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STRENGTHENING SOCIAL SECURITY FOR YOUNG WORKERS

FOR MANY YOUNG ADULTS, economic prospects have deteriorated sharply in recent years. According to the U.S. Department of Education, from 1972- 1995, annual incomes for young adults age 25-34 plunged twenty-one percent for college graduates and thirty-five percent for high school graduates. The Clinton economic expansion is helping, but it cannot continue forever. A long-term commitment to full employment at living wages is still needed.

The problem results from poor standards in many of the new jobs created in our economy: part time, small business, service sector and temporary jobs. These are the jobs of the future. As the Social Security debate moves forward, policymakers should recognize the broader economic context of America's new workplace and seek solutions that will leave younger generations with a solid safeguard for an uncertain future.

SOCIAL SECURITY MATTERS to young adults for many reasons. While annual incomes for young adults have plummeted since 1972, pension coverage for workers age 25 or less dropped one-third; for workers age 25-29, coverage dropped fifteen percent, according to the Department of Labor. The jobs of the future hold little promise of improvement.

Only 3.1 percent of temporary employees - half of whom are age 20 - 34 - - have a 40 1 (k), and not one has a pension, through their employment. Similarly, only eighteen percent of workers in small businesses (fewer than twenty-five employees) have any retirement plan. According to the Department of Labor, small businesses created seventy-five percent of all new jobs in 1995.

As Commissioner Kenneth Apfel has remarked, one-third of all Social Security beneficiaries are not retired. They are survivors, disabled workers, and their families. Many of these young families depend upon Social Security to pay rent and medical bills or finance an education.

Far from being millionaire internet entrepreneurs, most young adults will be working in service sector jobs of short duration, with few of the safeguards that once existed for workers in the manufacturing economy. These young workers need Social Security to be there for them, and they need Social Security's future resolved in a manner that strengthens the basic survivors, disability, and retirement guarantees.

PRIVATIZING SOCIAL SECURITY IS WORSE for Generation X workers than any other age group. Privatization is touted as a remedy for illnesses said to afflict younger generations -the so-called ravage of overly abundant grandparents, a government that cannot be trusted to keep its promises, or a 21st Century American economic Ice Age. Privatizing Social Security will solve none of these problems.

Unfortunately, many young people have come to believe that Social Security will not be there for them (the depth of this belief, however, is not clear; it may be quite shallow). While privatization advocates claim that an individual account will restore some of their faith in Government, this claim is false both in fact and motivation. More likely, it will foster an attitude that our interests are best served by abandoning collective commitment.

More importantly, young people have never been told what privatization would do to the Social Security Trust Fund. Most young people do not want an "alternative" to Social Security; they just want Social Security to be there for them. If a privatized account will accomplish that goal, they might favor the proposal. If a privatized account threatens Social Security, they will oppose the proposal. Non-biased opinion research reaches this conclusion.

In order to divert a portion of payroll taxes into privatized accounts, privatizers must reduce Social Security guaranteed benefits for future generations by 20 - 40 percent and increase the retirement age. Worse, the benefit cuts seriously jeopardize millions of survivors and people with disabilities. Every privatization proposal either cuts survivors and disability benefits dramatically (15-30 percent) or has no plan at all for raising the large amounts of revenue needed to keep benefits intact. These young adults' benefits will go first to the chopping block.

STRENGTHENING, NOT UNDERMINING Social Security is the best course. Taking Social Security off budget, investing the surplus like a pension, applying FICA more fairly to wealthier workers, using general revenues, and indexing FICA to increases in life expectancy ($2 annually) are all good options. The distinction between a good proposal and a bad proposal is the degree to which it will assure the safeguard of Social Security's guaranteed benefits.

There is agreement that the Federal budget surplus can be used to strengthen Social Security, and that significant benefit cuts or tax increases should be off the table. Individual accounts are a viable option, if they are a voluntary supplement requiring no cuts in Social Security benefits.

Common ground can exist if policymakers heed public opinion. In polls by Americans Discuss Social Security, the public, when presented with the trade-offs involved with various options (such as private accounts), choose security over risk every time, even if it means higher FICA contributions. In the 2030 Center poll, 86 percent of all Americans say that "Congress should not reduce benefits or raise the retirement age in order to fund individual accounts."

THE 2030 CENTER is a public policy organization for young adults, founded in 1997 to provide a voice for young people's economic concerns in order to reverse the deterioration of their economic circumstances.

The 2030 Center is at the forefront of developing progressive strategies to strengthen Social Security. We speak to audiences of all ages, write articles and op-eds, advise Congressional staff, conduct survey research and policy development, train young leaders, and provide a younger generations' perspective for major events and the media.

In the summer of 1998 we released a national poll on Social Security reform, conducted by Peter Hart Research, which found deep support among young adults for Social Security. This month, we released our policy manual, Strengthening Social Security for Young Workers.

A not-for-profit nonpartisan project of the Tides Center

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