Blog: Teachers and Social Security

Rather that fighting to preserve an expensive, unfair status quo, teachers should demand retirement plans worth fighting for.
In honor of Teacher Appreciation Week, we think one of the ways states could thank teachers would be to make sure they all have secure, portable, sustainable retirement benefits. Unfortunately, too many teachers do not. To help illustrate why that’s not happening, consider six ways states make it harder for teachers to qualify for secure retirement benefits, as told through the lens of some of the most memorable, fictional teachers and educators.
Teacher pensions are more complicated than they appear, and that has implications for teachers.
Teacher pay and benefits have made headlines over the past few weeks, with walkouts and strikes by teachers in Kentucky, Oklahoma, and West Virginia. Indeed, with so much unfolding so quickly, it can be hard to keep up.
People may assume that an "expensive" retirement must obviously translate into one that's also "generous" for workers. But that's not the way teacher pension plans work.
Changes in the retirement plan offered to federal workers can teach us lessons about the retirement plans state and local governments offer to teachers.
NFL players and teachers surprisingly have a lot in common. Neither has a pension plan that meets the majority of their needs. But for teachers, the failure of the plan to provide a good retirement benefit is particularly costly.
While maintaining the Social Security status quo might seem at the very least unobtrusive, it neglects an opportunity to extend coverage to the over 1 million teachers and 6.5 million government workers whose jobs go uncovered.

America’s next president may bring substantial changes to Social Security, depending on who is elected. Both Republican and Democratic candidates have presented their ideas for change (or no change) at the last few debates. Current positions primarily focus on expansion or reduction, but so far haven’t mentioned workers who lack coverage.  

So what do the 2016 presidential candidates want to do to Social Security?  

Democrats

  • Hillary Clinton says she will preserve benefits and enhance certain aspects of the program, such as benefits for vulnerable populations. She proposes lifting the payroll tax cap, broadening the tax base, and raising survivor benefits for groups such as widows and giving caregiver credits for those who have removed themselves from the workforce to care for children or ailing family members. 
  • Bernie Sanders proposes a broader expansion of the program with general increases to the minimum benefit and using a higher price index to make cost-of-living-adjustments (COLA) for more generous benefits. Similar to Clinton, Sanders also proposes lifting the current income cap, so that high-income individuals pay the same percentage on their income toward Social Security. Currently, high-income earners only need to pay Social Security taxes on a portion (the first $118,500) of their income. Sanders proposes lifting the cap, so that individual making over $250,000 will be taxed at the same percentage as other workers. 

Republicans

The Brookings Institute hosted an event on state retirement security yesterday, including a panel on Social Security coverage for state and local workers. A quarter of all state and local government workers—including over 1 million public school teachers—are not covered by the federal program.  
 
Universal Social Security would provide a number of benefits for new workers and the program itself by:
  • Providing workers with portable, inflation-protected benefits based on a progressive formula.
  • Reducing the program’s long-term shortfall and extending solvency and fairly distributing legacy costs.
  • Eliminating obscure provisions, like GPO and WEP, that reduce benefits for workers with mixed coverage.
  • Ensuring that all public workers, including teachers, are on a path to a secure retirement.
 
There are, of course, some tradeoffs. Pension plans in states without Social Security tend to offer larger state pension benefits to compensate for the lack of Social Security and would likely be reduced with the addition to Social Security (note: if Social Security were expanded to only new hires, existing workers could remain in their existing plans). Moreover, state and local government employer and employees would need to pay contributions to the federal program.
 
But the benefits may outweigh the costs. As the presenter, William Gale, explained, if we were designing Social Security today from scratch, it wouldn’t make any sense to leave out a quarter of state workers. Today, teachers without coverage are left to rely on their state or local pension plan, which unfortunately, provide inadequate benefits for the majority. Workers today need consistent, reliable benefits that they can take with them wherever they move. Extending to Social Security to all workers would be a step in the right direction.