The Social Security Benefit Structure: Equity Considerations of the Family as Its Basis
Abstract
The secondary benefit structure of the Old Age, Survivors, and Disability Insurance system (OASDI) transfers $25 billion per year to families of retired, deceased, and disabled workers without appreciable regard to past contributions or to need. Since these benefits are financed through payroll taxes, the insurance premiums of larger families are subsidized by the contributions of individuals and smaller families, regardless of ability to pay. This subsidy exists even with the strong weighting of the system in favor of lower income workers. The present research indicates that returns on Social Security contributions vary more by family pattern than by any other variable. Moreover, the enactment of several recent congressional bills would further expand the transfer among family types. Research suggests that if equity among families and individuals is an issue of concern, then alternative means of financing Social Security cost increases should be implemented.
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