The National Urban League, the National Council of La Raza, and the National Women's Law Center disputed claims by the Heritage Foundation that minorities and women would be better off if Social Security were privatized. All three groups noted that Heritage tried making similar claims several years ago, but their research and conclusions were roundly criticized and rejected by the Social Security actuaries and other leading experts. The three national groups also warned that diverting Social Security revenues into private accounts would threaten deep cuts in benefits that are especially important to women and racial and ethnic minorities.
Women and minority groups have the most to lose if Social Security is changed from a program that provides guaranteed, progressive benefits for workers and their families to a system of private retirement accounts. Women, African Americans, and Hispanic Americans earn less over their lifetimes and are less likely to have pensions. As a result, Social Security's progressive, lifetime-guaranteed benefits are crucial to their economic security in retirement. In addition, Social Security provides disability and survivor benefits and family protections that are especially important for African Americans, Hispanic Americans, and women.
"Heritage takes a couple of isolated facts, such as the fact that African American men have shorter lifespans, and then twists them, arguing that African Americans would do better with private accounts," said Dr. William Spriggs, Research and Public Policy Director of the National Urban League. "This conclusion is just flat wrong. They ignore the fact that higher rates of premature disability and death in our community mean that Social Security's survivor and disability benefits are especially critical for African American families."
While African Americans are only 12 percent of the population, they make up 17 percent of Americans receiving Social Security disability benefits and 22 percent of all children receiving survivor benefits. Almost half of African American Social Security beneficiaries receive benefits through the disability insurance system, whereas about one-quarter of white beneficiaries receive such benefits. And elderly African Americans rely on Social Security retirement benefits more than white elders; 40 percent of elderly African Americans rely on Social Security for all of their income, compared to 16 percent of elderly whites.
"The truth is that the cost of privatizing Social Security would fall hardest on younger workers, who would be forced to keep paying to maintain the old system while funding a new system for themselves. Since the Hispanic population is disproportionately younger than other ethnic groups, our community would be especially burdened by privatization," said Raul Yzaguirre,President, National Council of La Raza. "Hispanic Americans also are a rapidly growing proportion of the nation's elderly, and rely heavily on Social Security; their benefits could be threatened if we eliminated the 'social insurance' character of the system. Hispanic Americans of all generations have a stake in preserving Social Security's system of guaranteed benefits."
The median age of Hispanics is 27, compared to age 31 for African Americans and 39 for whites. If young workers bear the brunt of the costs of reforming the system, Hispanics will be disproportionately burdened. At the other end of the age spectrum, it is important to note that Hispanics tend to be long-lived: the average Hispanic who reaches 65 lives an additional 20.5 years, while the average white will live an additional 17.8 years. Eroding the guaranteed, lifetime, inflation-adjusted features of the current system will disproportionately hurt Hispanics, who are also more reliant on Social Security. Social Security benefits are the sole source of income for almost 40 percent of Hispanic recipients, compared to 16 percent of white recipients.
"Social Security offers women advantages that cannot be matched by private accounts, such as secure benefits that can't be outlived, and inflation adjustments that protect their purchasing power over their longer lives," said Joan Entmacher, the National Women's Law Center's Vice President and Director of Family Economic Security. "Social Security's spousal benefits also provide many women who have spent years out of the labor force as homemakers, or in jobs that pay substantially less than their husband's jobs, with a way to get better benefits than they would receive on their own work record."
Guaranteed, lifetime, inflation-protected benefits are especially important for women because they live longer than men and have less non-Social Security income. A 65-year old woman who purchased an annuity with her private account would see the purchasing power of her monthly payment lose 40 percent of its value by the time she reached 85, with inflation at just 2.5 percent per year. Spousal benefits are available on a gender-neutral basis, but 99% of the retirees who collect higher benefits as spouses or surviving spouses are women. Although fewer women in the future will rely on spousal benefits, Social Security actuaries predict that in 2060, 40% of women still will receive benefits based on their husband's earning history.