A new report from the Center for American Progress says improving living standards in communities of color in the United States would do more than just help those directly affected. It also would go a long way toward shoring up the Social Security system.
Already, the report finds, population growth in communities of color are helping Social Security financially. That’s because faster population growth leads to increased employment growth, which in turn creates more workers who pay Social Security taxes. But if those workers also had a lower unemployment rate, better incomes and less risk of disability and premature mortality, the benefit to social Security would be even greater.
“A Win-Win for an All-In Nation” – read the full report here.
Among the report’s findings:
- Population growth, due to the faster growth of communities of color, and its accompanying employment growth improves Social Security’s long-term financial outlook. Faster population growth means that more workers contribute to Social Security through their payroll taxes sooner. The latest trustees report of the Social Security Administration estimated that rising population growth – and presumably, long-term employment growth – due to higher fertility rates and increased immigration will improve Social Security’s finances. Increasing the fertility rate from 2 children born per woman to 2.3 children would lower the program’s 75-year shortfall by 12.8 percent. Increasing annual immigration from 1.125 million to 1.43 million people would cut the long-term deficit by 7.3 percent.
- Raising wage growth by lifting wages among communities of color brightens Social Security’s long-term outlook. The latest trustees’ report estimates that inflation-adjusted annual wage growth of 1.76 percent – instead of 1.13 percent, which the trustees assumed in their intermediate scenario – would improve Social Security’s financial outlook and cut its future expected deficit by 34.7 percent. A higher minimum wage – which would benefit communities of color in particular –would also improve Social Security’s outlook.
- Lowering disability incidences, which are especially prevalent among communities of color, would improve Social Security’s finances. The latest trustees’ report estimates in its intermediate scenario that 5.4 people out of every 1,000 people who have the potential to become disabled are awarded benefits annually. It argues that by lowering this number to 4.3 people, Social Security’s long-term financial shortfall could be reduced by 9.5 percent. Creating better jobs for communities of color is one way to help reduce disability rates.
According to the report, policymakers can achieve a win-win outcome for both struggling communities and Social Security by embracing policies that improve the economic and physical health of communities of color, raising the living standards of communities of color today and substantially improving Social Security’s finances in the long term, lifting up the economic security of struggling, middle-class non-Hispanic white families and communities of color alike.