NCPA - National Center for Policy Analysis

Social Security and Minorities

April 28, 2003

Although Social Security's benefit and contribution provisions are neutral with respect to race, ethnicity and gender, concerns about the experiences of minority groups under Social Security focus on whether they benefit less than whites from the Social Security system, particularly because of their shorter life expectancies.

Differences by race relative to taxes paid and benefits received under Social Security are due mainly to differences in lifetime earnings, the incidence of disability and the morality among the groups.

Of people born from 1931 to 1964, researchers say those in the lowest earnings quintile experience a higher benefit-to-tax ratio relative to those in the upper quintiles.

  • Approximately 38 percent of Hispanics are in the lowest-earnings quintile, while about 35 percent of blacks and 17 percent of whites are.
  • And about 9 percent of Hispanics are in the highest-earnings quintile, while blacks and whites are 11 percent and 22 percent, respectively.

Because minorities are over-represented in the lowest earnings quintile and under-represented in the highest quintile, they sometimes have higher benefit-to-tax ratios than whites. Furthermore, blacks and Hispanics have higher disability rates and thus as a group tend to receive greater benefits relative to taxes paid than whites.

  • Blacks made up 10.3 percent of the sample, but 16.9 percent of the DI beneficiaries, Hispanics were about 8.4 percent of the sample, and 10.1 percent of DI beneficiaries.
  • Whites are the only group to make up a smaller percent of DI beneficiaries than of the whole sample.

However, because of lower life expectancies, as a group, Blacks are projected to receive fewer years of retirement benefits. Hispanics, on the other hand, are expected to receive more years of retirement benefits than Whites.

Source: United States General Accounting Office, "Social Security and Minorities," GAO 03-387, April 2003.

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