New NCLR Report: Latinos Have a Major Stake in Social Security Debate
Feature Story by Tyler Lewis - 6/21/2005
Adding the perspective of the Latino community to the debate over Social Security reform, the National Council of La Raza (NCLR) has released a new report detailing the program's impact on Hispanic workers and beneficiaries.
The report, "The Social Security Program and Reform: A Latino Perspective," reveals that while the vast majority of the U.S. Latino workforce--including native-born, lawfully-present foreign-born, and undocumented workers--are paying into the Social Security system, in many cases, they are less likely than other American workers to receive retirement benefits.
This disparity is due to a number of factors. According to the report, while approximately 25 percent of Latino workers are categorically ineligible because of immigration status, many native-born or lawfully present Latino workers are domestics, child care workers, or agricultural workers--occupations in which it is difficult to meet Social Security thresholds. These workers may be simply "outside" the system.
According to Janet Murguia, executive director of NCLR, preserving and strengthening Social Security is of fundamental importance to the Latino community. "It is critical to ensure that [Social Security] is the social insurance program it was intended to be," Murguia said.
For those Latinos who do receive benefits, the impact is significant. The report notes that the poverty rate of eligible elderly Hispanics would more than triple, from 16 percent to 55 percent, without Social Security.
Hispanics are also fifty percent more likely than whites to receive Social Security disability benefits. The disability insurance benefits of Social Security are at the greatest risk from privatization, which could make program cuts fall disproportionately on Hispanics and other minority communities.
NCLR's recommendations encourage policymakers to oppose cost-of-living adjustment (COLA) reductions and other changes that would further reduce benefit replacement rates for low-income workers.
NCLR's report comes at a time when Congress and President Bush are struggling with the changes to include in Social Security legislation. Senate Finance Committee Chairman Charles E. Grassley, R. Iowa, acknowledged in the June 15th issue of the Washington Post that personal accounts are the "harder piece of the puzzle."
On the issue of private accounts, the report states that "there are no realistic conditions under which a private account carve-out proposal would benefit Latinos, or low-income workers, to the same degree as upper-income workers."
The report calls on policymakers to oppose proposals to divert any portion of existing Social Security payroll taxes into private accounts that would reduce the guaranteed benefits of the existing system.
Regardless of whether or not a private account is added to the Social Security system, the report recommends expanding access to 401(k) and private pension plans.
NCLR's recommendations also support incentives like providing financial counselors and expanding the use of automatic enrollment in retirement savings plans, which have proven effective in increasing worker participation rates.
To directly address long-term solvency, the report recommends removing the current $90,000 cap on wages subject to the payroll tax and including state and local government workers who are currently excluded from the system.
The report also recommends broadening Social Security's revenue base beyond wage income to include capital gains income and an estate tax surcharge.
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