Blog: Teachers and Social Security

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.

 

Public sector unions praise Social Security. Except they don’t want it for all of their workers.
For all the talk about expansion, there hasn’t been any mention of extension to those without Social Security coverage.
In many ways, women are actually worse off under defined benefit pension plans than they would be under more portable plans.
Teachers need stable retirement benefits that they can take with them wherever they go.
Teachers have a complicated past with Social Security. See this timeline for key dates in Social Security’s history that have impacted teachers.
Forty percent of all public K–12 teachers are not covered under Social Security for their time in the classroom because of decisions made decades ago.