BEST Report

Last week, Wider Opportunities Women (WOW) was pleased to host our Elder Economic Security Initiative state partners for our National Partner Summit here in Washington, DC. WOW’s Family Economic Security program partners also participated in the Summit, which includes those organizations involved in our GREEN Institute, Basic Economic Security Tables (BEST) and Self-Sufficiency Standard work. The event featured speakers from many different sectors, including administration officials, foundations and think tank organizations. Our state partners also spent an afternoon on Capitol Hill speaking to their senators’ offices on the importance of programs and services up for cuts in the federal budget debate.

WOW also released at the event our newest measure – the Basic Economic Security Tables (BEST) for the United States,which is the first ever measure of economic security that takes into account what American workers need to save for retirement.  Our new measure received a host of media attention over the past week and we invite you to check it out at www.wowonline.org/usbest.