SOCIAL SECURITY AND AFRICAN AMERICANS

Another Segment Of American Life Shortchanging Us

The ruckus over the Old Age Survivors and Disability Insurance Program (OASDI) is just another example of the way blacks keep getting the short end of the stick.  Let’s be honest about it, there’s much talk, but the rhetoric reveals that in the end, we’ll still be stuck at the short end.

Day-to-day in America, until death parts us, life is most unfair among African Americans.  African Americans receive less from the OASDI system, popularly known as Social Security, because we die sooner and receive less income in life.

Put in place by New Deal President Franklin Roosevelt 70 years ago, Social Security programs deliver cash benefits to 50 million beneficiaries every month.  Most Americans associate Social Security only with the old age retirement benefit.  Yet it does more, 70 percent of funds go to retirees, 15 percent to disabled workers, and 15 percent to survivors.

The current controversy over Social Security is because it is a "pay as you go" system.  The taxes paid by today’s workers are not set aside to pay their own benefits down the road, but rather go to pay the benefits of current recipients.  It’s financed using the Federal Insurance Contribution Act (FICA) payroll tax, paid by all working Americans on their earnings up to $90,000 a year. 

Officially Social Security is colorblind, but fundamentally the system, like most systems in America, is unfair to blacks.  Demographic disparities show African-Americans and white people have different relationships to the program.  Racial disparities in income, unemployment and life expectancy cause blacks to be more dependent on the federal retirement system than white people.  African Americans on average earn less, and suffer from unemployment more, than other groups; especially in younger years when black employment gaps compared to whites are at their highest.  In 2002, median earnings of working-age blacks in jobs covered by Social Security were $22,100, compared to $28,400 for all working-age people. 

The average Social Security retiree benefit is $955 per month.  The average monthly benefit for African American men is $850 and is their predominant source of retirement income.  Social Security provides income to 82.3 percent of African Americans 65 and older; however, the poverty rate among African Americans age 65 and older is more than twice that of all older people.

From cradle to grave, the net worth of blacks is less than 10 percent of that of whites; as they get old, blacks have to rely on Social Security for income.  It’s 44 percent of their total income and the only source of income for one in three African Americans 65 and older.  In contrast, wealth-building instruments such as interest and dividends provide a source for 50 percent of the income of Americans 65 and older, but less than 25 percent of older African Americans’ income.  Because African-American men die earlier on average than their white counterparts (69 vs. 75 years old), they receive less retirement benefits offered through Social Security.  A 2001 study found that African-Americans receive $21,000 less from Social Security over their lifetimes than white people with similar incomes and marital status. 

At the moment, blacks are in the spotlight over Social Security because we die younger, get disabled at earlier ages and have the heaviest reliance on it.  The argument blacks collect less than their share of Social Security is based on the assumption Blacks will continue to live less long than whites.  Social Security is not the reason African-American men have shorter life spans; it’s the health-care, educational, nutritional and income disparity.  Any involvement African Americans have toward solving Social Security's, and our children’s, future financial problems should take into account social justice in America.  Racial inequalities continue to plague us in American society and if corrections are not made to problems such as un-and-under employment, the education system, criminal justice, and election reform and accountability, blacks will continue to collect Social Security’s $225 lump sum death benefit more often, and in greater numbers, than most Americans.