FOR IMMEDIATE RELEASE
April 30, 2013
CONTACT: Andrew Sousa
(202) 265-5111

African Americans more economically vulnerable; depend on program in disability, old age, youth

WASHINGTON—President Obama’s proposal to base the Cost of Living Adjustment (COLA) for Social Security, civil service retirement and other benefit programs on the chained consumer price index (chained CPI) will widen the income and wealth inequality seen among African Americans, according to a new report by the Center for Global Policy Solutions.

The Chained CPI: Increasing Economic Inequality for African Americans finds that COLA decreases resulting from the chained CPI will disproportionately harm African Americans, who have dramatically fewer sources of wealth to draw upon compared to whites and are, therefore, more heavily reliant on federally-issued benefits.

Changing the COLA for Social Security benefits from the traditional CPI to the chained CPI would lead to a larger across-the-board cut in Social Security benefits. Almost half of African-American seniors rely on Social Security for more than 90 percent of income in retirement due to lower levels of educational attainment, employment, earnings, and ownership of family assets such as homes, investments, savings accounts, businesses and other opportunities to build assets over time that ensure financial security in post-working years.

“As a result of racial wealth disparities, African Americans will be negatively affected by implementation of the chained CPI regardless of the non-means tested federal program from which they receive their benefits,” said Dr. Maya Rockeymoore, president and CEO of the Center for Global Policy Solutions. “With precious few other assets to help meet expenses, African Americans will experience deeper economic pain as a result of the chained CPI.”

The median wealth of white households is twenty times that of African American households. This racial wealth gap means that African Americans are less likely than whites to possess other resources to offset reductions to their COLAs. Older individuals and those who receive benefits for a long time are especially vulnerable.

“Rather than achieving deficit reduction on the backs of middle and working class households using the chained CPI, the President and Congress should identify reforms—like lifting Social Security’s cap on taxable wages—that strengthen the program’s solvency while providing a basis for ensuring that benefits work for those who need them most,” said Dr. Rockeymoore.

Dr. Rockeymoore serves as the board chair of the National Committee to Preserve Social Security and Medicare and co-authored the report, Plan for a New Future: Impact of Social Security Reform on People of Color, as co-chair of the Commission to Modernize Social Security.

The Center for Global Policy Solutions is social change nonprofit organization in Washington, DC dedicated to making policy work for people and their environments.

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