Since you began working for the man (your company), you’ve forked over a portion of every paycheck to the man (the government) in the form of Social Security Taxes. You haven’t had a choice in this matter.
Yes, a few semi-crackpots have told you that you can not pay these taxes if you disavow your SSN, but these types of people usually end up in standoffs with the government in remote locations.
So what exactly is Social Security Taxes? Who do they benefit? Why do you pay them? And where the heck did this policy come from?
You have burning questions and I have answers.
In this post, I am going to spell out the who, what, and why of Social Security. We’ll answer your burning questions in a way that doesn’t confuse you or bore you senseless.
Let’s get started.
Question #1: Where Did Social Security Come From?
On August 14, 1935, President Franklin Roosevelt signed the Social Security Act. Originally the bill was going to be called the “Economic Security Act,” but it was changed to the equally boring “Social Security Act” when it was being evaluated by Congress.
Those guys have never been known for their creativity or liveliness.
Ernest Ackerman received the first payment ever – a whopping 17 cents. Even back in 1935, this was not a particularly large sum. Presumably, he saved this money so he could purchase a single beer after he retired.
The program was already a rollicking success!
Question #2: What Is The Purpose Of Social Security?
Most people think of Social Security as just a retirement program. This makes sense given that you can’t collect it before age 65 without a penalty. But, it also provides some life insurance and disability protection as well.
Let’s say that, God forbid, you are in a terrible roller derby accident. It can happen to anyone.
If you didn’t survive your accident, your dependents would receive benefits from Social Security. If you were severely disabled, you would also receive some compensation through what you had already contributed. The Center for Budget and Policy Priorities has done an extensive study on the data and statistics on Social Security benefits, and I will be sharing them with you.
In 2016, approximately one-fifth of the 60 million people who received Social Security benefits were either disabled or dependents of deceased workers.
Now that you have this knowledge, you can go all out in your next roller derby tournament.
Question #3: Who Is Eligible For Social Security Benefits?
If you’ve worked for 10 years or more, you’re probably eligible. In order to receive the minimum income of $1,260 per quarter, you need to have 40 credits (or quarters) of coverage.
There are a few odd exceptions to this. Pastors have the option of choosing to not opt-in to Social Security. Federal employees hired before 1984 can’t participate and railroad workers usually get benefits through a different system.
As long as you don’t fall into one of those categories, you should be solid.
Question #3: What Determines How Much You Receive In Benefits?
The amount you end up receiving is based on the amount you earned over the course of your life. The more you earned and paid in taxes, the higher the amount (not percentage) you receive.
Let’s say you’re a high-flying CEO earning a cool six-figure salary. You will pay a percentage of your salary in Social Security taxes, up to a maximum taxable amount of $118,500. When you retire (or are pushed out by a younger, better looking executive), you will receive benefits based on your earnings and what you paid in taxes.
But here’s the thing: the higher your earnings, the lower percentage you earn in benefits. In other words, if you make 45 percent of the average wage, Social Security will replace about half of your income. If you earn more, Social Security will replace a lesser percentage. It’s a progressive benefit.
As you get older, your benefits will be adjusted based on the cost of living. This is to prevent you from sinking into poverty and being forced to panhandle for change.
If you start drawing benefits early, you will receive a reduced amount.
Question #4: Why Is Social Security Important?
When you see that chunk of change being removed from every paycheck, it can be tempting to think that Social Security is just a waste of your money. But it’s not.
First, it’s an almost guaranteed retirement plan. The Social Security Administration estimates that 97 percent of people aged 60 – 89 receive benefits or will receive them. This functions as a safety net for retirees.
Second, it’s available to all people, no matter how much they earned. Unlike some programs, where you get the shaft depending on your earnings, everyone has access to Social Security funds.
Social Security matters for the United States, especially as the Baby Boomer generation hits the retirement age. Without it, many people would be left high and dry with very little in their bank account.
Question #5: Can You Live Off Social Security Benefits After You Retire?
Unfortunately, Social Security doesn’t pay enough to let you purchase a Lamborghini or a house in the Hamptons. In fact, the benefits are actually smaller than many people realize.
In 2016, the average benefit was only about $16,000 per year. Unless you’ll be living in a shack and eating noodles, that’s probably not enough to survive.
And, to make things worse, the replacement rate for wages is falling. In 2016, Social Security replaced about 39 percent of past wages, but it’s going to fall to about 36 percent in the future.
That being said, Social Security will still replace a significant portion of most people’s income and shouldn’t be discounted.
Question #6: Is Social Security Important For People Other Than Retirees?
It sure is. It matters to a lot of children in the United States. In 2014, more than 6 million kids lived in homes that received some form of social security income. This includes dependents of retirees, deceased workers, and the disabled.
You may not like giving up money for Social Security but think about the kids. You care about kids, right? RIGHT?
Social Security is also very important for minorities. Why? Because they often have less opportunity to save money and earn pensions. For those 65 and older, Social Security is 90% of income for Asian Americans, 45% for African Americans, and 52% for Latinos.
Finally, Social Security is critically important for women. It’s common knowledge that women earn less than men, take more time out of the workforce, and live longer than men. This combination makes it critically important to women, especially those who survive their spouses. In fact, about 97% of survivor beneficiaries are women.
Question #7: What Would Happen To Retirees If They Didn’t Have Social Security?
Just how important is Social Security to the elderly? Without it, 40% of those 65 or older would be below the poverty line. That is a huge number of people and will continue to grow as the Baby Boomer generation ages.
With Social Security in place, only 10% of those retirees are below the poverty line.
Social Security is really important to a lot of people.
In fact, 61 percent of elderly people rely on Social Security for the majority of their income. For one-third of those people, it represents 90% or more of their income.
Removing Social Security would create a massive problem for those who are relying heavily on the benefits to keep them afloat.
Question #8: Will The Social Security System Continue As Is?
That’s a bit of a dicey question. The Social Security Board of Trustees has said that, unless things change, funds will begin declining and 2020 and become depleted in 2034. When they are depleted, benefits will be paid out a reduced rate.
That reduced rate will start at around 79% and decline to 73% by 2089.
Of course, it’s not likely that you’ll be alive in 2089 unless science finds a way to dramatically increase the human lifespan. However, your kids will be alive, so this does affect them.
Let’s hope they fix things before then.
Clearly, Social Security isn’t a perfect system. It doesn’t have a huge payout after retirement and that payout will probably be smaller in the future. But it does play an enormous role in our society. Without it, millions of people would be in poverty.
Additionally, it functions as a safety net of sorts, so that if something does happen to you, you’ll receive at least some income.
Should you plan on living off Social Security? Of course not. But you can count on receiving something after age 65, and that’s a huge benefit.
How American Cities Can Promote Urban Agriculture
In his original plan for the city of Philadelphia, William Penn declared that every home should have ample space “for gardens or orchards or fields, that it may be a green country that will never be burnt and always be wholesome.” Before militiamen or throngs of protestors, the Boston Common nourished grazing cattle. Urban agriculture has cropped up again and again in cities throughout American history – from “relief gardens” for the poor in the 19th century, to “victory gardens” of World War II – and for good reason. If embraced and encouraged, urban agriculture can create economic, cultural, environmental and educational benefits. In recent years, various cities have developed good urban agriculture programs. By distilling their successes and struggles, my colleagues and I identify a series of best practices in this area.
Tailoring Programs for Varied Communities
“Urban agriculture” is an umbrella term encompassing a wide array of practices. Good programs take account from the start of community preferences that vary. Beekeeping or backyard chickens, for example, might be considered progress in Portland but backwardness in Baltimore. Controversies often arise, but they offer opportunities for dialogue. When disputes erupted about the 140-acre Hantz Farms proposal in Detroit, for example, officials convened public meetings to fashion a vision of urban agriculture. Cities like Portland and Vancouver have formed urban agriculture task forces composed of private citizens, government representatives, and organizational partners to advise the cities on planning and code issues.
In most cities, urban agriculture of some form is already practiced, whether regulations officially enable it or not. It is important to take stock of these existing operations and practices. Important elements to consider include: the number of gardens and gardeners, their demographics, the type and location of existing gardens, popular agricultural practices, and where space exists to expand urban agriculture. Numerous cities have benefited from conducting “urban agriculture land inventories,” in which mapping professionals use satellite imagery and public records to determine which publicly-owned plots are best suited to urban agriculture.
Communities should develop an independent agency or department to manage urban agriculture. Because urban agriculture is a multi-faceted process, many city agencies currently regulate its disparate aspects; Parks, Public Works, Environmental Protection, Sustainability, Health and Sanitation, Land Banks, and other departments all have their hand in working with growers. Centralizing this authority under one department can streamline regulation and simplify the process of establishing gardens and farms. Boston’s Grassroot program, Chicago’s Neighborspace program, and New York’s Green Thumb program are all excellent examples.
Municipalities should audit existing codes and laws. Although most relevant regulations will be found in local zoning ordinances, other codes might have unexpected effects on urban agriculture – including ordinances regulating produce sales, market stands, shade trees, and noise. In Los Angeles, a near-forgotten, yet narrowly-worded, 1946 “Truck Gardening Ordinance” threatened to limit agricultural sales exclusively to vegetables before it was amended by the city’s governing body. Municipalities should also be aware of state and federal regulations that might affect agriculture policy decisions. Right to Farm laws typically operate at the state level and may restrict localities. Notably, Detroit and other large cities in Michigan had to postpone regulation of urban agriculture until they were exempted from their state’s Right to Farm rules.
Ways to Facilitate Urban Agriculture
Although public sentiment should determine where urban agriculture is appropriate, there are opportunities to incorporate some form of agriculture or gardening in every land use zone. Cities from Seattle to Philadelphia have incorporated urban agriculture into existing land use codes. Small acreage projects unlikely to create nuisances include backyard gardens typical of single family homes and should be permitted virtually anywhere. Yet large acre, high nuisance projects – such as multi-acre urban farms relying on heavy machinery or animal husbandry – are better suited for the city edges or industrial zones.
While permitting urban agriculture outright in this fashion has proven successful, other creative ways that cities have enabled urban agriculture include:
- Creating new zones for urban agriculture specifically, as in Boston and Cleveland.
- Permitting urban agriculture as “conditional” or “accessory” rather than primary use. This allows local planning and zoning boards to maintain control over how such uses are developed, without restricting them. However, this approach can become too cumbersome and likely to disproportionately burden applicants with fewer resources.
- Land can be directly supplied — through adopt-a-lot programs and leasing underused spaces to citizens or qualified urban farmers. Offering flexible, medium- to long-term leases is critical, as security of land is vital to the success of urban farms.
Good Management to Sustain Citizen Projects
Finally, municipalities must take steps to ensure that citizens practicing urban agriculture do so responsibly. Some of the most effective approaches include:
- Passing or revising codes that limit the use of pesticides and fertilizers
- Enforcing time restrictions on the use of noisy farm equipment (although this is not typically an issue on small plots where hand tools are most common)
- Providing training opportunities through city departments or local cooperative extension services
- Requiring preliminary testing of land and monitoring of soil toxicity, soil nutrition, and any utility lines running through a property
- Offering access to rain barrels or municipal water hookups
- Including urban agriculture in all future urban planning efforts, including master plans.
How Environmental Policies Can Promote Economic Growth
The Trump administration had been working hard to roll back the nation’s environmental regulations on the grounds that they are an economic burden on business. But evidence from California tells a very different story. For the past half century, California has been the richest U.S. state – even as it has led the United States in coastal protection, restricting oil drilling, regulating automotive emissions, promoting energy efficiency and, most recently, curbing greenhouse gas emissions.
From 2013 to 2016, California grew more rapidly than any other state – to become the world’s sixth largest economy. Not only have rapid economic growth and stringent environmental regulations proved compatible, many of California’s environmental regulations have promoted economic growth and benefitted businesses.
A History of Innovative Environmental Policy
California was the first government in the United States to impose pollution controls on motor vehicles. The campaign to do so was strongly supported by the Los Angeles business community, most notably its powerful real estate developers. They feared that unless the city’s air quality measurably improved, it would become more difficult for the city to attract new residents and businesses.
Thanks to the steady strengthening of both state and federal automotive emissions controls, air quality in Los Angeles dramatically improved. During the 1970s Los Angeles averaged 125 Stage I smog alerts per year, but it has not had a single one since 1999. In 2015, the city recorded its lowest smog level since reporting began. It is hard to imagine that Los Angeles would have continued to grow so substantially or become the center of the world’s entertainment industry as well as the location of so many high income communities had its air remained so hazardous.
California’s pollution controls grew out of a long history of collaboration between policymakers and business firms. In fact, California’s businesspeople and policymakers have been working together since the 19th century. To promote tourism in the Golden State, steamship companies wanted to safeguard Yosemite and the Southern Pacific Railroad became advocate of protecting the sequoias of the Sierra.
Most recently, California businesses have backed the state’s wide-ranging initiatives to reduce greenhouse gas emissions. California’s historic 2006 Global Warming Solutions Act mandated a reduction in greenhouse gas emissions to 1990 levels by 2020. It was backed by more than 200 individual firms and business associations, including the state’s high-technology and venture capital firms in Silicon Valley. By 2006, nearly $2 billion in venture capital had been invested in clean technology. As one state policymaker noted, “The legislation . . . sends a signal to people that there is a market where people can invest. . . So what started as an environmental issue in 2001 or 2002 has garnered a lot of business support.”
Economic Benefits of Smart Environmental Policies
Promoters of economic growth in California rightly see that regulations have opened doors for innovative businesses and reduced costs for citizens and enterprises alike:
- Thanks to the state’s promotion of renewable energy, 1,700 solar companies are based on California. The state accounts for half of the rooftop solar installations in the United States and a quarter of the nation’s solar energy jobs. Renewable energy mandates have been strongly supported by the state’s unions because of the jobs they create. All told, more than 500,000 people are employed in the state’s growing renewable energy sector.
- The state’s Advanced Clean Cars Program and its zero-emission mandates have led Californians to buy or lease more than 200,000 pure electric vehicles. This represents roughly half of all such vehicles registered in the United States, and has made California, along with China, the world’s largest market for this new automotive technology. Thanks to Tesla, California has become the center of electric vehicle technology, with several other auto manufactures opening design facilities in the state.
- Between 1974 and 2014, energy consumption per person in the United States increased by nearly 75 percent, while California’s per person energy consumption has remained nearly constant. The state’s energy-savings program, building codes, and appliance efficiency standards have reduced the energy bills of Californians by nearly $90 billion and have also saved the expense of constructing what could have been up to 50 new power plants.
In 2010, two Texas-based oil companies launched a California ballot initiative to roll back the state’s climate change commitments. Tellingly, this effort met with strong business opposition, especially from California’s clean technology sector, which by then had investments worth $6.6 billion. According to the Silicon Valley Leadership Group – whose participants reap worldwide revenues of more than $2 trillion – “our members believe that reducing greenhouse gas emissions and our dependence on fossil fuels presents an opportunity to transform the economy from one based on coal, oil, and gas to one that runs on clean renewable energy.”
California as a Model
The experience of America’s most populated and currently rapidly growing state challenges the claim that environmental protection hurts the economy. Often jointly backed by businesses and citizens groups, California’s environmental policy leadership has nourished prosperity, truly laying the foundations for the making of a “Golden State.”
As Washington now tries to retreat in environmental policymaking, more states can learn from what California has accomplished. Policymakers, advocates, and others concerned about economic growth and competitiveness should work to strengthen regulations and create new opportunities for firms that stand to benefit from a “greener” growth trajectory. When a state protects its scenic beauty, improves its air quality, reduces its energy use, and promotes renewable energy, it not only protects its environment, but also becomes a more inviting place to live, work, visit, and invest.
New Preschool Program in Oregon is a Model for the Nation—But Challenges Remain
In November 2020, voters in Multnomah County, home to the city of Portland, resoundingly approved the creation of a new, universal preschool program—a program that could serve as a model for desperately needed preschool and childcare investments for the entire country. All three- and four-year-olds in Multnomah county will be able to attend a free, year-round, universal, high quality preschool program that meets their needs as well as those of most families, providers and staff, and local businesses. Key elements include a wide range of choices for families as well as living wages and professional supports for providers and workers. The program is slated to be equitably funded by a local income tax on the highest income households.
Two big challenges remain: ensuring that families with “non-traditional” work schedules are included, and significantly increasing public investment in facilities to allow preschools to expand well beyond church basements and providers’ homes. Those working non-traditional hours are disproportionately low-income, women, people of color, and often “essential workers” without whom our society and economy would not function. Federal childcare initiatives must address the needs of families with such work schedules, or the families that most need public child care will be left out.
A Universal Model that Serves Diverse Needs
Universal preschool programs benefit all children and lead to better outcomes than means-tested programs for the most disadvantaged children. Means-tested programs such as Head Start seek to deliver services only to households with low incomes. Although means-tested programs “target the poor,” universal programs bring children and families from across the socioeconomic spectrum together, challenging ongoing race, ethnic and class segregation that erodes democracy. Universality also inspires broad support to maintain adequate funding. After fifty well-regarded years, Head Start is still available—but only for a fraction of eligible families, and even then, often only part-time and part-year. High quality preschool and child care is out of reach for the large majority of families who already face the high cost of housing, health care, and student debt with stagnating wages. Importantly, universal preschool is both a two-generation anti-poverty program and a powerful boost to economic development, because it returns $9.45 to the community for every dollar spent.
Families raising young children are diverse and need a wide range of options. Multnomah County’s new Preschool for All program will offer choices of:
- language and cultural contexts, including Afro-centric and other alternatives,
- types of setting, including family childcare providers, public schools and free-standing centers, and
- schedules, including school year and year-round, full and part-time, weekend days as well as week days, with up to 50 hours a week for families that need or want longer days
Children with disabilities will be included, facilitating earlier identification of health issues and treatment. Expulsions, now too common in preschool settings particularly for children of color, will be prohibited, requiring that the system provide supportive interventions to meet all children’s needs.
Fair Pay and Professional Support for Providers and Workers
Currently, U.S. family childcare providers, preschool teachers, and childcare workers earn poverty wages with few benefits and often cope with difficult working conditions. The result is high turnover; the loss of skilled, experienced and dedicated workers to jobs that better support their families; and damage to the quality of care. High quality child care depends on the ongoing relationships caregivers develop with families, children, and co-workers.
Multnomah County’s new Preschool for All program will pay teachers comparably with kindergarten teachers, doubling their current salaries. The wage floor for assistant teachers and other classroom staff will be set at nearly $20 an hour when the program starts in Fall 2022, with pay levels adjusted to reward increasing skills, training and experience. Continuing professional development will be geared to the schedules of the low-income working parents who are over-represented among preschool workers. Should workers wish to join a union, employers will be required to remain neutral.
Funding universal high quality child care is within reach. Over the past 40 years, U.S. economic gains have been concentrated on an ever smaller group of the wealthy, while responsibility for paying for our infrastructure and public services has been shifted from the affluent to the working and middle classes. Reversing such trends, Multnomah County’s preschool program is to be funded by a county income tax on approximately eight percent of households at the top. Combined federal, state, and local income tax rates for such households will still fall far below the top tax federal income tax rates in place for the much of the 20th century, from the 1930s through the 1970s.
Multnomah County intends to offer preschool up to ten hours a day and on weekend days, but has not committed to other “non-traditional” hours. Employers demand “non-traditional” work schedules for the three occupations expected to add the most jobs between 2019 and 2029: home health and personal care aides, fast food and counter workers, and restaurant cooks. Many retail and hospitality positions also entail low wages and employer insistence that workers maintain “open availability,” and healthcare, construction, and gig workers struggle with work schedules that make it very difficult to find child care.
Multnomah County will pay fair wages to everyone working in the classroom, but will not supplement the pay of people working in Head Start and other public preschool and childcare programs that pay too little to retain skilled people in the face of a more attractive alternative. The county plans to support some infant and toddler programs, but won’t be able to overcome the severe shortage of affordable, quality care for these age groups, likely to be exacerbated by competition from a preschool system offering better compensation. Finally, preschool and child care is now crowded into inexpensive or public spaces; serving all children well will require a significant investment in physical facilities.
Despite such continuing challenges, Multnomah County’s Preschool for All offers a national model, with its variety of choices to families, living wages for all classroom staff, and an equitable approach to public funding. Each of these aspects needs to be included in any new federal program. In addition, a new federal program should aspire to offer high quality child care to families struggling with difficult work schedules, until labor legislation is revised to place limits on such unpredictable schedules. Strategies will also need to be implemented to improve the wages of workers in Head Start and other public preschool and childcare programs.
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