Social work and social insurance

Jeane Anastas, PhD, LMSWThe start of 2013 brought legislative compromise on the tax side of the financial challenges facing the United States, even though it took extended congressional efforts to do it. Spending cuts, however, are also needed to achieve a balanced and effective approach to deficit reduction. But determining which programs to cut is complex.

As in the 1990s during the welfare reform debate, the political rhetoric surrounding spending cuts uses the term “entitlements” to vilify social benefits — this time key social insurance programs for the elderly and others who receive Social Security and Medicare.

This rhetoric overlooks the core principle of social insurance, that benefits are earned. Due to the visionary work of social workers Harry Hopkins and Frances Perkins — and others — Social Security was enacted as part of the New Deal. Social workers also supported the enactment of Medicare as part of the New Frontier and Great Society programs addressing the needs of workers and the poor.

The money that supports both Social Security and Medicare comes from payroll taxes paid by both employers and employees. For employers, this payment represents a repayment for services rendered by current workers. By contributing to these programs from their earnings, employees become legally entitled to receive benefits when an insured event occurs: sickness, disability, retirement or death.

Rather than providing an entitlement to wealth, however, Social Security retirement benefits are designed to replace a percentage of a retiree’s prior earnings, in order to help the retiree maintain at least a minimally adequate standard of living. Social Security is thus intended to be the base upon which workers can try to build additional income in order to ensure themselves of a secure retirement.

Members of Congress who advocate reducing Social Security benefits often speak of the need for a “balanced approach” to deficit reduction. This argument does not address the fact that Social Security benefits are already being cut as the result of changes enacted in 1983 and later, principally increasing the full retirement age from 65 to 67, taxing benefits, and deducting the cost of ever-rising Medicare premiums from benefits.

As a result of these changes already in law, which are still phasing in, the share of a worker’s prior earnings that Social Security replaces is projected to decline from 39 percent on average now to 29 percent in 2030. That is a 25 percent cut — no small thing for those most dependent on Social Security to keep them out of poverty.

Given this decline, a case can be made that achieving and maintaining genuine balance would require offsetting the benefit cuts already in law by modestly increasing revenues to Social Security so that the program can continue to pay all scheduled benefits for the long term.

This could perhaps improve the adequacy of benefits for those most likely to depend on them, including lifetime low-wage workers and workers — mostly women — who must leave their jobs (and thus stop earning credit toward future Social Security benefits) to become caregivers.

During its 78-year history, many adjustments have been made to the Social Security system, and more may be needed to keep the program sustainable through the retirement of the Baby Boomers and beyond. But care must be taken to ensure that adjustments are fair and equitable.

As social workers, we must be prepared to make our voices heard on the side of balanced and intelligent measures to preserve and improve upon our social insurance systems now.