As if Americans’ Social Security retirement benefits were not already sufficiently modest, conservatives have come up with a new ploy to erode them under the guise of something positive: paid family leave. The Cradle Act, introduced last week by Sens. Joni Ernst (R-Iowa) and Mike Lee (R-Utah), would encourage new parents to accept federally-paid family leave in exchange for much-needed Social Security retirement benefits later.
“You can take one, two or three months of parental leave and as a consequence of that, choose to delay your retirement date by two, four or six months,” Senator Lee explained. Note the Senator’s use of the word “consequence.” Paid family leave should not entail “consequences” for new parents, least of all the sacrifice of their future retirement benefits.
{mosads}The federal government should fund family leave. But why help new parents out in the early years only to penalize them as seniors?
“There should be no trade-off between paid family leave and Social Security benefits,” says former Senator Tom Harkin, chairman of the National Committee to Preserve Social Security and Medicare’s advisory board. “The Cradle Act proposes the same kind of ‘I need it now’ trap that induces younger adults to withdraw money from their retirement plans when changing jobs. Later, they discover they have nothing left for old age.”
Sens. Ernst and Lee should remember that two-thirds of retirees rely on Social Security for most of their income, a number that will only grow if current trends continue. Pensions – the bedrock of the American Middle class in the 20th century – are fading into history. Fewer than half of American workers receive any kind of employer-provided retirement benefits, and even those are subject to the volatility of financial markets. Sixty-five percent of Americans have little or no savings, and 40 percent of us do not have enough cash on hand for a $400 emergency.
New mothers, in particular, can ill afford to compromise their future retirement benefits. On average, women save less for retirement and their Social Security benefits are already likely to be lower than men’s because of wage inequality and time away from the workplace caring for family. The average American woman loses nearly $325,000 in wages and retirement benefits in a lifetime by caring for family members.
“I would have appreciated having government-paid leave when my kids were born, but I would never have been willing to give up several months of retirement benefits in exchange,” says Lisa Swirsky, a mother of two young children in Maryland. “I understand the importance of Social Security as someone who has an elderly mom who relies on it. In fact, Social Security helps her to remain independent, which allows me to focus on my work and my kids.”
The Cradle Act is only the latest proposal to misappropriate earned benefits for unrelated purposes. Last year, Ivanka Trump and Sen. Marco Rubio (R-Fla.) floated a similar proposal to trade paid leave now for Social Security benefits later. In 2015, the GOP-controlled Senate considered a bill to boost the nation’s highway fund by cutting Social Security retirement and disability benefits. Another proposal in Congress that year would have taken $950 million from Medicare to pay for trade legislation. These were risky proposals then; they are still risky today.
Social Security already provides financial protection for young families through disability and survivor benefits. Nationwide, there are some 6 million survivors, including nearly 2 million children who receive Social Security benefits due to the death of a wage-earning mom or dad. Another 1.5 million kids receive benefits because their parents are disabled.
If Congress truly wants to help young families, it could boost Social Security benefits by creating caregiver credits for adults who spend time out of the workforce caring for loved ones. (Because retirement benefits are calculated according to lifetime earnings, unpaid caregivers usually receive less for having left the workforce – even temporarily). Caregiver credits would guarantee higher retirement benefits to parents and others who forgo wages to care for family.
Rep. Nita Lowey (D-N.Y.) is expected to re-introduce her Social Security Caregiver Credit Act later this year. Under Lowey’s bill, the caregiver credit would be progressive and calculated on a sliding scale according to income. A full-time caregiver would receive an annual $22,000 credit toward her earning history to be used in determining her future Social Security benefit.
Meanwhile, Rep. John Larson’s (D-Conn.) Social Security 2100 Act would, among other improvements, restore the student benefit age to 22 instead of the current age of 18. This would provide more financial protection for families as children enter their post-high school years.
Above all, we must resist any attempt to change the fundamental nature of Social Security through the Cradle Act or other proposals. Social Security is insurance that Americans contribute to during their working years so that they have a guaranteed source of basic income in retirement. It is not a piggy bank to be used for unrelated purposes, no matter how intrinsically worthy they may be. In the wealthiest nation in the world, we should be able to care for people at both ends of life — newborns and seniors — without sacrificing the well being of either.
Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare, a membership organization that promotes the financial security, health and well being of current and future generations of maturing Americans. He also chairs the board of the National Committee’s Political Action Committee, a PAC that endorses candidates for federal office.