Personal Finance

Women and minorities receive less from Social Security. Politicians are looking to change that

Key Points
  • Women and minorities tend to receive less in Social Security benefits due to a persistent pay gap and other challenges, including disability.
  • House Democrats took to the Hill on Wednesday to advocate for Social Security reform aimed at preventing susceptible workers from retiring into poverty.
  • The bill is scheduled for a full committee hearing in July followed by a mark-up in September.

When it comes to Social Security benefits, women and minorities tend to receive less money.

That means those individuals have a greater chance of retiring into poverty or grappling with financial instability if they become disabled. That also affects their families, who often receive less in dependent or survivor benefits.

Congressional Democrats took to the Hill on Wednesday promising to change that. Their message was the latest push as part of the proposed Social Security 2100 Act, led by Rep. John Larson (D-Conn.).

Allison Shelley | Getty Images News | Getty Images

The bill aims to strengthen Social Security for the rest of this century. Its key features includes an increase that will amount to a 2% boost to the average benefit, a new minimum benefit that will be 25% above the poverty line, cutting taxes on non-Social Security income and changing the formula upon which annual cost-of-living adjustment are calculated, among other changes.

Notably, the plan also calls for raising the payroll tax wages on earnings over $400,000. It would also gradually raise payroll contributions to 7.4% from 6.2% for workers and employers.

The changes would bolster Americans, including women and minorities, financially, according to Larson.

"This is a civil rights issue," said Larson. "This is a women's issue.

"This is an economic development issue," he added. "It is also the nation's No. 1 insurance program and No. 1 anti-poverty program."

Supporters who voiced their support for the legislation at Wednesday's event included Reps. John Lewis (D-Ga.), Linda Sanchez (D-Calif.), Judy Chu (D-Calif.), Dwight Evans (D-Pa.), Bill Pascrell (D-N.J.), Conor Lamb (D-Pa.) and Tom Suozzi (D-N.Y.). Advocacy groups including the National Association for the Advancement of Colored People, National Organization for Women and Latinos for a Secure Retirement also participated.

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A full Ways and Means committee hearing on Social Security is scheduled for July, followed by a mark-up in September, Larson said, citing committee Chairman Richard Neal (D-Mass.). The bill currently has more than 200 congressional co-sponsors.

How minorities fall behind

Social Security benefits are based on an individual's working record. But social forces tend to contribute to lower retirement, disability and survivor benefits for people of color, noted Hilary Shelton, senior vice president for advocacy and policy at the NAACP.

African Americans, in particular, tend to have fewer alternative financial resources, become disabled at higher rates and have shorter life expectancies, Shelton said. Their families also tend to rely more on survivor benefits.

Almost 50% of African American beneficiaries rely on Social Security for 90% or more of their retirement income, Shelton said.

Without Social Security, 46% of Latinos would live in poverty, Sanchez said. Asian Americans and Pacific Islanders face a benefits shortage due to the pay gap and less access to other retirement funds, according to Chu.

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Women also tend to receive reduced benefit payments due to lower pay, time out of the work force and the higher probability they will longer.

"Social Security is more than a right," Lewis said. "It is a promise, a promise people paid into to secure their future.

"We can do better."

Larson said the legislation has the support of legislators, particularly those, including Neal, who relied on Social Security benefits growing up after their own parents died.

"Throughout the Congress, we have people who understand the importance and the economic impact that Social Security will have," Larson said.