A benefit of one's own: older women's entitlement to Social Security retirement.

This article explores differences in Social Security eligibility and benefit levels for older men and women using survey data from the Health and Retirement Study combined with administrative records on actual work histories and Social Security rules. We are able to determine the fully insured status of those persons, how close they are to meeting eligibility criteria when they are not fully insured, and their prospects for benefits. Around three-quarters of older women nearing retirement today will be fully insured for Social Security old-age benefits on the basis of their own accounts, but the rest would need substantial extra employment to rise above the eligibility threshold. Further, two-thirds of older married women who are fully insured have sufficient lifetime earnings to translate into an age-65 primary insurance amount worth at least half their husband's, but the other one-third can expect no additional retirement benefit from contributing to Social Security late in life. Finally, most wives will not be able to improve their benefits by working more under current rules. These results have mixed implications regarding the potential impact of women's rising labor force attachment on eventual retirement benefits. Working more years could increase women's chances of becoming eligible for Social Security benefits, but that effect is likely to be small. Furthermore, even when women do become fully insured according to the rules, not many wives will receive a higher benefit at the margin. The reason is that married women still receive higher Social Security benefits as a spouse than they do on the basis of their own work record. In fact, the net benefit from Social Security due to additional work is negative once one takes into account the Social Security contributions the women paid while employed. Benefits paid to widows are even more likely to be based on the spouse's work history rather than on the woman's. Hence, the rising labor market attachment of women in the future may increase their eligibility for benefits but will produce only modest (and often negative) impacts on their old-age Social Security benefits under current rules.     

Relationship between the retirement, disability, and unemployment insurance programs: the U.S. experience

This article was prepared initially for an international conference of social security program administrators and researchers. They examined the reasons for, and implications of, a recent trend in several European countries toward making it easier to qualify for retirement or disability benefits as a way of alleviating long-term unemployment. The article notes that the United States has not followed this trend. Instead, this country has continued to use temporary extensions of unemployment insurance benefits as a way to help the long-term unemployed during recessionary periods. Since the mid-1970's, the emphasis in retirement and disability insurance programs has been to strengthen the financial integrity of these programs rather than to expand eligibility. Described here are the progression of extended benefit provisions of unemployment insurance through the most recent recession, the historical development of early retirement features in the social security program, and the more recent attention that has been paid to the financing issues that have played a central role in legislation during the late 1970's and early 1980's. Unemployment experience and trends toward early retirement are examined, along with the role of public and private employee pension plans that supplement social security retirement benefits. Preliminary data from the Social Security Administration's New Beneficiary Survey show the prevalence of such pension coverage for recent retirees and the extent to which these pension benefits were claimed before normal retirement age.     

Development and evaluation of a survey-based type of benefit classification for the Social Security program

This attempt to classify Social Security beneficiaries by type of benefit using the new Survey of Income and Program Participation (SIPP) has yielded promising results. Evaluations of the classification algorithm based on comparison of the estimated number of beneficiaries in each of the several categories to independent estimates of the number of beneficiaries indicate that in most instances a high percentage of each category has been identified. For the most part, age and monthly benefit amount size distributions seem reasonable. Furthermore, very few persons in the sample who were identified as Social Security beneficiaries could not be assigned to one or another of the benefit groups. The classification procedure also represents a marked improvement over earlier efforts to classify type of beneficiary that relied on data from the March Supplement to the Current Population Survey (CPS). Most importantly, the benefit classification scheme based on SIPP data appears to provide reasonably reliable distinctions between retired-worker and widow benefits for widowed women and permits the identification of retired-worker benefits for those women dually entitled to retired-worker and spouse benefits. In addition, the distinction between disabled- and retired-worker benefits for recipients aged 62-64 appears to be reasonably reliable, and for women under age 65, the classification procedure distinguishes between disabled-worker benefits on the one hand and widow and widowed mother benefits on the other. Finally, SIPP procedures for identifying minor child beneficiaries yield markedly better estimates than those available from the Current Population Survey. These improvements in the SIPP context are due entirely to the presence of information not collected in the CPS. The enhancement of the SIPP data set in turn resulted directly from an assessment of earlier work carried out by Projector and Bretz in the CPS context and on extensive research into the nature of Social Security reporting errors in the CPS. The superiority of the SIPP data set is linked principally to the presence of three pieces of information: the Medicare BIC, the direct question on reasons for benefit receipt asked of persons under age 65, and the direct measurement of recipiency and amount of benefits for minor children. Other items of some import include self-reported work disability, retirement status (ever retired from a job), previous marital status for currently married women, age first prevented from working due to a health condition, and Supplemental Security Income misreporting items.(ABSTRACT TRUNCATED AT 400 WORDS)     

Characteristics of individuals with integrated pensions

Employer pensions that integrate benefits with Social Security have been the focus of relatively little research. Since changes in Social Security benefit levels and other program characteristics can affect the benefit levels and other features of integrated pension plans, it is important to know who is covered by these plans. This article examines the characteristics of workers covered by integrated pension plans, compared to those with nonintegrated plans and those with no pension coverage. Integrated pension plans are those that explicitly adjust their benefit structure to help compensate for the employer's contributions to the Social Security program. There are two basic integration methods used by defined benefit (DB) plans. The offset method causes a reduction in employer pension benefits by up to half of the Social Security retirement benefit; the excess rate method is characterized by an accrual rate that is lower for earnings below the Social Security taxable maximum than above it. Defined contribution (DC) pension plans can be integrated along the lines of the excess rate method. To date, research on integrated pensions has focused on plan characteristics, as reported to the Bureau of Labor Statistics (BLS) through its Employee Benefits Survey (EBS). This research has examined the prevalence of integration among full-time, private sector workers by industry, firm size, and broad occupational categories. However, because the EBS provides virtually no data on worker characteristics, analyses of the effects of pension integration on retirement benefits have used hypothetical workers, varying according to assumed levels of earnings and job tenure. This kind of analysis is not particularly helpful in examining the potential effects of changes in the Social Security program on workers' pension benefits. However, data on pension integration at the individual level are available, most recently from the Health and Retirement Study (HRS), a nationally representative survey of individuals aged 51-61 in 1992. This dataset provides the basis for the analysis presented here. The following are some of the major findings from this analysis. The incidence of pension integration in the HRS sample is 32 percent of all workers with a pension (14 percent of all workers). The HRS can also identify integrated DC plans, a statistic that is not available from BLS data. The rate of integration for workers with only DC plans is 8 percent. After controlling for other variables, several socio-demographic characteristics are significantly related to the incidence of integration. The probability of having an integrated pension is 4.6 percentage points less for men compared to women. Non-Hispanic blacks are 6.4 percentage points less likely than non-Hispanic whites to have integrated pensions. Union members are 14 percentage points less likely to have integrated pensions, while workers with less than a graduate level education are at least 15 percentage points more likely to have a pension that is integrated. Some earnings and pension characteristics are also significantly correlated with pension integration. Earnings are positively related, with the probability of having an integrated pension increasing by 2 percentage points for an increase of $1,000 in annual pay. An even larger effect comes from earning at or above the Social Security taxable maximum. Workers at or above this income level are 10 percentage points more likely to have an integrated plan, but for those with more than one plan the probability of pension integration goes up by 13 percentage points.     

Using data for couples to project the distributional effects of changes in Social Security policy

Under Social Security program rules, the aged receive Social Security benefits either as retired workers, spouses, divorced spouses, or widow(er)s. Retired-worker benefits are paid to workers who have 40 quarters of coverage over their lives. Auxiliary benefits are paid to spouses, divorced spouses, and widow(er)s of retired workers. Spouse benefits are computed using the earnings history of the current spouse for individuals who are married when they apply for benefits. Divorced spouse and widow(er) benefits are computed using the earnings history of the ex-spouse or deceased spouse with the highest PIA. A large number of retired women are entitled to auxiliary benefits. Some women receive only auxiliary benefits, while the majority of women have their retired-worker benefit supplemented by auxiliary benefits. Because the level of Social Security benefits can reflect the relative lifetime earnings of both spouses, as a couple, using individual data to estimate Social Security benefits will tend to underestimate actual benefits, particularly for women. However, detailed data for couples are often difficult to obtain. There is currently no known single data source that includes both marital and earnings history information. As a result, many researchers resort to estimating Social Security benefits using individual data or aggregate data, such as the average earnings of men and women. The Social Security Administration's Office of Research, Evaluation, and Statistics, with substantial assistance from the Brookings Institution, the Urban Institute, and the RAND Corporation, is developing a model that overcomes this problem by using the marital and earnings histories of both marital partners to estimate Social Security benefits. The Modeling Income in the Near Term (MINT) model projects retirement income (Social Security benefits, pension income, asset income, and earnings of working beneficiaries) from 1997 through 2031 for current and future Social Security beneficiaries using a unique data source--the Survey of Income and Program Participation (SIPP)--matched to Social Security Administration records. Using MINT data, this article establishes the importance of using data for couples rather than individuals by examining the impact of changing Social Security benefits to reflect 40 years of lifetime earnings rather than the 35 years required under current law. We compare the effect of this policy change on married women by estimating their benefits with data for couples and with individual data. Results indicate that: Using individual data overestimates the projected reduction in retirement benefits brought about by the policy change and makes the effects on women look more severe than they actually are. Because older birth cohorts are more likely than younger cohorts to receive auxiliary benefits based on their husbands' average lifetime earnings, the bias created by using individual data is projected to be much larger for older cohorts than for younger cohorts. This article emphasizes the importance of using data for couples to estimate Social Security benefits, particularly for women. Although our focus is on married women, using data for couples is just as important for calculating the retirement benefits of divorced and widowed individuals. For individuals who are divorced or widowed at retirement, their Social Security benefits are based on their own earnings history, as well as the earnings histories of each of their previous spouses.     

The widow(er)'s limit provision of Social Security

Widow benefits have been a part of the Social Security program since the 1939 amendments to the Social Security Act (widower benefits were added later). For many years, the Social Security law called for paying a widow(er) a fraction of the deceased worker's primary insurance amount (PIA). However, the worker--while alive--may have received the full PIA as his or her retirement benefit. Over time, arguments were made that a widow(er) should be treated as generously as his or her spouse was. The 1972 amendments to the Social Security Act allowed for a widow(er) to receive a full PIA, subject to actuarial reductions if the widow(er) benefit was claimed before the normal retirement age (NRA) and subject to a new provision of the law commonly referred to as the widow(er)'s limit. Generally, the widow(er)'s limit specifies that if a worker received reduced retirement benefits (because the worker claimed benefits before the NRA), then the worker's widow(er) cannot receive a monthly benefit equal to the full PIA. Rather, the widow(er)'s benefit is generally limited to the amount the worker would receive if he or she was still alive. The limit provision appears to be motivated by the overall intent of the 1972 Congress to pay a benefit to a widow(er) that was comparable with what the worker received. A number of changes to the limit provision have been discussed. This article looks at the following options: Abolishing the limit, Raising the limit by requiring that it never be set below the average PIA among all retired-worker beneficiaries. Adjusting the limit for some widow(er)s--that is, only persons who are widowed before the NRA (the ARLA option), Making a simpler adjustment to the limit by abolishing it for persons who are widowed before age 62 (the SARLA option), and A proposal by Robert J. Myers that would make modest adjustments to the limit for cases in which the worker died before the NRA. The most fundamental change--abolishing the limit--would increase benefits for about 2.8 million widow(er)s and would cost about $3.1 billion a year. Most of the additional government expenditures would not go to the poor and the near poor. Another change would be more successful in aiding low-income widow(er)s: requiring that the limit amount never be set below the average PIA among all retired-worker beneficiaries. About 58 percent of the government expenditures from that option would be received by the poor and the near poor. Overall, 1.2 million widow(er)s would be helped, and the cost would be about $816 million a year. Although the limit provision is consistent with the overall intent of the 1972 Congress, it can have effects that may have been unintended and that some policymakers might consider unusual. Persons who delay receipt of Social Security benefits usually receive higher monthly benefit amounts, but a widow(er) who faces a limit cannot increase his or her monthly benefit through delayed receipt of benefits. Thus, many persons who are widowed before the NRA face strong incentives to claim benefits early. That is somewhat unusual because the actuarial adjustments under Social Security are approximately fair, so there are no cost savings to the Social Security program from "forcing" a widow(er) to claim early benefits as opposed to allowing him or her to delay receipt of benefits in exchange for a higher monthly amount. And many widow(er)s would be better off if they could use the Social Security program to, in effect, save (that is, delay receipt of benefits in exchange for a higher amount later). This article analyzes two other options that would provide widow(er)s with additional filing options under Social Security. The ARLA option would ultimately help about 229,000 widow(er)s, and the cost would be small (about $69 million a year). The SARLA option would help about 117,000 widow(er)s, and the cost would be about $41 million a year. Robert J. Myers, a former Chief Actuary of Social Security, has offered a proposal that would provide relief from the widow(er)'s limit in cases in which the worker dies shortly after retirement. That proposal would help about 115,000 widow(er)s, and the cost would be low (about $57 million a year).     

Benefit adequacy among elderly Social Security retired-worker beneficiaries and the SSI federal benefit rate

Both target effectiveness and administrative simplicity are desirable properties in the design of minimum benefit packages for public retirement programs. The federal benefit rate (FBR) of the Supplemental Security Income (SSI) program has been proposed by some analysts as a potentially attractive basis of establishing a new minimum benefit for Social Security on both of these grounds. This type of proposal is related to a broader array of minimum benefit proposals that would establish a Social Security benefit floor based on the poverty rate. In contrast to Social Security, the SSI program is means tested, including both an income and asset screen and also a categorical eligibility screen (the requirement to qualify as aged or disabled). The SSI FBR provides an inflation-adjusted, guaranteed income floor for aged and disabled people with low assets. The FBR has been perceived by proponents as a minimal measure of Social Security benefit adequacy because it represents a subpoverty income level for a family of one or two depending on marital status. For this same reason it has been seen as a target-effective tool of designing a minimum Social Security benefit. An FBR-based minimum benefit has also been viewed as administratively simple to implement; the benefit can be calculated from Social Security administrative records using a completely automated electronic process. Therefore-in contrast to the SSI program itself-an FBR-based minimum benefit would incur virtually no ongoing administrative costs, would not require a separate application for a means-tested program, and would avoid the perception of welfare stigma. While these ideas have been discussed in the literature and among policymakers in the United States over the years, and similar proposals have been considered or implemented in several foreign countries, there have been no previous analyses measuring the size of the potentially affected beneficiary population. Nor has there been any systematic assessment of the FBR as a measure of benefit adequacy or the tradeoffs between potential target effectiveness and administrative simplicity. Based on a series of simulations, we assess the FBR as a potential foundation for minimum Social Security benefits and we examine the tradeoffs between administrative simplicity and target effectiveness using microdata from the 1996 panel of the Survey of Income and Program Participation (SIPP). Our empirical analysis is limited to Social Security retired-worker beneficiaries aged 65 or older. We start with the assessment of the FBR as a measure of benefit adequacy. We are particularly concerned about two types of error: (1) incorrectly identifying some Social Security beneficiaries as "economically vulnerable," and (2) incorrectly identifying others as "not economically vulnerable." Operationally we measure economic vulnerability by two alternative standards. One of our measures considers beneficiaries with family income below the official poverty threshold as vulnerable. Our second measure is more restrictive; it uses a family income threshold equal to 75 percent of the official poverty threshold. We find that a substantial minority of retired workers have Social Security benefits below the FBR. The results also show that the FBR-based measure of Social Security benefit adequacy is very imprecise in terms of identifying economically vulnerable people. We estimate that the vast majority of beneficiaries with Social Security benefits below the FBR are not economically vulnerable. Conversely, an FBR-level Social Security benefit threshold fails to identify some beneficiaries who are economically vulnerable. Thus an FBR-level minimum benefit would be poorly targeted in terms of both types of errors we are concerned about. An FBR-level minimum benefit would provide minimum Social Security benefits to many people who are clearly not poor. Conversely, an FBR-level minimum benefit would not provide any income relief to some who are poor. The administrative simplicity behind these screening errors also results in additional program cost that may be perceived as substantial. We estimate that an FBR-level minimum benefit would increase aggregate program cost for retired workers aged 65 or older by roughly 2 percent. There are two fundamental reasons for these findings. First, the concept of an FBR-level minimum benefit looks at the individual or married couple in artificial isolation; however, the family is the main consumption unit in our society. The income of an unmarried partner or family members other than a married spouse is ignored. Second, individuals and couples may also have income from sources other than Social Security or SSI, which is also ignored by a simple FBR-based minimum benefit concept. The substantial empirical magnitude of measurement error arising from these conceptual simplifications naturally leads to the assessment of the tradeoff between target effectiveness and administrative simplicity. To facilitate this analysis, we simulate the potential effect of alternative screening methods designed to increase target effectiveness; while reducing program cost, such alternatives also may increase administrative complexity. For example, considering the combined Social Security benefit of a married couple (rather than looking at the husband and wife in isolation) might substantially increase target effectiveness with a relatively small increase in administrative complexity. Adding a family income screen might increase administrative complexity to a greater degree, but also would increase target effectiveness dramatically. The results also suggest that at some point adding new screens-such as a comprehensive asset test-may drastically increase administrative complexity with diminishing returns in terms of increased target effectiveness and reduced program cost. Whether a broad-based minimum benefit concept that is not tied to previous work experience is perceived by policymakers as desirable or not may depend on several factors not addressed in this article. However, to the extent that this type of minimum benefit design is regarded as potentially desirable, the tradeoffs between administrative simplicity and target effectiveness need to be considered.     

Coping with the demographic challenge: fewer children and living longer

Due to demographic changes, the U.S. Social Security system will face financial challenges in the near future. Declining fertility rates and increasing life expectancies are causing the U.S. population to age. Today 12 percent of the total population is aged 65 or older, but by 2080, it will be 23 percent. At the same time, the working-age population is shrinking from 60 percent today to a projected 54 percent in 2080. Consequently, the Social Security system is experiencing a declining worker-to-beneficiary ratio, which will fall from 3.3 in 2005 to 2.1 in 2040 (the year in which the Social Security trust fund is projected to be exhausted). This presents a significant challenge to policymakers. One policy option that could help keep the Social Security system solvent is to reduce retirement benefits, either by raising the normal retirement age or through life expectancy indexing, to reflect the fact that people are living longer. However, these reductions in benefits have the potential to harm economically vulnerable retirees. Other options, such as progressive price indexing proposals, explicitly protect the retirement benefits of low lifetime earners. Still other options would seek to raise additional revenue for the system. Since individuals will be living longer in retirement, many policymakers believe it is important to encourage older workers to delay retirement so that they can maintain a quality standard of living throughout their retirement. One proposal to encourage continued work would be to increase the early eligibility age for Social Security benefits from age 62 to age 65. This could possibly hurt individuals who need to retire from physically demanding jobs but would ensure that people receive higher benefit amounts once they were able to fully retire. Other proposals that could promote more work at older ages include expanding phased retirement options and reforming pension and defined contribution systems to create incentives to work and save.     

Social Security: a financial appraisal for the median voter

Several explanations have been proposed for why voters continue to support unfunded social security systems. Browning (1975) suggests that the extremely large unfunded pension systems of most democracies depend on the existence of a voting majority composed of middle-aged and older people who fail to fully internalize the cost of financing the system. In fact, when voting, economically rational workers consider only their current and future contributions to the system and their expected pension benefits--not their past contributions, which they regard as sunk costs. If, for a majority of voters, the expected continuation return from social security exceeds the return from alternative assets, an unfunded social security system is politically sustainable. This article explores the validity of Browning's proposition by quantifying the returns that U.S. voters in presidential elections from 1964 to 1996 have obtained, or expect to obtain, from Social Security. Did "investments" in Social Security outperform alternative forms of investment, such as mutual funds or pension funds, for a majority of the voters? What can be expected for the future? The U.S. Social Security system redistributes income within age cohorts on the basis of sex, income, and marital status. To account for some of these features, the median voter is represented by a family unit whose members--a husband who accounts for 70 percent of household earnings and a wife who accounts for 30 percent--make joint economic and voting decisions. Thus, retirement and survival benefits paid out to the spouse of an insured worker can be included in the calculation of Social Security returns. Interval estimates of voters' family incomes from the U.S. Census Bureau were used to obtain the median voter's household earnings. The median voter's age is derived from the ages of those who voted in presidential elections, not from the ages of the entire electorate. The median voter's contributions to Social Security are the product of the joint employer/employee Old-Age and Survivors Insurance (OASI) tax rate and employee earnings. Data on actual contributions are available for median voters in the 1964 to 1976 elections; Social Security Administration (SSA) estimates are used for future tax rates and average wage growth rates. Data on actual old-age, retirement, and survivor benefits, as well as estimates of future benefits, are also available from SSA. Analysis of ex-post returns from "investing" in Social Security and from a buy-and-hold strategy applied to three alternative assets--the Standard & Poor's Composite Index (S&P), the Dow Jones Industrial Average (DJIA), and U.S. government bonds--shows surprising results. In 1964 and 1968, Social Security largely outperformed the other three assets. In 1972, Social Security and the stock market performed almost equally. In 1976, however, the median voter would have been better off in the stock market. The expected returns for median voters in later elections cannot be directly compared with realized returns from alternative assets. However, estimates range from 5.7 percent in 1984 to 7.0 percent in 1996 and thus compare favorably with average returns of 5.6 percent for S&P, 5.3 percent for DJIA, and 2.1 percent for government bonds over the 1964-1996 period. Although these findings must be taken with caution since they compare ex-post returns, they show that, despite a continuous reduction in profitability, Social Security still represents a safe, high-return asset for a majority of families.     

Trends in the economic status of the elderly, 1976-2000

The economic well-being of elderly Americans (aged 65 or older) improved between 1976 and 2000. Overall, poverty rates fell during this period, median real income rose, and median income relative to the working-age population was relatively stable. Most population subgroups shared in the reduced poverty rates; however, the economic status of elderly Hispanics did not improve. This article attempts to explain those economic trends by identifying changes in five sources of income for the elderly and analyzing the changes in the context of demographic changes in the elderly populations over the past 25 years. As a result of increased longevity, for example, larger proportions of elderly men and women are now 80 or older, and smaller proportions are 65 to 69. Hispanics and Asian Americans make up a larger share of the elderly population and whites a smaller share. The fraction of women who are married has increased, the fraction who are widowed has fallen, and the fraction who are divorced has grown. Such demographic changes can greatly affect the economic status of subgroups as well as the overall elderly population. Of the five sources of income for the elderly, Social Security remains the most prevalent and important. While both the rate of receipt and the share of aggregate income from Social Security benefits stayed relatively steady over the past 25 years, the average real Social Security benefit increased because of rising wages. Income from assets, the second most important source of income for the elderly, fluctuated. Because the elderly are more likely to hold interest-bearing assets such as bonds rather than stocks, their asset income is responsive to changes in nominal interest rates and bond yields. Receipt of pension income increased during this period, although it leveled off during the 1990s. Factors contributing to this pattern include enactment of the Employee Retirement Income Security Act of 1974, which increased protections of pension benefits for spouses, and improved labor market opportunities for blacks and women. In recent years, defined contribution pension plans have become more prevalent than defined benefit plans, but the full effect of this change on pension income may not yet be apparent. After decades of decline, labor force participation rates of older men leveled out in the mid-1980s and then increased. For older women, the trend before the mid-1980s was flat, but since then rates have risen substantially. The increased use of part-time jobs or self-employment to ease the transition into retirement, the economic expansion of the 1990s, and the liberalization of the Social Security earnings test may all have contributed to those trends. Although the percentage of elderly people with earnings has increased only modestly in the past few years, the share of income from earnings has grown substantially--from 16 percent of income in 1984 to 23 percent in 2000. Finally, Supplemental Security Income (SSI) benefits are indexed for inflation but not for growth in real wages. As real incomes of the elderly rose, therefore, fewer elderly persons were eligible to receive SSI or, for those receiving SSI, were eligible for smaller benefits. The proportion of elderly persons receiving public assistance, primarily SSI, declined from 11 percent in 1976 to 5 percent in 2000.     

Caregiver credits in France, Germany, and Sweden: lessons for the United States

Recently, analysts in the United States (US) have proposed adopting caregiver credits, or pension credits, provided to individuals for time spent out of the workforce while caring for dependent children and sick or elderly relatives. The primary objective of these credits, used in almost all public pension systems in the European Union, is to improve the adequacy of old-age benefits for women whose gaps in workforce participation typically lead to fewer years of contributions, lower lifetime average earnings, and consequently lower pensions. This article examines caregiver credits in the context of future reforms to the US Social Security system, with attention given to the adequacy of current spouse and survivor benefits and how changing marital patterns and family structures have increased the risk of old-age poverty among certain groups of women. It then analyzes caregiver credit programs in selected countries, with particular focus on design, administration, and cost.     

Social Security's special minimum benefit

Social Security's special minimum primary insurance amount (PIA) provision was enacted in 1972 to increase the adequacy of benefits for regular long-term, low-earning covered workers and their dependents or survivors. At the time, Social Security also had a regular minimum benefit provision for persons with low lifetime average earnings and their families. Concerns were rising that the low lifetime average earnings of many regular minimum beneficiaries resulted from sporadic attachment to the covered workforce rather than from low wages. The special minimum benefit was seen as a way to reward regular, low-earning workers without providing the windfalls that would have resulted from raising the regular minimum benefit to a much higher level. The regular minimum benefit was subsequently eliminated for workers reaching age 62, becoming disabled, or dying after 1981. Under current law, the special minimum benefit will phase out over time, although it is not clear from the legislative history that this was Congress's explicit intent. The phaseout results from two factors: (1) special minimum benefits are paid only if they are higher than benefits payable under the regular PIA formula, and (2) the value of the regular PIA formula, which is indexed to wages before benefit eligibility, has increased faster than that of the special minimum PIA, which is indexed to inflation. Under the Social Security Trustees' 2000 intermediate assumptions, the special minimum benefit will cease to be payable to retired workers attaining eligibility in 2013 and later. Their benefits will always be larger under the regular benefit formula. As policymakers consider Social Security solvency initiatives--particularly proposals that would reduce benefits or introduce investment risk--interest may increase in restoring some type of special minimum benefit as a targeted protection for long-term low earners. Two of the three reform proposals offered by the President's Commission to Strengthen Social Security would modify and strengthen the current-law special minimum benefit. Interest in the special minimum benefit may also increase because of labor force participation and marital trends that suggest that enhancing workers' benefits may be a more effective means of reducing older women's poverty rates than enhancing spousal or widow's benefits. By understanding the Social Security program's experience with the special minimum benefit, policymakers will be able to better anticipate the effectiveness of other initiatives to enhance benefits for long-term low earners. This article presents the most recent and comprehensive information available about the special minimum benefit in order to help policymakers make informed decisions about the provision's future. Highlights of the current special minimum benefit include the following: Very few persons receive the special minimum benefit. As of December 2001, about 134,000 workers and their dependents and survivors were entitled to a benefit based on the special minimum. Of those, only about 79,000 received a higher total benefit because of the special minimum; the other 55,000 were dually entitled. (In effect, when persons are eligible for more than one type of benefit--that is, they are dually eligible--the highest benefit payable determines total benefits. If the special minimum benefit is not the highest benefit payable, it does not increase total benefits paid.) As of February 2000, retired workers who were special minimum beneficiaries with unreduced benefits and were not dually entitled were receiving, on average, a monthly benefit of $510 per month. That amount is approximately $2,000 less than the annual poverty threshold for an aged individual. Special minimum benefits provide small increases in total benefits. For special minimum beneficiaries who were not dually entitled as of December 2001, the average special minimum monthly PIA was just $39 higher than the regular PIA. Most special minimum beneficiaries are female retired workers. About 90 percent of special minimum beneficiaries are retired workers, and 77 percent of those retired workers are women. The special minimum benefit has never provided poverty-level benefits. Maximum payable special minimum benefits (unreduced for early retirement) equal 85 percent of the poverty level for aged persons, down from 96 percent at the provision's inception. Major public policy considerations raised by this analysis include the following: Social Security benefits alone do not protect all long-term low earners from poverty. Low earners with 30 years of earnings equal to the annual full-time minimum wage who retired in selected years from 1982 to 2000 received benefits that were 3.9 percent to 20.1 percent below the poverty threshold, depending on the year they retired. For 40-year earners, the range was 3.9 percent to 15.3 percent below poverty. Furthermore, in 1993, 29.2 percent of retired-worker beneficiaries who were poor had 30 or more years of coverage. The size of the universe of persistently low earners with significant attachment to the covered workforce is unknown. Available research that examines two 28-month periods suggests that only 4 percent to 6 percent of full-time, full-period earners had below-minimum wages for more than 12 consecutive months. Targeting enhanced benefits only toward long-term, regular workers who are low earners is difficult under the current Social Security program. All else being equal, if total wage-indexed lifetime covered earnings are the same for both a full-career low earner and for a high earner who has worked only occasionally, then their Social Security benefits will be identical. Social Security has no information on number of hours worked, hourly wages, or other information that could distinguish between two such persons.     

Comparing replacement rates under private and federal retirement systems

One measure of the adequacy of retirement income is replacement rate - the percentage of pre-retirement salary that is available to a worker in retirement. This article compares salary replacement rates for private-sector employees of medium and large private establishments with those for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. Because there is no standard benefit formula to represent the variety of formulas available in the private sector, a composite defined benefit formula was developed using the characteristics of plans summarized in the Bureau of Labor Statistics Medium and Large Employer Plan Survey. The resulting "typical" private-sector defined benefit plan, with an accompanying defined contribution plan, was then compared with the two federal systems. The Civil Service Retirement System (CSRS) is a stand-alone defined benefit plan whose participants are not covered by Social Security. Until passage of the 1983 Amendments to Social Security Act, it was the only retirement plan for most federal civilian employees. Provisions of the 1983 Amendments were designed to restore long-term financial stability to the Social Security trust funds. One provision created the Federal Employees Retirement System (FERS), which covers federal employees hired after 1983. It was one of the provisions designed to restore long-term financial stability to the Social Security trust funds. FERS employees contribute to and are covered by Social Security. FERS, which is a defined benefit plan, also includes a basic benefit and a 401(k)-type plan known as the Thrift Savings Plan (TSP). To compare how retirees would fare under the three different retirement systems, benefits of employees retiring at age 65 with 35 years of service were calculated using hypothetical workers with steady earnings. Workers were classified according to a percentage of the average wage in the economy: low earners (45 percent), average earners (100 percent) high earners (160 percent), and maximum earners (earnings at the taxable maximum amount). Overall, this analysis found that: Excluding Social Security benefits and TSP and defined contribution annuities, CSRS retirees have a higher pre-retirement salary replacement rate than either FERS or private-sector retirees. Private-sector retirees, however, have higher replacement rate than their FERS counterparts. Including Social Security benefits but not TSP and defined contribution plan annuities, CSRS retirees who are maximum earners have a higher pre-retirement salary replacement rate (despite receiving no Social Security benefits) than FERS retirees with the same earnings. Private-sector retirees in all earnings categories have a higher replacement rate than federal retirees with the same earnings. Including Social Security and TSP and defined contribution plan annuities, private-sector retirees in all earnings categories have a higher replacement rate than federal retirees, but their rate is close to that of FERS retirees. The rate is higher for FERS retirees than for CSRS retirees in all earnings categories. This analysis shows that replacement creates could exceed 100 percent for FERS employees who contribute who contribute 6 percent of earnings to the TSP over full working career. Private-sector replacement rates were quite similar for those with both a defined benefit and a defined contribution pension plan. Social Security replacement rates make up the highest proportion of benefits for th private sector's lowest income quartile group. The replacement rate for 401(k) plans and the TSP account for a higher proportion of benefits than does Social Security for all other income groups, assuming the absence of a defined benefit plan.     

The Separation of Powers, Court Curbing, and Judicial Legitimacy

A major focus of judicial politics research has been the extent to which ideological divergence between the Court and Congress can explain variation in Supreme Court decision making. However, conflicting theoretical and empirical findings have given rise to a significant discrepancy in the scholarship. Building on evidence from interviews with Supreme Court justices and former law clerks, I develop a formal model of judicial-congressional relations that incorporates judicial preferences for institutional legitimacy and the role of public opinion in congressional hostility towards the Supreme Court. An original dataset identifying all Court-curbing legislation proposed between 1877 and 2006 is then used to assess the influence of congressional hostility on the Court's use of judicial review. The evidence indicates that public discontent with the Court, as mediated through congressional hostility, creates an incentive for the Court to exercise self-restraint. When Congress is hostile, the Court uses judicial review to invalidate Acts of Congress less frequently than when Congress is not hostile towards the Court.     

Changing the method for calculating quarters of coverage: the impact on workers' insured status

The 1977 Social Security Amendments specified that, beginning in 1978, a worker would be credited with one quarter of coverage for a designated amount of annual earnings. For 1978, a worker received one quarter of coverage (up to a total of four) for each $250 in annual earnings from employment or self-employment. Before 1978, a worker who was paid $50 in wages in a calendar quarter was credited with a quarter of coverage. A person who had $400 or more in self-employment income in a year was credited with four quarters of coverage. Some workers received more quarters of coverage under the new provisions than they would have under the old, and other workers received less. Since a worker's receipt of benefits depends on his or her insured status, which is based on quarters of coverage, this change can affect a worker's eligibility for benefits. This study indicates that if $250 in annual earnings had been required for one quarter of coverage in 1977, more than 2.1 million workers would have had a change in their insured status for disabled worker benefits, and about 700,000 workers would have had a change in their insured status for survivor benefits. Those whose insured status was affected were most likely to have had marginal earnings records--for example, they had four to seven quarters of coverage when six were needed. (This effect was expected when the legislation was passed.) This article examines those whose eligibility for benefits was most likely to have been affected.     

Congress,the Supreme Court,and Judicial Review: Testing a Constitutional Separation of Powers Model

Recent scholarship suggests that the U.S. Supreme Court might be constrained by Congress in constitutional cases. We suggest two potential paths to Congressional influence on the Court's constitutional decisions: a rational‐anticipation model, in which the Court moves away from its preferences in order to avoid being overruled, and an institutional‐maintenance model, in which the Court protects itself against Congressional attacks to its institutional prerogatives by scaling back its striking of laws when the distance between the Court and Congress increases. We test these models by using Common Space scores and the original roll‐call votes to estimate support in the current Congress for the original legislation and the Court's preferences over that legislation. We find that the Court does not appear to consider the likelihood of override in constitutional cases, but it does back away from striking laws when it is ideologically distant from Congress.     

Social security: a program and policy history

Many of the federal and state programs that provide income security to U.S. families have their roots in the Social Security Act (the Act) of 1935. This Act provided for unemployment insurance, old-age insurance, and means-tested welfare programs. The Great Depression was clearly a catalyst for the Social Security Act of 1935, and some of its provisions--notably the means-tested programs--were intended to offer immediate relief to families. However, the old-age insurance program-the precursor to today's Old-Age, Survivors, and Disability Insurance, or Social Security, program-was not designed specifically to deal with the economic crisis of that era. Indeed, monthly benefit payments, under the original Act, were not scheduled to begin until 1942. In addition, from the beginning, the Social Security program has embodied social insurance principles that were widely discussed even before the onset of the Great Depression. The first four decades of the Social Security program were, in general, ones of expansion. In fact, the program was expanded even before it became truly operational. In 1939, amendments added child, spouse, and survivor benefits to the retirement benefits authorized by the 1935 Act. Those amendments also allowed for monthly benefits to begin in 1940. Although the program was not changed substantially during the war years and the initial postwar period, the 1950s were a transformational decade in the program's history: benefit amounts were increased substantially, coverage under the program became close to universal, and a new disability insurance benefit was offered. The 1960s witnessed additional growth in Social Security, but the most important development in social insurance occurred in health insurance, with the creation of the Medicare program in 1965. Legislative actions in the 1970s had profound effects on the Social Security program and, indeed, set the stage for many of today's reform debates. Large benefit increases, a new benefit formula that was erroneously generous, and other changes in the early 1970s created a situation in which annual program costs, as a share of gross domestic product, increased during a 12-year period from about 3 percent to 5 percent. In 1977, amendments to the Act corrected the flawed benefit formula and made other changes in the financing of the system to shore up the program. Thus, the 1970s represent a watershed in the program's history-program growth gave way to increasing concerns about the program's finances. Those concerns were reflected in the amendments to the Act in 1983, which were the last major changes to the program. These amendments, based largely on recommendations from a commission chaired by Alan Greenspan, adjusted benefits and taxes to address pressing near-term financing problems faced by the system. Although the Greenspan Commission focused to a large extent on short-range issues, the resulting reforms have generated large surpluses in the program and the buildup of a substantial trust fund. However, the looming retirement of the baby boomers and several other demographic factors will, according to projections, result in the exhaustion of the trust fund by 2042.     

Women, marriage, and Social Security benefits

The majority of women Social Security beneficiaries receive at least part of their benefit based on their status as the wives or widows of entitled workers. This article discusses the impact of past and present marital status of women as a factor in establishing eligibility for monthly benefits and the amount of the benefit payment. The data are drawn from the 1980 and 1985 June Marital History Supplements to the Current Population Survey. Whether or not they are currently receiving auxiliary benefits, most older women are potentially eligible for them based on their current marital status or past marital duration.     

Noncitizens and the Supplemental Security Income program

The Supplemental Security Income (SSI) program, established by the Social Security Amendments of 1972 (Public Law 92-603), was designed to provide cash assistance to needy aged, blind, and disabled citizens, and noncitizens lawfully admitted for permanent residence or permanently residing under color of law. Since then, this means-tested program has undergone many legislative changes that affect the eligibility status of noncitizens. This article, presented in three parts, discusses the legislative history of noncitizen eligibility, and details relevant laws enacted since the program's inception; provides current data on the trends and changes of the noncitizen population; and describes the larger population of foreign-born SSI recipients, of which the noncitizens are a part. Data on the number of SSI recipients born abroad but who had become citizens before applying for SSI payments were not previously available. Analytical data are from the Supplemental Security Record (SSR) matched to the Social Security Number Identification (Numident) file.