"Create a More Evenhanded System"

August 30, 2002

Alvin Williams, CEO of Black America's Political Action Committee (BAMPAC) argues in a recent Washington Times op-ed that Social Security needs to be "back on firm financial footing." Williams believes that African Americans would fare better under a system of personal retirement accounts. Excerpts follow:

"There are fewer workers supporting more and more retirees every year, and under current projections, total benefits being paid out will exceed Social Security revenue by the year 2014. It's all down hill after that. African-Americans will be hurt the most. Under the current system, 70 percent of African Americans can expect to receive less money from Social Security than pay in Social Security taxes - and a significant number of black workers will never see a penny from the program, because blacks, on average, die younger than others."

"Yet Social Security is still important to aging African-Americans, many of whom have no other form of retirement income. So it is important to put the program back on a firm financial footing - and equally important to level the playing field for blacks.

"Under the current system, a young worker paying into the Social Security program has no guarantee he or she will ever receive any benefits at all. Yet, a 28-year-old worker making $13,500 per year and paying $1,674 in Social Security taxes could accrue $177,147 by age 67 if that $1,674 per year was invested in a conservative investment account that earned just a 4 percent return, according to a 2001 study. That would amount to $400 more per month than the Social Security system promises today - a figure that cannot be ignored.

"Under the current system, the government prevents workers from deriving these benefits. Instead our Social Security taxes are used to fund other government programs, while the taxes we pay are replaced in the Social Security "trust fund" by government IOUs.

"The current system is especially unfair for young black males, who typically enter the work force earlier, enroll in college at significantly lower rates, and have a lower life expectancy than other American workers.

"Since they pay into the system longer, and live an average of three years less than other American males, many African American men receive far fewer benefits than their peers. Indeed, the National Center for Health Statistics reports that half of all 20-year- old African American males who enter the labor force will die before they receive even three years of Social Security benefits.

"Updating Social Security by adding a private pension option would give workers ownership of the money they pay into the system, a method that promotes wealth accumulation and contributes to economic growth. If an individual dies young, his or her accumulated wealth and savings from the private account could be left to the family - and not simply lost in the black hole that exists today."

For more information on how Social Security reform will affect the African American community, please see the video of Cato's conference, "Social Security and African Americans: Race, Retirement, and Reform." Also see Michael Tanner's study, "Disparate Impact: Social Security and African Americans."

2005 Index | 2004 Index
2003 Index | 2002 Index | 2001 Index
2000 Index | 1999 Index | 1998 Index