Josh Barro notes that marriage cannot be an entirely state issue because of the way in which it impacts things like Social Security and Medicare eligibility. Below is the majority of a post I wrote in September, 2011 on the subsidy of marriage provided by Social Security…..
Gene Steurle and Stephanie Rennane have a nice policy brief put out by the National Institute for Health Care Management on the lifetime contributions and benefits of Social Security and Medicare. This is mostly familiar stuff, with lifetime Medicare benefits consistently being several times larger than contributions to the pay-as-you-go program, and Social Security lifetime contributions and benefits being more similar for singles and two-earner couples. However, one thing jumped out from this figure (circled):
The profound subsidy of marriage that is inherent in how Social Security determines benefits for spouses who do not pay Social Security taxes in earlier life. As Steurle notes:
While a single woman who worked a full career at the average wage can expect to receive Social Security benefits roughly in line with her payroll contributions, a married woman who never worked but whose husband paid the same taxes as the single woman can expect to receive about $180,000 in spousal and survivor benefits. Unlike private pensions, these additional benefits are essentially free but only to those who are married, regardless of need, contributions or any child rearing.
The subsidy would be the same if the gender roles were switched.
Determining what type of contracts (marriage, civil union, etc.) provide the benefit described here-allowing one member of a couple to obtain eligibility for Medicare and a Social Security pension even if they have no market wages that were subject to payroll taxes over their younger years- and whether all American citizens have access to this subsidy, is a key public policy detail that will have to be worked out if marriage equality is to have its fullest meaning.
don’t forget that some people are a part of a separate retirement system and receive no spousal benefit at all. my wife pays into social security and i am part of the texas teacher retirement system. i am disqualified from receiving any spousal benefit which irritates my wife to no end because her mother recieved a spousal benefit through her husband’s social security and she never worked a day in her life being a stay at home mother.
Technically, this single/married disparity also applies to compensation while working at for employers who provide dependent medical coverage. Two identical workers receive very different total compensation if one is single and one is married +/- with kids, because the single person’s medical coverage typically costs between one-third and one-half of what family person’s coverage does, a difference of hundreds of dollars per month.
This was of little consequence when health coverage cost a lot less, but it’s now a huge difference. This is not the “ideal” way to pay for medical coverage, to say the least. It’s one more reason that medical coverage should not be connected to employment, and that would also apply to Medicare. Single-payer now!
The rationale for the disparity in Social Security that you note stems from the idea that stay-at-home parents have no other source of retirement income even though they did the productive but uncompensated work of child-raising. The “Security” is intended for families, not individuals, as evidenced by it also being given to disabled person who have never worked, or to dependents of those who die. It’s more of an insurance scheme than a retirement plan, and I think those other functions need to remain for that reason.
I don’t think it’s humanly possible to set up a plan like Social Security that will be “fair” to all participants, but that’s the “Social” part of it: the idea is to reduce poverty among the vulnerable, whether aged or disabled or children, and whether an individual makes a claim on any of those benefits is of less consequence than the fact that they carry that “insurance” for life.
I’m sorry but the second column is assuming that women make the same as a single male in column one. This is totally incorrect.
I would not trust this display if such a basic fact is ignored.
@evil..
The graph is from a simulation of a mean wage for a person who was 65 in 2011…with the mean wage for each year from age 25 to 65 run through the model. They did use the same wage for single males and single females; you are correct that wages are not the same. I suspect they did this as they were trying to heighten the subsidy effect of marriage, and to keep it simple when there was a one wage earner couple, otherwise you would need one wage earner male, and one wage earner female. It is just an illustrative analysis of the ‘average’ wage case.
The difference in income is not addressed in this comparison, as that would introduce another variable. What is being addressed is how much a recipient receives in comparison to their contributions, and to do that analysis, income is held as a constant.
The chart says that at a given amount of lifetime earnings (and contributions), a participant in the programs receives differing amounts in return, based solely on how they are classified-part of a single-earner marital unit or not. This is a big deal for single-earner same-sex couples, because the together they receive the same as a one single person ($290k instead of the $448k they’d get if they were married).
Addressing the male-female earnings discrepancy is a separate issue, and an important one, but since females on average live longer, they may make some or all of that back over their longer lifespans and longer time of receiving benefits. I haven’t seen this important comparison done but it probably is out there somewhere.
It’s even worse - If I divorce spouse #1 and marry spouse #2 (neither of whom ever worked) both will get benefits based on my SS contributions