WORKING FOR NOTHING

For decades, the Social Security retirement system has tried to achieve a balance between equity and adequacy. In other words, between the notions that people should receive benefits based upon what they paid into the program and that lower earning individuals should receive enough to prevent them from falling into hardship once they retire. Most understand that the proper balance between the two is not easy to determine.

What fewer people know, however, is that a large portion of Social Security benefits are awarded neither based upon equity or adequacy, but according to an outdated benefit formula based upon the households of the 1930s.

Consider the following: On one side of a town is a woman who has been married to a successful attorney who pays the maximum Social Security tax each year. She never earned income nor contributed a dime into the system, but she receives a "free" $982 each month from Social Security -- separate from his earned benefit--solely because she is married to him. This reflects neither equity nor adequacy --she didn't pay into the program and the couple doesn't have a pressing need for the benefits it provides.

On the other side of town is a mother divorced from her husband after a few years of marriage. She worked full time for 40 years at half the average wage to raise their three children, receiving no financial help from their father. During this time, she contributed tens of thousands of dollars to the Social Security system. With no pension, she struggles to live on the $780 a month benefit she gets from Social Security. She paid a lot into the system and needs every penny she can get from it, yet she receives very little.

The reason for these inequities is Social Security's spousal benefit formula, based upon the single-breadwinner stereotype present when the system began in the 1930s. The lower earning spouse is entitled to a benefit equal to half that received by the higher earning spouse, regardless of whether she needs the benefit or paid into the program.

The example above is outrageously unjust, but it is not infrequent. The Social Security system's benefit structure contributes to the fact that as the wealthy get wealthier, the poorer get poorer. And, the fastest growing portion of our society "single and divorced workers" get no extra help. C. Eugene Steuerle, senior fellow at the Urban Institute, says "single women (including many divorced women) fare much more poorly [on Social Security] than married women - a fact hidden in the data on all women. Social Security's progressive benefit formula helps this imbalance, but doesn't alleviate it.

Low wage workers who work their whole lives to scratch out a meager living while contributing to Social Security can receive a retirement benefit from Social Security that leaves them below the poverty line.

One would think that this would result in howls of unfairness and discrimination from our legislators and from women's advocacy groups, demanding that this be rectified as soon as possible.

Now, add this to the scenario: experts in and out of government say that due to the retirement of the baby boom generation, there is a large shortfall coming in our government's ability to pay Social Security benefits. The longer Congress waits to fix this shortfall, the more likely it will be that the primary fix will be tax increases on the workers who contribute to Social Security. Government auditors and system trustees report that in order for expected benefits to be paid in the future, the Social Security tax rate would eventually have to rise a whopping 50%. Who wouldn't feel the affects of this? That's right. The stay-at-home spouses in single-earner couples.

I'm not at all opposed to spouses choosing not to enter the workforce and choosing to stay home, for whatever the reason. But I am opposed to paying a "free" spousal benefit to those who don't need it. Since this provision was created almost 70 years ago, single-earner couples are no longer the norm but tend to be the wealthier couples in our society.

Because Social Security hasn't adjusted to the massive changes in American society since the 1930s, Social Security isn't fair to millions of working women. Does this system, designed seventy years ago, meet the needs of today's workers, especially working women? What kind of a system do we want going forward?

It's time to ask: Shouldn't we do better?

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