African-Americans and Racial Disparity in Retirement Income
As journalist Alessandra Malito aptly points out in MarketWatch, at the same time as Americans protest for equal justice under the law for African-Americans, there is growing demand for economic justice, as well. “There are calls for overall societal changes, such as equity in education, banking, housing and health care,” she writes. This includes gross disparities in retirement income between whites and communities of color.
According to the Center for Retirement Research at Boston University, African-American households have only 46% of the retirement income of their white counterparts. There are many reasons why it is harder for communities of color to build retirement income. Too many African-Americans are concentrated in lower-wage jobs that lack pensions – or retirement plans of any kind. Black workers face ongoing job discrimination and higher unemployment rates than whites (a trend that continues during the COVID pandemic), making it difficult to save or invest for retirement. The just-released May jobs report had good news for all other workers, but not African-Americans:
“Unemployment rates declined among white and Hispanic Americans, but the level ticked up among African Americans to 16.8%, matching the highest since 1984.That comes amid nationwide protests over police mistreatment of African-Americans, which have drawn renewed attention to black people’s economic plight.” – Bloomberg, 6/5/20
Social Security is often the only thing keeping African-American retirees out of poverty. Were it not for Social Security, black households would have only 16% the retirement assets of white households.
“Without the program, a typical black household would have five to seven times less wealth than a white household. Adding Social Security payments to their income reduces that gap to two to three times less.” – Alessandra Malito, Marketwatch, 6/3/20
In fact, Social Security provides most elderly African Americans with their sole or primary source of income in retirement. (Overall, some 40% of all retirees rely on Social Security for all of their living expenses.) This is why any attempts to weaken or cut Social Security would hurt all retirees, but impact African-Americans the most.
“Across-the-board benefit cuts, such as increases in the Full Retirement Age, will have an outsize impact on black and Hispanic households’ retirement wealth. As policymakers consider changes to the Social Security program to shore up its finances, considering ways to mitigate any impact on these groups may be important.” – Center for Retirement Research
Unfortunately, across-the-board benefit cuts are exactly what ‘fiscal hawks’ in Congress and the private sector have proposed under the guise of “entitlement reform.” President Trump, who promised not to touch Social Security, continues to signal that he is open to potentially devastating benefit reductions in the future. “Oh, we’ll be cutting,” he said at a FOX Town Hall in March.
The National Committee has ardently opposed any attempts by the administration and Congress to cut Social Security, while endorsing much-needed legislation to boost benefits – and guarantee the program’s financial future financial health, so that it is there for everyone, especially communities of color.
African-Americans would benefit from Rep. John Larson’s Social Security 2100 Act in several ways. The bill provides a 2% across-the-board benefit boost. But it also increases the special minimum benefit – designed to supplement low income workers’ retirement income – to 125% of the federal poverty level. And it adopts a more accurate cost-of-living adjustment formula, the CPI-E, which would help retirees better keep up with inflation. It’s time for Congress to move this legislation forward – for the benefit of communities of color and all workers.
Social Security is already a lifeline for millions of African-American retirees. As communities of color fight for social and economic justice, Social Security can play an even more crucial role moving forward – if our elected leaders have the conviction to strengthen and expand the program that keeps millions of our most vulnerable citizens out of poverty.