March 16, 2005

Hispanics and the Social Security Debate

I. Overview

Latinos have distinct demographic and economic characteristics that give them a unique stake in the debate over the future of Social Security. First, they are younger on average than the remainder of the U.S. population, which means that, as a group, their future as Social Security contributors and beneficiaries will be different from the future of non-Hispanics. Second, Hispanic workers tend to hold lower-paying jobs than the average U.S. worker and are less likely to have an employment-based pension. At all ages of adulthood Hispanics have lower average incomes and have accumulated less wealth than their white counterparts, and Hispanics currently over the age of 65 rely very heavily on Social Security retirement benefits as a source of income. For all these reasons, the nature, extent and timing of any changes to Social Security would have specific and distinct consequences for the Hispanic population.1

In addition to examining these demographic and economic characteristics, this report presents the findings of a new national public opinion survey which found that about half of all Latinos favor a plan of the sort proposed by President George W. Bush, a plan that would allow wage earners to put some of their Social Security taxes in investment accounts. Conducted from February 15 to March 2, 2005, among a nationally representative sample of 1,001 Hispanic adults, the Pew Hispanic Center survey found that 49 percent think the proposal is a good idea while 38 percent say it is a bad idea. The survey also found that Latinos strongly favor measures that would limit benefits for the wealthy or increase Social Security taxes on them and oppose measures that would reduce benefits or eligibility for most retirees.

The major findings presented in this report include:

This report is broken into four sections. First, it reviews the current and future demographic characteristics of the Latino and white population in the United States, and shows how differences in these characteristics mean that Latinos and whites would be affected in different ways by the changes in Social Security proposed by President Bush. Next, the report analyzes how older Hispanics are faring under the current Social Security system. It then shows how wealth accumulation and levels of participation in pension plans by Hispanics are likely to shape their dependence on Social Security in the future.2 Finally, the report presents the findings of a national survey of Latino attitudes toward proposed changes in the Social Security system.

  1. The terms “Hispanic” and “Latino” are used interchangeably in this report. All racial identifiers such as “white” and “black” refer to non-Hispanics.
  2. In line with current public debate, this analysis focuses only on the retirement portion of Social Security. Social Security also provides benefits to disabled workers and surviving family members of deceased workers. Of the 46.4 million Social Security beneficiaries in December 2002, 32.3 million were either retired workers or the spouses or children of retired workers. Although Social Security reform might also affect disability and survivors’ benefits, it is clearly the projected growth in the number of retiree beneficiaries due to the aging of the baby boom generation that is driving this reform.