Cover All Newly Hired State and Local Government Workers
About 25 percent of state and local government employees are not covered by Social Security. Rather, these workers are covered by retirement plans provided by state or local governments that have chosen not to participate in the Social Security program. Under one proposed change, Social Security would cover all newly hired state and local government workers. Those workers and their employers would each pay their share of Social Security payroll taxes, and the workers would receive Social Security benefits. Current state and local government workers would not be affected. This proposal is estimated to fill about 8 percent of Social Security’s funding gap.
PRO: Social Security works best for everyone when it covers everyone. Workers gain seamless, portable life and disability insurance as well as basic retirement income protection. Any employer-provided pensions are then added to Social Security. Extending coverage to newly hired workers, as was done with federal employees in 1983 legislation, would ease the transition for the workers and jurisdictions that would be affected. (Virginia Reno, National Academy of Social Insurance)
CON: Making newly hired workers join Social Security would increase revenue now, but eventually the program would have to pay these workers benefits. That would make Social Security’s financial problems even worse. In addition, certain already underfunded state and local government employee pension plans would see reduced contributions, and almost certainly need tax hikes to pay promised benefits. (David John, Heritage Foundation)