Mandatory Social Security Coverage of State and Local Workers: A Perennial Hot Button

Alicia H. Munnell

IB#32

Introduction

Some recent proposals to address Social Security’s financing shortfall have included an extension of coverage to the 5 million uncovered state and local workers. These proposals spark a predictable outcry from Massachusetts public employees and those in other affected states. This Issue in Brief analyzes the arguments for and against mandating Social Security coverage for newly hired state and local workers. The case against mandatory coverage centers on the issue of higher costs for state and local governments. The case for coverage rests on issues of equity and better protection for state and local workers. That is, mandatory coverage would better distribute the burden of paying for the system’s legacy debt and would improve benefits; it also would raise costs by about 6 percent of payrolls…