Social Security Fairness Act Ignores The Real Injustice

This week the Senate is expected to vote on the Social Security Fairness Act which already passed the House in November. This bill would repeal two provisions of current law (GPO and WEP) at a cost of $196 billionover 10 years, plus an additional $37 billionin interest payments on the national debt.

According to its proponents, this bill would "ensure Americans are not erroneously denied their well-earned Social Security benefits simply because they chose at some point to work in their careers in public service." But nothing could be further from the truth.

Most police, firefighters, teachers, and other government employees receive Social Security in addition to their public pension because they contribute to both systems throughout their entire career.

Fewer than 30 percentof state and local government employees have chosen not to participate in Social Security. These non-covered workers are not being denied Social Security because of their public service careers. They do not receive Social Security benefits because they do not pay Social Security payroll taxes.

Admittedly, some non-covered workers qualify for Social Security, either by working in another job in covered employment or as the spouse or survivor of a covered worker. However, the benefit reductions they receive as a result of the GPO and WEP are merely intended to duplicate similar rulesthat apply to everyone else.

Non-covered workers are not being singled out for unfair treatment. Indeed, repealing the GPO and WEP would result in more favorable treatment. They would get more and pay less than everyone else. That would be an unearned windfall.

But what's even more unfair is the fact that millions of non-covered workers will never receive a public pension, and their Social Security benefits will be reduced due to their non-covered employment. These results have nothing to do with the GPO and WEP, and repealing these provisions won't fix these problems.

In 1990, Congress made Social Security mandatory for most workers, with the most notable exception being state and local government employees. This exception was supposed to be limited to employees participating in a qualified pension plan that provides comparable retirement benefits. But the IRS regulationsissued to ensure this result have fallen short.

Most non-covered workers never qualify for a pension because they leave their jobbefore they become vested. These workers not only fail to earn a pension, but they have fewer years remaining to participate in covered employment, which results in lower Social Security benefits. Moreover, many of those who do qualify for a non-covered pension receive less than they would have received from Social Security because the IRS allowspensions that are less generous than Social Security, especially for workers with lower wages and shorter careers.

Proponents of the Social Security Fairness Act claim they want to protect non-covered workers from being treated unfairly. But the real injustice that's being ignored in the debate so far is what happens to the majority of non-covered workers who never qualify for a pension.

If proponents are really concerned about the financial well-being of non-covered workers, they would expand Social Security coverageto include them, rather than provide an unearned windfall to the lucky few who ultimately receive a non-covered pension.