ArcaMax

In some columns I wrote earlier this month about the repeal of laws that affect people who spent a large portion of their careers working at jobs that were not covered by Social Security, it became very clear to me that many people wondered why that is. Even many people who work at such noncovered jobs were confused. So why are some jobs not covered by Social Security? Here is the story.

When the Social Security laws were first passed in 1935, the program was mandatory for almost all Americans, the vast majority of whom did not have any kind of pension plan where they worked.

But at the time, Congress decided that they could not force a federal pension plan (Social Security) on state and local government employees. So, they gave them the option of joining Social Security or not. Most did. Over the years, other state and local groups who did not originally join Social Security eventually signed on to the program. But to this day, there are still large blocks of state and local employees, such as teachers in some states and firefighters and police officers in other states, who are not covered by the Social Security system. They usually have their own retirement pension system. They constitute about 20% of all state and local government workers.

Another group not covered by Social Security is career railroad workers. The Railroad Retirement System was set up in 1934, one year before Social Security came into being. But once Social Security became law, the two programs developed a special relationship that still exists to this day. For example, if you have more than 10 years of railroad work, but other years where you worked and paid into Social Security, your Social Security earnings will be transferred to the Railroad Retirement Board, and they will pay you a combined benefit. On the other hand, if you have less than 10 years of railroad work, and the rest of your career was at jobs covered by Social Security, then your railroad earnings will be transferred to the Social Security Administration, and those railroad earnings will just be incorporated into your Social Security records.

The other large group of workers who were initially not covered by Social Security were federal government employees. Back in 1935, Congress said that federal government employees did not need to be covered by the new Social Security program. Why? Because federal employees were already covered by the civil service retirement system that had been around since 1920.

But over the years, Congress felt an increasing amount of pressure to bring federal employees into the Social Security fold. There were two main reasons. No. 1: You could make the case that all workers in the country should be covered by the same retirement system. (Although to be true to that philosophy, you would have to make all state and local workers and all railroad workers part of the Social Security program, too.)

But reason No. 2 was the bigger factor: As federal government employees, members of Congress and the judiciary, and the president, did not pay into Social Security. They were covered by the same civil service retirement system as all other federal employees. And it was politically embarrassing for politicians to be making laws about a retirement program (Social Security) that they were not a part of.

This led to all kinds of conspiracy theories (that still exist to this day) that top members of government get fat and lucrative pensions while scattering crumbs to the peasants in the form of meager Social Security benefits. This was never true. But millions of Americans believed it, and many still do.

Anyway, by the 1980s, the political pressure to bring federal employees into the Social Security tent was too great. In 1983, a law was passed saying that all federal employees hired after Dec. 31, 1983, would be covered by the Social Security system. At the same time, the law decreed that effective Jan. 1, 1984, all members of Congress, the president, the vice president and federal judges would also start paying into Social Security. (So let's get rid of that myth.)

The new retirement program that Congress set up was called the Federal Employees Retirement System, or FERS. They gave all old government employees hired before 1984 the option of switching from the Civil Service Retirement System to FERS. By the way, I was one of those people; I was hired in 1973. I remember that I struggled mightily with that decision. Should I stick with CSRS or switch to FERS? (There were some advantages -- too complicated to explain here -- to making the switch.) I finally decided to stay with CSRS. Frankly, to this day, I'm not sure I made the right move. I have several old friends and former colleagues who switched to FERS, and now that we are all retired, it looks to me like they are a little better off than I am. But that's my problem, not yours.

FERS employees had Social Security taxes taken out of their paychecks. They also had an extra deduction from their salary to fund a federal retirement benefit designed to supplement their Social Security checks. So old federal retirees like me get just one CSRS pension check each month, but those retirees who are covered by FERS get a Social Security check and a smaller FERS pension check -- smaller than CSRS pension checks, that is. The intent of the new program was that a combination of Social Security and FERS benefits should roughly equal what CSRS retirees were getting. But, as I said, some of my FERS friends seem to be getting more. Oh, well.

Anyway, that's the story behind the issue that some people don't pay into Social Security. To put things in perspective, all the people whose jobs are not covered by Social Security that I've been talking about in this column (some state and local employees, railroad workers and old federal retirees like me) make up only about 10% of the workforce in this country. In other words, 90% of people in the United States work at jobs that are covered by Social Security.

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If you have a Social Security question, Tom Margenau has two books with all the answers. One is called "Social Security -- Simple and Smart: 10 Easy-to-Understand Fact Sheets That Will Answer All Your Questions About Social Security." The other is "Social Security: 100 Myths and 100 Facts." You can find the books at Amazon.com or other book outlets. Or you can send him an email at thomas.margenau@comcast.net. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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