July 19, 2014; The Government We Deserve

Some of us expect never to stop working. We can’t afford it. With kids, ex-spouses, houses, ever-increasing medical bills, how can we? Except that’s the type of middle-class, white-collar solipsism unfortunately endemic in much nonprofit commentary. Some of us might have been lucky enough to save some sort of retirement funds, even if they’re small, but for much of America’s labor force, especially in the expanding areas of the service economy where pension benefits and other kinds of benefits tend to be a rarity, retirement means trying to make do on Social Security—a system that needs reform.

As people live longer, they will—in theory—spend more time in retirement. Because a large part of the employed population works at firms that do not offer much in the way of health benefits, it is difficult to consider retiring before Medicare benefits kick in at age 65. The most recent employee benefits calculations of the U.S. Bureau of Labor Statistics show that only 19 percent of private industry workers had access to defined benefit plans and 59 percent to defined contribution plans.

Those statistics hide the inequities and differences among different wage groups. The BLS survey shows that low-wage workers have the least access to private retirement plans.

Wage category

Access to defined benefit plans 

Access to defined contribution plans

Lowest 25 percent



Lowest 10 percent



Second 25 percent



Third 25 percent



Highest 25 percent



Highest 10 percent



For many of us, it’s Social Security or next to nothing. The Urban Institute’s Gene Steuerle, who writes the “The Government We Deserve” blog, testified before the House Ways and Means subcommittee on Social Security and laid out the rationale for reforming Social Security now. His testimony drew on information from his recent new book, Dead Men Ruling, in which he argues, “We block progress by refighting yesterday’s battles and trying to control too much an uncertain future.”

Steuerle suggests three problems in the Social Security debate:

  1. Steuerle says that Social Security “in many ways…fails to provide equal justice.” As examples, he points out that working single parents “are forced to pay for spousal and survivor benefits they cannot receive [and] often receiving at least $100,000 fewer lifetime benefits than some who don’t work…” He also indicates that Social Security discriminates against “two-earner couples, spouses who divorce before ten years of marriage…and those who beget or bear children before the age of 40.”
  2. He is concerned about the longer time frame for unemployment now that many people retire in middle age and, because of medical innovations, live longer than their forbears. “Within a couple of decades, close to one-third of the adult population will be on Social Security for one-third or more of their adult lives,” Steuerle writes. “There is no financial system, public or private, that can provide so many years of retirement for such a large share of the population without severe repercussions for individuals’ well-being in retirement and the workers upon whose backs the system relies.”
  3. Steuerle is also concerned about the impact of the slow development and implementation of concerted Social Security reform agenda. “Each year of delayed reform shifts more burdens to younger generations from older ones, with the largest impact on groups like blacks and Hispanics, in part because they comprise a larger share of those future generations with lower returns,” Steuerle writes.

Many nonprofits and their national trade associations have been assiduous in crafting strategies for nonprofits to provide pension programs for their employees. But equally important for the nonprofit sector is paying close attention to the large segment of workers—their own and those elsewhere in the private sector—that will have to depend on Social Security for retirement and will expect that the inequities in the Social Security system get fixed—before they retire. Steuerle’s writings on this subject are important reads.—Rick Cohen