Black Folks and Social Security

Eugene Steuerle over at the Urban Institute recently issued a new report detailing the impacts of race on who benefits from Social Security. His findings? Since the program’s inception Social Security has systematically redistributed income from people of color to whites.

On its face, there’s nothing intentional going on here. Steuerle and his team find that due to demographic trends and the structure of benefit increases, younger blacks, Hispanics and Asians have been in effect paying for the retirement security of older whites. Steuerle points to why:

…Hispanics and Asians are more likely to have immigrated to the United State relatively recently and thus less likely to have family members in those earlier generations with higher net benefits or returns. Second, blacks and Hispanics have tended to have larger families than whites, thereby creating a larger share of taxpayers receiving lower returns on their contributions relative to parent and grandparent beneficiaries who got higher returns.

Some were quick to point out that despite the cross-generational redistribution, Social Security is still a good deal for blacks and other communities of color. Due to the progressive benefit structure, blacks on average come out ahead, earning roughly three quarters of what whites do,  but receiving a social security benefit around 85 percent that of whites. At the same time, Social Security plays a larger role in boosting the retirement income of minorities.

So, depending on how you slice it, you can say that Social security is a good or bad deal for people of color. I have more to say about this, but it’s gonna take a little bit of time for me to organize my thoughts in a productive manner. Read the reports!

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  1. Krugman: Expanding Social Security | Orange Husky Productions - November 22, 2013

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