WomenSSA No. 16

January 20, 2006

New Research
African Americans and Social Security
Women and Social Security
Home Ownership and Retirement Security

In the News
“Bush’s Stealth Attack on Social Security”
Bush Continues to Talk About Private Accounts Despite Lack of Support as Attention is Turned to Medicare and the Budget

Budget Resolution, Events and Action Items
NCWO/IWPR Congressional Staff Briefing, “Budget Resolution in the Aftermath of Hurricanes Katrina and Rita: Low-Income Women and Families Left Behind,” January 23, 2006.
Take Action to Stop the Budget Cuts

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NEW RESEARCH

African Americans and Social Security

A new report, African Americans and Social Security: The Implications of Reform Proposals, by the Center on Budget and Policy Priorities (CBPP) highlights the particular importance of the current structure of Social Security (its progressive benefit formula and distribution and its coverage for families and survivors) for African Americans, given their lower lifetime earnings, their higher levels and longer lengths of unemployment, and their greater likelihood of becoming disabled or dying prior to retirement. All plans for privatization would reduce Social Security of its ability to address some of the disadvantages faced by African Americans, such as the employment gap (there are fewer African Americans employed between the ages of 20 to 24 than whites in that age range), which allows African Americans less time to grow their earnings, and the education gap (African Americans have less education and earn less than comparable whites).

Under the President’s plan for privatization and based on current earnings, CBPP estimates that Social Security benefits would be reduced by 10.5 percent for African Americans aged 26 to 31, 7.2 percent for those aged 32 to 41, and 2.8 percent for those aged 42 to 54. While these reductions are lower on average than what would be experienced by whites, 82 percent of total retirement income for elderly African Americans comes from Social Security as compared with 66 percent for whites, making any reduction in benefits more harmful to their retirement security.

Women and Social Security

In her new factsheet, “Women and Social Security”, author Melissa M. Favreault of the Urban Institute looks at the parts of Social Security that specifically impact women and a number of proposals aimed at improving Social Security benefit distribution. Although Social Security disproportionately benefits women because they live longer and have lower lifetime earnings, women are at a greater risk of poverty for those very same reasons. The author examines a variety of proposals focusing on whether they would make distribution of benefits more equitable between women and men, and among women of different economic, social, and marital statuses. Some of the proposals include partially substituting marital benefits with caregiver credits, in recognition of the costs of childrearing to women; increasing the survivor’s benefit; decreasing the marriage duration requirement for the divorced spouse benefit; and reducing benefits to spouses of high earners for redistribution to women in greater financial need.

Home Ownership and Retirement Security

Alicia Munnell and Mauricio Soto of the Center for Retirement Research explore how housing equity affects overall economic security in retirement in their new brief, “The House and Living Standards in Retirement”. Previous research conducted by the authors found that Social Security replaced, on average, about 44 percent of pre-retirement income. Their new analysis of the Health and Retirement Study finds that for the “typical” household (defined as the average of the middle 20 percent of households), home equity accounted for 16.7 percent of all sources of wealth holdings at retirement, ranking it third behind Social Security and defined pension plans. Despite making up a large portion of retirees’ wealth, home equity did not yield a high replacement rate. For the third of households without a defined pension plan, having home equity did not keep those households from falling below the living standards threshold (generally understood to be 65 to 75 percent of a household’s pre-retirement income). This finding underlines the importance of defined pensions and raises questions about how the baby boom generation will fare when it retires.

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IN THE NEWS

Bush’s Stealth Attack on Social Security

The Bush Administration has recently proposed a new regulation for Social Security’s disability determination process that will make it more difficult to qualify for disability coverage at younger ages. The proposed change to eligibility determination for disability coverage stands to affect African Americans the most, as they are more likely to work in “blue-collar” and service jobs, which are often physically demanding, and more likely to receive disability benefits. The new regulation for determining eligibility for disability benefits has been posted for public comment for a 90-day period. For more information see, “Bush’s Stealth Attack on Social Security,” (January 03, 2006)

Bush Continues to Talk About Private Accounts Despite Lack of Support as Attention is Turned to Medicare and the Budget

In a December press conference President Bush spoke of the need to revitalize Social Security reform and emphasized the need for private accounts, despite statements by leaders like Senator Grassley of Iowa that the issue is dead until 2009. The President’s comments focused on privatization, which proved highly unpopular with the American public, instead of solvency (December 25, 2005).

In the meantime, attention is now fixed on the Medicare prescription drug plan, which has failed to provide many low-income seniors with their much needed prescriptions, and budget cuts to programs like Medicaid, which provide critical support to seniors in need of long-term care but now face greater eligibility restrictions. For a discussion on these issues see “Scoring a Drug Fix,” (January 05, 2006) and “Proposed Budget Bill Contains Bad News for Seniors,” (January 09, 2006).

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BUDGET RESOLUTION, EVENTS AND ACTION ITEMS

NCWO/IWPR Congressional Staff Briefing

IWPR will lead a National Council of Women’s Organizations Congressional Staff Briefing entitled, “Budget Resolution in the Aftermath of Katrina and Rita: Low-Income Women and Families Left Behind ,” on Monday, January 23, 2006 from 10am to 11:30am in the U.S. Capitol Building, Room HC-8.

Presenters include Avis Jones-DeWeever, Ph.D., Study Director of Poverty and Income Security at IWPR, Joan Kuriansky, Executive Director of Wider Opportunities for Women, Shireen Mitchell, Executive Director of Digital Sisters, and Randi Schmidt, Senior Advocacy Associate of the YWCA. All are welcome to attend.

Take Action to Stop Budget Cuts

The House of Representatives will vote on Senate changes to the budget on February 1, 2006. This bill contains cuts to basic assistance programs of critical importance to low-income families across the country, including victims of Hurricanes Katrina and Rita. The bill also contains new provisions to reauthorize the Temporary Assistance to Needy Families (TANF) program and to raise the work participation rate requirements for states.

For information about the effect the budget cuts will have on your state click here. To find out about “National Call-In Week” (starting Monday, January 23, 2006) and for other action items, please visit CHN and ECAP online.