Mandatory Coverage Advocate Releases Study
A long-time advocate of forcing newly-hired state and local workers to participate in Social Security has released a new study of the issue. "Mandatory Social Security Coverage of State and Local Workers: A Perennial Hot Button" from Alicia Munnell, the director of the Center for Retirement
Research at Boston College, surveys the cases for and against the measure and concludes that:
The arguments for mandatory Social Security coverage rest on equity. While mandatory Social Security coverage may be equitable and improve benefits, it will raise costs by 5 to 6 percent of payroll. Part of the increase reflects improved real benefits, the cost of which will probably be borne by the workers; part reflects a tax to cover Social Security’s legacy costs, the burden of which will probably be borne by the taxpayer.
Munnell in 2000 conducted a study of the 1999 Segal Company report in which she concluded that mandatory coverage would improve Social Security's finances, provide some benefits that some public employees do not now have and increase the fairness of the program since, "Excluded state and local government employees or taxpayers in their jurisdictions are not paying their share of income redistribution ... [and] also are not paying their share of financing the unfunded liability associated with the startup of the Social Security program."While the 2000 study did not challenge the Segal report's conclusion that mandatory coverage would cost state and local governments $26 billion during the first five years - a number that was recently updated to $44 billion - it did downplay the significance of that number.
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