Social security operationalizes a sense of vertical, or work, equity. Recipients have extensive work histories (or, minimally, work histories covering the bulk of their adult lives) and have made regular contributions through payroll taxes. The program posed some horizontal, or support, equity problems for workers who were in-
eligible because of their age at the time social security was initiated, and a few related problems occasionally arise. However, today roughly nine of every ten workers and retirees participate in the program. The largest single group of workers currently not covered are federal government employees, who have their own pension programs, but under current legislation, they will eventually be brought into social security. For employees of state and local governments, participation in the program is optional but widespread.
Eligibility for social security benefits has been based on a rigorous interpretation of the investments (effort) principle of distributive justice, to use Hochschild's terms. Benefits may be viewed as a reward for regular exertion in the paid labor force (or, minimally, for being a dependent of such a person). The scaling of benefits to wage histories fits Hochschild's criterion of results, although since the early 1970s the overall benefit structure has been redirected toward meeting basic needs.
This firm link to regular participation in the work force has facilitated SSA's argument that recipients have an earned right to their benefits, a point bolstered by the use of carefully selected terms: "contributions," rather than "taxes," for example. The most important rhetorical strategy in distinguishing these earned rights from other forms of social provision has been the concept of individual social security accounts. By calling the records of workers' payroll taxes "accounts," the creators of social security effectively evoked the image of bank accounts, sums of money that workers accumulate through their contributions and that are held in their names by the SSA. And while recipients of means-tested public assistance must exhaust their resources in order to receive benefits, social security recipients simply draw on their personal accounts of prior contributions regardless of current means or need. This concept of earned rights to public income-maintenance benefits rather nicely conforms to American attitudes about human dignity, self-reliance, and self-help, thus clearly distinguishing social security recipients from the "undeserving poor."
Because need is not a criterion for receiving benefits, the program cannot ensure that benefits are used for basic needs rather than for frivolous luxuries. But we have good reasons to assume that most benefits paid out through the mid-1970s were spent on
basic needs. For one, professionals and some other high-income workers were not covered by the initial act; physicians, for instance, were not added to the program until 1965. Additionally, because social security was designed to supplement individual initiative with respect to thrift and savings, the proportion of a retiree's former earnings that benefits provide, the replacement rate, is generally low—around 25 percent for high-income recipients, rising to 40 percent for medium incomes, and climbing to 55 percent or so for those with low incomes. Indeed, state means-tested benefits have frequently been more liberal than social security pensions. Even in the early 1980s the minimum annual benefit was only $1,464, and the average monthly pension for a couple was $640. Earned (but not unearned) income greater than a specified amount (currently $7,500) reduces—and once eliminated—benefits.
Since the mid-1970s the system has included increasing numbers of high-income citizens, and benefit levels have risen. But not until 1980 did the percentage of elderly households below the official poverty thresholds fall to levels similar to those among the population at large. To some degree the formula by which benefits are calculated offsets recent trends. While the dollar value of benefits is directly related to recipients' earnings histories, the replacement rate rises as income falls. In contrast, the peculiarities of the indexing system adopted in the early 1970s led for a time to gradually rising replacement rates for everyone.
From the standpoint of an individual the redistribution that social security entails can be described as life-cycle: a covered individual contributes to the system when he or she is working and draws benefits when covered social hazards interrupt or halt employment. In comparison to means-tested programs that characteristically redistribute from more affluent strata to the poor, social security thus cannot be viewed as an attack on traditional property rights or wealth. As we will see, even the moderately progressive replacement rates are offset to some degree by regressive taxation and differences in the contributor-recipient ratios of high- and low-income workers.
Given the increases in benefit levels, the rising proportion of affluent beneficiaries, and the concerns about the program's financial
solvency, it is no surprise that social security has in recent years attracted wider critical attention.