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into the benefit formula. This is one limitation of thedata prior to 1978. In addition, data on race in theMEF are limited to a single undated entry, whichdoes not account for changes in race coding overtime (Scott 1999). Another limitation arises from theexistence of the ESF, which includes wage reports thatcould not be entered into the MEF. This means thatnot all earnings from 1937 to the present are includedin the file. Lastly, there could be errors resulting fromthe employer failing to report earnings properly or in atimely manner, from clerical errors, or from data beingkeyed improperly.Some employer errors can be corrected by submittinga W-2c. However, introducing corrected earningsinto the MEF may create additional problems becausethe previous earnings posting does not get removedwhen a W-2c is received. Instead, two new postingsare created: one includes a negative amount to offsetthe original wage report, and the other includesthe new, correct amount. For example, if a worker’soriginal W-2 stated earnings of $20,000 and the W-2cstated corrected earnings of $15,000, SSA would createtwo new postings, one reporting −$20,000 and theother reporting the new earnings amount of $15,000.Occasionally, a negative dollar amount can result ifmore than one correction is made to a worker’s earnings.This can happen when both the worker and theemployer try to correct a mistake, resulting in a doublecorrection, or a correction is resubmitted while theoriginal submission is still working its way throughthe system. (These instances were more common inthe past, as modernization and enhancements to SSA’scomputer systems have largely put an end to doublecorrections.) In addition, some employers may erroneouslyfile a new W-2 instead of a W-2c to correct amistake. Internal SSA processes check for duplicatepostings of the same amount; when detected, the originalamount is then offset. However, if the amountson the W-2s differ, the new amount will be enteredwithout offsetting the old amount, resulting in a falseearnings total. The large majority of employers whofile W-2c’s, however, do so correctly.Another issue arose beginning in 1978, whenearnings information started to come to SSA annuallyon Form W-2. Even after the switch, some stateand local governments were still able to report theiremployees’ earnings under the old quarterly system.Some reported under both the old and new systems.This resulted in some double postings for a few yearsbecause different EINs were used under each system,with the quarterly system using a special EINbeginning with the digits 69 (to identify state and localgovernment employers and earnings) and the annualsystem requiring a regular EIN (IRS 2009). Somestate and local governments also used different EINsfor reporting to SSA and to the IRS. When differentEINs were used for each agency, some earnings wereposted twice. This continued until tax year 1981, whenSSA no longer allowed state and local governmentsto report earnings on a quarterly basis (Cronin 1985).Use of EINs with the 69 prefix ended in 1986 (IRS2009). SSA corrects duplicate earnings records whennotified by affected employees.There are also some issues in the MEF data relatedto self-employment earnings. Total self-employmentearnings reported by individuals and the total numberof self-employed workers prior to 1978 can notbe determined because of the way these data werecollected by SSA (described above). In addition, selfemploymentearnings that were taxable by Medicareonly were not recorded from 1991 through 1993. Thiswas not discovered until 1994 and at that time onlydata from 1992 and 1993 could be recovered retroactively;for 1991, only self-employed earnings fromdelinquent reports are available. Therefore, completeself-employment income data for 1991 are not available.In addition, there may be limitations in the datareported to SSA, as they depend on the accuracy ofdata reported by self-employed individuals on IRStax forms.Uses of the Master Earnings File DataThe MEF data are used extensively, but are mainlyused for calculating Social Security benefits forindividuals and any auxiliary beneficiaries they mayhave. 40 First, the earnings data are used to determineif a person has sufficient QCs to qualify for benefits.SSA also uses earnings records from the MEF tocalculate benefit amounts. 41 For benefit calculations,an individual’s total taxable OASDI earnings for eachyear (including earnings from different employersand self-employment, military credits, and railroadearnings) are added together to determine total annualearnings up to the taxable maximum. 42 The annualearnings amounts are then indexed using the nationalaverage wage index (AWI) series, to ensure thatbenefits reflect the general rise in U.S. wages overthe person’s working lifetime. 43 The sum of indexedearnings in the years of highest earnings is thendivided by the number of months in the computationperiod (35 years for retirement benefits, 35 or fewer fordisability and survivors benefits). The result is calledSocial Security Bulletin • Vol. 69 • No. 3 • 2009 39