NCPA - National Center for Policy Analysis

Social Security: Racism Disguised As Compassion?

August 11, 2000

Defenders of the current Social Security system implicitly assume that the working poor -- who are more often than not racial minorities -- will not or cannot take care of themselves. That, say advocates of Social Security privatization, is racism disguised as compassion.

Certainly the system does everything possible to assure low-income earners end up being wards of the Nanny State when they retire -- if they live that long.

Reformers cite the case of a hypothetical 35-year-old black man named Joe, who earns $20,000 a year.

  • By law, Joe must pay 12.4 percent of his earnings -- or $2,480 a year -- into Social Security.
  • That's a big chunk of his earnings, which makes it virtually impossible for him to save any additional money for retirement.
  • Moreover, as a low-income black male, Joe's life expectancy is roughly 65 -- meaning that he will probably die two years short of the time he might expect the government to start giving him some of his money back in the form of a monthly Social Security check amounting to roughly $1,200.
  • According to Cato Institute figures, had Joe been allowed to invest that $2,480 a year in low-risk investments, he would collect a payout of $2,400 monthly -- twice what Social Security promises to pay.

Perhaps cruelest of all, Joe's family and heirs won't collect that money he was forced to pay into the system -- or the interest on it. But under a privatized system, they would collect a tidy sum.

The current scheme goes a long way to explain the wealth gap between whites and non-whites.

Source: Star Parker (Coalition on Urban Renewal and Education), "Subtle Racism: Social Security Deprives Blacks of Real Nest Egg," Investor's Business Daily, August 11, 2000.


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