Former Social Security Commissioner Urges Candidate Debate

November 7, 2003

In an op-ed for the New York Amsterdam News, a weekly publication serving the African-American community, former Social Security Administration commissioner Gwendolyn King calls on the presidential candidates to address Social Security's critical problems. She makes the case that all Americans should seek an alternative to the current system, particularly African-Americans because of Social Security's long-term detrimental effect on wealth distribution. Excerpts of her op-ed follow:

"Our country's broken retirement system disparately affects African-Americans and other minority workers. So far, however, candidates seeking the White House have been extremely quiet on the Social Security front. For voters, that silence should speak volumes.

"Because Social Security benefits are based on life span, African-Americans will collect on average about $21,000 less lifetime Social Security benefits than whites. According to the National Center for Health Statistics, the average life expectancy for a 25-year-old black male is 70.2 years compared to 75.9 years for white men. Meanwhile, an African-American woman can expect 76.4 years of life versus a white female's 80.8 years.

"Because Social Security benefits cannot be passed on to heirs, funds 'owed' an individual based on lifetime payroll taxes are rolled back into the system. This in a sense subsidizes longer-living white retirees.

"According to the RAND Corporation the net lifetime transfer of income from blacks to whites is as much as $10,000 per person. This occurs even though African-Americans are likely to enter the workforce earlier and pay Social Security taxes sooner than whites.

"Although the income gap between the races has narrowed, the gap between accumulated wealth is growing. According to a 2001 Federal Reserve Board study, the typical white family had more than six times as much wealth as its black counterpart ($120,900 compared with $19,000). Nearly 20 percent of white families had a net worth of over half a million dollars, compared with 2 percent of black families. Meanwhile, one-tenth of black families owned stock outside of retirement funds compared to one-quarter of white families.

"The low return rate on Social Security 'investments' exacerbates the life span disparity African-Americans face. Under the current system, retiring baby boomers will gain a return of less than 2 percent, while Generation X taxpayers can expect less than 1 percent. That Social Security return pales even more when compared to Standard and Poor's index, which over the last 128 years has averaged an inflation-adjusted annual return of 6.4 percent.

"We must develop a solution, because at its current pace, Social Security will begin running a deficit in 2018 and will not be able to pay promised benefits to future retirees.

"Taxpayers contribute more than 12 percent of their lifetime earnings to Social Security. Workers stuck with Social Security as their primary or only investment vehicle are forced to accept scant returns passively. Because one can't pass even those minimal returns to heirs, the income disparity becomes a vicious cycle. Meanwhile, those with greater means are able to pursue more diverse and often much more lucrative investment paths that build greater wealth, larger inheritances and better futures.

"We leave it to workers to find a job, keep a job, and care for their families. Why then do we shackle more than 12 percent of laborers' lifetime earnings and prevent them from growing the rewards of their work? It's a cruel and senseless disincentive. Social Security must become a tool for achieving financial success, not stifling it.

"Both Republicans and Democrats crave the African-American vote. Meanwhile, every American worker seeks a quality, secure retirement. The bridge that unites these desires is Social Security reform. Our country's presidential candidates must begin building it."

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