Social Security

Social Security & African Americans

Described as a pyramid scheme by its critics, social security is a groundbreaking initiative to help all Americans in their times of need and despair. As part of The New Deal with America, this 70-year-old program has held up against critics, wars and even recent deficits. Many hard working Americans depend on this and other government-sponsored program to live and enjoy their twilight years. It's a contract with America; if I work this amount of time I will be guaranteed this amount after when I retire. It's simple, yet very effective. Why do so many in Washington feel that social security needs to be overhauled?

Since president Bush's first term in office, he has been pushing for social security reform. The state of the social security system is in question, with baby-boomers getting older, most if not all retired, this is putting a huge strain on resources. The Bush administration feels that the program is in danger of running out of money by 2050. But to his dismay, no one was listening, many America see any change in the social security program a threat to the stability of their lives. Because of this the issue took a back seat during the 2004 election, until it reared its ugly head again in 2005. The president convinced he had been given a mandate to do what he willed after the 2004 election push the idea again, this time focusing squarely on African Americans, Latinos and the youth. Under the perceived notion that all African American workers are low-wage workers and low life expectancy, the administration felt that with minorities influence it could achieve a double victory. Transforming social security into private accounts that could be traded through the stock market and silencing people who say the administration doesn't care for the concerns of minorities. Being the top minority group, Latinos will pay more into social security than any other racial group. If privatization becomes a reality, they will be the most affected by the change.

Here are some facts presented by the administration:

* The Social Security system is progressive in that lower-wage earners receive a higher percentage benefit than higher-wage earners do. The system returns a greater percentage of pre-retirement earnings to a lower-wage worker than to a higher-wage worker. African Americans who are low-wage workers receive back more benefits in relation to past earnings than do high-wage earners.

* The median earnings of working-age African Americans in jobs covered by Social Security in 2002 were about $22,100, compared to $28,400 for all working-age people.

* In 2002 the average monthly benefit for African American men receiving retired worker benefits was $850, and for women was $683.

* Social Security is the only source of retirement income for 40 percent of elderly African Americans.

* Survivors insurance benefits African Americans. African Americans make up approximately 13 percent of the American population. Twenty three percent of all children receiving Social Security survivor benefits in 2002 were African American.

* African American families benefit from disability insurance. In 2002, 13 percent of the population was African American, however, 17 percent of disabled workers receiving benefits were African American.

* African Americans receiving benefits are helped by Social Security's cost-of-living protection, which guarantees a benefit that is annually adjusted for inflation.

* The African American population in the U.S. is expected to grow. Today, 13 percent of the population is of African American origin. This proportion is expected to grow to 15 percent by 2050.

In order to truly understand this issue, we need to look at how this program began and the circumstances surrounding its adoption into law.

After the stock market crash of 1929, followed by the great depression, many Americans felt that some kind of security was needed for them and their families. Many families were left with little to nothing and no one to turn to in that time of need. Signed into law on August 14, 1935 by President Roosevelt, social security was to "frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age" said President Roosevelt in 1935. The draft bill submitted by FDR differed in many interesting respects from the final Social Security Act, which emerged from Congress in August 1935. For example, FDR had proposed a three-part program of old-age security consisting of: old-age welfare pensions; compulsory contributory social insurance (what we now think of as Social Security); and a third-tier which would consist of optional annuity certificates sold by the government to workers who, upon retirement, could convert the certificates to monthly annuities which would be used as supplements to their basic Social Security retirement benefit. This third program was among the features of the President's proposals, which the Congress did not accept. Many other changes were made in the Administration's proposal.

Originally it was believed that in such a great nation as the United States, no one should be left destitute. Results showed that having more citizens able to contribute to society, even if they could not work a wage-earning job, improved overall life from both a community and economic standpoint. Also, having a national Trust Fund invested in US Bonds allowed our country to undertake large-scale projects (e.g. the interstate highway system,), which have boosted both economic efficiency and overall quality of life. All Social Security funding comes from "payroll taxes." Employee wages and salaries up to $88,000 a year are taxed at 6.2%. Additionally, employers contribute another 6.2% above the wages they pay, for a total of 12.4% of all wages going into the Social Security trust. Unlike income taxes, payroll taxes are taken directly from paychecks and are not refundable.

The first recorded applicant for a lump sum payment was Ernest Ackerman, who retired only one day after the Social Security program began. For his nickel put into Social Security, he received a lump sum payment of seventeen cents. The lowest payment made was only five cents. Payment of monthly benefits began in January 1940. Ida May Fuller was the first beneficiary