Oct 12, 2021
Social Security depends on two sources of income to be able to pay out benefits:
1) The money paid in by current workers.
2) The existence of future workers, who will themselves pay in to support the people supporting today’s retirees.
Americans are rewarded for contributing to (1) but not to (2). Your benefits increase with the amount you earned (and thus, the amount you paid in through your taxes), but parents don’t receive any additional bonus for helping to stabilize the system by having kids. Instead, they get a double whammy—making less in the present as they step back from work, and receiving less in the future when their benefits are scaled to their diminished earnings.
There may not be a complete solution to this problem, but Murray suggests a pretty doable improvement. Many European countries offer “caregiver credits” as part of their public pension programs. Women’s time spent mothering is rewarded as valuable work—work we all depend upon—and they are pensioned accordingly.
This kind of credits program could be expanded beyond caregiving, to fold in volunteer work or other kinds of work where the pay is lower than the value of the work. We’d be pricing the positive externalities of care back into our safety net.