Social Security Reform: Keeping it Solvent and Provide a More Equitable System

Abstract

There is a broad consensus amongst most parties that the Social Security, as it currently exists needs to be reformed in some manner to make it solvent in the long-term. For a large segment of the retired and retiring population, Social Security represents their principle source of income. Abandoning this program does not seem to be a viable option, since it would likely place a significant number of households into poverty levels—although many are now at near-poverty levels today.

The advent of the coronavirus pandemic has introduced an element of uncertainty within the Social Security program. It has been cited in some sources that the reductions in the employment due to the pandemic has provided a degree of impetus for those 62+ to apply for Social Security benefits, especially if these individuals had been either furloughed or terminated from their existing place of employment.

This discussion paper is not presented as a comprehensive investigation into the myriad of facets that are contained within this program. Its primary objective is to highlight the more salient aspects of the issues surrounding Social Security with respect to its primary goal of attaining solvency. A secondary objective is to determine if Social Security can be made more equitable with respect to those who have labored in low-paying jobs and must now accept an equally low-benefit payout.

Two proposal will be advanced, not so much as a recommended course of action, but as a starting point for further discussion. The level of details is minimal. These proposals will hopefully suggest an approach that highlights the various aspects of how it may be possible to secure long-term solvency for the program, as well as possibly providing a more equitable solution to those who participate in the labor market.

Keywords: Social Security, Labor Market, Retirement, Unemployment, Pandemic

JEL Classification: E24, H55, I31