Sunday, February 13

Not Covered by Social Security

Some Americans are not covered by Social Security. The Coalition to Preserve Retirement Security explains that
Fourteen states cover substantial numbers of their public employees under independent plans which would be jeopardized by mandatory Social Security: Texas, Louisiana, Missouri, California, Ohio, Colorado, Illinois, Massachusetts, Kentucky, Minnesota, Nevada, Connecticut, Maine and Alaska. From 20 percent to 100 percent of the public employees in each of these states are not covered by Social Security. Firefighters and police officers in nearly every state are covered by independent plans rather than Social Security. Nationwide, about 5 million public employees are covered by state or local plans in lieu of Social Security.
It also points out that
These plans have been actuarially funded and invest in stocks, bonds and other investments that provide a high return. These retirement plans provide good benefits at a reasonable cost to public employees and employers.
So it looks like it works.

Meanwhile, the AARP has The Impact of Mandatory Social Security Coverage of State and Local Workers: A Multi-State Review by Alicia H. Munnell.
...the strongest arguments for mandatory coverage are complex and somewhat subtle issues of equity. Excluded state and local government employees or taxpayers in their jurisdictions are not paying their share of income redistribution.
Subtle? I guess she means open to disagreement.
...taxpayers in their jurisdictions are not paying their share of income redistribution. Excluded state and local workers and their employers also are not paying their share of financing the unfunded liability associated with the startup of the Social Security program. The parents and grandparents of these state/local workers - like those of covered workers - have received Social Security benefits far in excess of their contributions to the system.
The fact that most people's parents and grandparents have received Social Security benefits far in excess of their contributions to the system show that there is something deeply flawed about it, and is hardly a reason to take money from even more people. Note that Alicia H. Munnell takes it as a given that income redistribution is right and proper. Not surprisingly, she is no friend of privatization.

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