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.
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