BAMPAC's Alvin Williams: Reform Corrects Benefit Inequities

August 25, 2003

In a commentary for the Dulluth News Tribune, president and CEO of Black America's Political Action Committee Alvin Williams asserts that personal accounts would naturally correct the inequities endured by African Americans under the Social Security system. With shorter average life expectancies, black men in particular are misrepresented under the current system. Excerpts of Williams' column, "Is It Time to Add a Private Pension Option to Social Security?" follow:

"Not long after the [77 million] baby boomers start joining the ranks of the retired, Social Security taxes will be inadequate to pay promised benefits. Washington will then be faced with stark choices: increase Social Security taxes again, slash monthly benefits, boost the retirement age from the current 67 years of age to 68 or more—or some of each.

"Blacks have more reason for gloom than the rest of the U.S. population. Under the current Social Security system, 70 percent of blacks can expect to receive less money in Social Security benefits than they pay in Social Security taxes—primarily because blacks, on average, die at a younger age than others.

"In fact, many blacks won't receive a dime from Social Security because they'll die before they receive their first check. And, as the program is now structured, their survivors also will receive nothing, other than a modest one-time death benefit that won't even pay for funeral flowers.

"This is not rhetorical hyperbole. According to a recent U.S. Administration on Aging fact sheet, black life expectancy is now 70.2 years, compared to an average of 76.5 years for all U.S. population groups.

"'The difference in life expectancy is even more striking among African-American men, who have a life expectancy of only 66.1 years, compared to the national average of 73.6 years for all men,' the fact sheet noted. What this means to the 'average' black working man who retires several years from now at age 66 is that he'll receive a single Social Security check and take it to his grave.

"The picture isn't any better for his children. Studies show that, on average, an unmarried, low-income black man born in 1980, to cite just one example, can expect to get back less than 88 cents for every dollar he pays in Social Security taxes. This negative 'rate of return,' as the financial community calls it, translates into an average loss of more than $13,000.

"The dollar loss is larger if the man has a long working career and collects little or nothing from Social Security. The loss is reduced if he beats the odds and lives into his 80s or 90s. Unfortunately, the National Center for Health Statistics estimates that half of all 20-year-old black men who enter the labor force will die before they receive even three years of Social Security benefits.

"While a disproportionate number of blacks earn low wages during their working years, the civil rights gains of the 1960s made it possible for many black baby boomers to attend college and pursue successful professional careers. This new generation, of which I am part, will 'max out' on Social Security taxes and feel the sting of the broken Social Security system even more if they die prematurely.

"No wonder 70 percent of the 1,800 blacks questioned in the most recent (June 9-12) Black America's Political Action Committee nationwide opinion survey supported changes in Social Security that would give people 'the option' to invest some of their Social Security taxes.

"Updating Social Security by adding a private pension option would at least give workers ownership of the money paid into that part of the system, while promoting wealth accumulation in the black community and contributing to economic growth. Best of all, when someone dies prematurely, the money that's accumulated in his or her personal account could be left to the family—not simply lost, as it is today."

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