When most Americans begin to prepare for retirement, they count on Social Security to form the bedrock of their retirement savings. For millions of working families, Social Security is the key to retiring with dignity. However, a significant number of public employees nationwide will not receive Social Security benefits in retirement because they do not participate in it during their working years.
Why do so many public employees not participate in Social Security? To answer this question, one must go back to the early history of the program. The Social Security Act was passed in 1935 as part of President Franklin Roosevelt’s New Deal program. Social Security was a response to the poverty inflicted upon many by the stock market crash of 1929 and the ensuing Great Depression. The idea was simple: if workers and their employers put aside a certain portion of their income during their working years, then workers would be able to retire with security and dignity when their careers ended.
Originally, Social Security covered much fewer employees than it does now. For instance, all employees of federal, state, and local governments were excluded from the program. Federal employees were already covered by the civil service retirement plan. For state and local government employees, it’s a little more interesting. In that instance, it came down to a constitutional question of whether the federal government had the authority to impose a tax on other levels of government, in this case, the payroll tax required to fund the Social Security program.
The answer to this question of whether the federal government can tax other levels of government is still unanswered today. Through a number of amendments and changes to the Social Security program beginning in 1950 and continuing to today, the number of workers covered by the program has been expanded. Now, federal employees and many state and local government employees participate in Social Security. In about 14 states, though, some public employees still do not participate in the program. For these teachers, firefighters, and other public employees, their defined benefit public pension is their only source of retirement income, aside from any personal savings.
When misguided politicians propose eliminating public pensions, it’s important to remember that for many public employees in states like California, Louisiana, and Texas, their public pension is all they’ve got for retirement. These working families don’t have Social Security to fall back on. This makes it all the more important to fight to protect pensions in these states.