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Selected Abbreviations—continuedHSAIRSMEFMQGEOASDIP.L.QCSSASSBSSNHealth Savings AccountInternal Revenue ServiceMaster Earnings FileMedicare Qualified GovernmentEmploymentOld-Age, Survivors, and DisabilityInsurancePublic Lawquarter of coverageSocial Security AdministrationSocial Security BoardSocial Security numberPost Office Department (Corson 1938). Beginningin 1937, information on earnings up to the taxablemaximum of $3,000 was collected for all qualifiedindividuals. This was the maximum amount on whichboth employers and employees were required to paytheir share of taxes (1.0 percent each) under Title VIIIof the original Social Security Act. In the 1939 amendments,the taxing provisions were taken out of theSocial Security Act and placed in the Internal RevenueCode as the Federal Insurance Contributions Act(FICA) (SSA 2009e). 4 FICA taxes (also called payrolltaxes) continue to be withheld from wages and earningsup to the taxable maximum, which has increasedover the past 70 years. For 2009, Social Security taxesare collected on earnings up to $106,800.Changes to CoverageThe Social Security Act stipulated who would becovered by the program, meaning those who wouldpay into the system while working and then receivebenefits in retirement. The types and numbers ofworkers covered by Social Security have changed overtime as more categories of workers have been addedto the rolls (see Chart 1). Under the original act, allworkers in commerce and industry (excluding railroads)were covered by the program. 5 In 1940, 24 millionworkers were in covered employment, whichwas approximately 52 percent of the employed laborforce (SSB 1944). Self-employment earnings informationwas first collected in 1951 when nonfarm selfemployedworkers (except members of professionalgroups) were added to the Social Security program.Additional groups of self-employed workers andprofessionals were added through legislation passed in1954, 1956, and 1965 (more information appears in theSelf-Employment Earnings section).Various types of agricultural and domestic workersand members of the uniformed services on activeduty were also added during the 1950s and 1960s,bringing the number of workers with taxable earningsto 92.1 million by 1970 (SSA 2008). The 1983 amendmentsto the act added newly hired federal employees,members of Congress, the president and vice president,and newly hired employees of nonprofit organizations.Today, approximately 96 percent of the U.S.workforce (including workers in American Samoa,Guam, the Northern Mariana Islands, Puerto Rico,and the U.S. Virgin Islands) participate in the SocialSecurity program (SSA 2008). 6 As more workers areadded to the program, SSA collects an increasingnumber of earnings records each year. The MEF currentlycollects earnings information on an annual basisfor about 160 million people working in the UnitedStates and its territories.Changes to the Taxable MaximumIn addition to changing coverage laws, changes to theSocial Security program and Social Security-relatedtax laws have also affected the information containedin the MEF (see Chart 2). Since its inception, therehave been increases to the maximum income subjectto Social Security payroll taxes, which has resulted inhigher earnings amounts being stored in the MEF. Thefirst increase in the taxable maximum, from $3,000 to$3,600, occurred in 1951, and four additional increasesoccurred through 1971. The 1972 Social SecurityAmendments provided for annual increases in thetaxable maximum, proportional to the increase in thenational average wage, beginning in 1975. 7 Since 1978,earnings information has also been collected for workersand earnings not covered by the program and forthose with earnings above the taxable maximum (formore information on changes to the earnings data seethe Relevant Time Periods section).In this article “covered earnings” refers to thosefrom employment covered by Social Security or,more specifically, Old-Age, Survivors, and DisabilityInsurance (OASDI). “Noncovered earnings” refersto those from employment not covered by OASDI.Covered earnings below the taxable maximum arecalled “OASDI taxable earnings,” while those abovethe taxable maximum are referred to as “OASDInontaxable earnings.” A “quarter of coverage” (QC)is the basic unit for determining whether a worker isinsured under the Social Security program. Covered30 Social Security Bulletin • Vol. 69 • No. 3 • 2009
Chart 1.Historical expansion of Social Security coverage: Additional types of workers covered, by date of authorizing legislation1935: All workers incommerce and industryunder age 65 (coveredafter 1936).1950: Regularly employedfarm and domestic workers,nonfarm self-employed(except members ofprofessional groups), U.S.citizens employed abroad byU.S. employers, and workersin Puerto Rico and the U.S.Virgin Islands (effective1951).1956: Members of theuniformed services onactive duty (effective1956).1965: Interns, selfemployedphysicians,and employees withtip income (foremployee share oftax only) (effective1966).1983: Federal employees hiredafter 12/31/1983, includingexecutive, legislative, andjudicial branch employees,members of Congress,president, vice president, sittingfederal judges, most executivelevelpolitical appointees, newlyhired employees of nonprofitorganizations, and U.S.residents employed abroad byU.S. employers (effective 1984).1994: Police andfirefighters under apublic retirementsystem can becovered for SocialSecurity in all states(effective August1994).1939: Age restrictioneliminated (effective 1940).1954: Self-employed farmworkers, self-employedprofessionals (with someexceptions), and homeworkers (effective 1955).1960: U.S. citizens employed inthe U.S. by foreign governmentsor international organizations,and workers in Guam andAmerican Samoa (effective1961).1982: Federalemployees, forMedicare Part A(Hospital Insurance)only (effective 1983).1990: State and localgovernment employeesnot under a state or localgovernment retirementsystem (with someexceptions) (effective July1991).SOURCE: SSA 2008, Table 2.A1.Social Security Bulletin • Vol. 69 • No. 3 • 2009 31
Page 1 and 2: Social SecuritySocial SecurityBulle
Page 3: Social SecurityBulletin Vol. 69, No
Page 6 and 7: Perspectives77 An Empirical Study o
Page 8 and 9: Selected Abbreviations—continuedM
Page 10: within the next few years (Aglira 2
Page 14 and 15: coverage varies significantly by ra
Page 16 and 17: non-Hispanic white, and college edu
Page 18 and 19: same groups (Table 6). For the last
Page 20 and 21: from DB to DC pensions is accelerat
Page 22 and 23: Table 8.Percent of individuals who
Page 24 and 25: not necessarily the largest gains a
Page 26 and 27: shoring-up DB plans before those pl
Page 28 and 29: Table B-1.Percent change in mean pe
Page 30 and 31: Table B-3.Percent of individuals wh
Page 32 and 33: ReferencesAaronson, Stephanie, and
Page 35: Social Security Administration’s
Page 40 and 41: self-employment information for the
Page 42 and 43: (Cronin 1985). The final earnings r
Page 44 and 45: prior to 1950, first year of earnin
Page 46 and 47: average indexed monthly earnings (A
Page 48 and 49: 13For an explanation of how the sel
Page 50 and 51: Kopczuk, Emmanuel Saez, and Jae Son
Page 53 and 54: Occupations of SSI Recipients Who W
Page 55 and 56: on the differences between the occu
Page 57 and 58: prediction models. Table A-1 lists
Page 59 and 60: Occupational Distributions of theEm
Page 61 and 62: similar, only 4 percent of the popu
Page 63 and 64: Table 5.Estimated occupational dist
Page 65 and 66: Table 7.Predicted Herfindahl-Hirsch
Page 67 and 68: Table 9.Estimated occupational dist
Page 69 and 70: Table 11.Average annual wages of wo
Page 71 and 72: Table A-2.Means and standard errors
Page 73 and 74: Table A-3.Coefficients and standard
Page 79 and 80: management, professional, and relat
Page 81: Stapleton, David C., Nanette Goodma
Page 84 and 85: Selected Abbreviations—continuedO
Page 86 and 87:
The 1983 Amendments to the Social S
Page 88 and 89:
Chart 1.Proportion of new claimants
Page 90 and 91:
Table 4.The evolution of the ARF an
Page 92 and 93:
for the test of equality of means b
Page 94 and 95:
Table 8.Average monthly Social Secu
Page 96 and 97:
in the chart, especially for men, t
Page 98 and 99:
6This is a very important character
Page 100 and 101:
Benítez-Silva, Hugo, Berna Demiral
Page 103 and 104:
OASDI and SSI Snapshot andSSI Month
Page 105 and 106:
Monthly Statistical Snapshot, Augus
Page 107 and 108:
Table 2.Recipients, by eligibility
Page 109 and 110:
SSI Federally Administered Payments
Page 111 and 112:
Table 7.Average monthly payment, by
Page 113:
Awards of SSI Federally Administere
Page 116 and 117:
Copyright—Authors are responsible
Page 119 and 120:
Program Highlights, 2009Old-Age, Su
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