S.S. distortions

For years, our local government has lamented the overwhelming local tendency to work in the public sector. Most of our local citizens, from high school dropouts to college graduates, prefer to work for our bloated local government. They prefer the complacency of assorted government bureaucracies to the productive challenges presented in the private sector.

The U.S. Federal Government recognizes this problem as well. To be sure, the Feds have repeatedly complained about our local labor force’s overwhelming preference for public sector employment.

The Clinton White House, for instance, wishes to federalize our immigration and deprive us of our nonresident workers, in part, because they mistakenly believe that this would encourage more of our local citizens to seek private sector employment. The Feds apparently believe that our relatively large nonresident worker population is responsible for driving our indigenous labor force into the public sector. If only we had less nonresident workers, they reason, more locals would be working in the private sector instead of government.

The Feds are wrong, of course. Without an adequate labor force, we would have meager capital investments and a rickety economy. The local unemployment rate would soar.

If the Feds are disturbed by the CNMI’s local preference for government employment, they can blame themselves for forcing their Social Security program upon us. From a Social Security point of view, it makes complete sense for our resident workers to seek local government employment.

CNMI government workers do not pay Federal Social Security taxes. In view of the CNMI Retirement Fund, they are exempt from it. Our resident workers therefore have a very compelling reason to seek out local government employment. By working with the local government, they avoid a significant Social Security payroll tax and get to keep more of their income.

Although CNMI government workers are still forced to pay into the local retirement program, they can still withdraw their “contributions” (presumably, with interest) as long as they are not vested (paying into the system for more than ten years, I believe). By sharp contrast, you cannot do this with the Federal Social Security program.

We have no private property rights with Social Security. Social Security is not an asset. The Federal government owns our individual “contributions.”

We won’t get one red cent out of Social Security until we are at least 62 years of age, when we are eligible for some partial benefits, assuming it is even solvent at that time, which is highly doubtful. To collect full S.S. benefits, we have to be at least 65 years-old. But by 2009, this minimum age requirement will go up to 66. In 2020, it will be 67. It may well be raised even further.

If you die before that age, as most CNMI residents do, Uncle Sam has probably ripped you off. Social Security has no designated beneficiary, and your child, assuming you have one, may collect some benefits only until he/she reaches 18 years of age, which may pay out less than actual “contributions.”
Given the Federal Social Security disincentive, it actually makes a great deal of sense to work for our local government.
Work for nine years, quit, collect your contributions (and invest it yourself); briefly work for the private sector and then return to the local government. Repeat cycle as necessary. Retire and collect full social security benefits based on one or two years of private sector S.S. “contributions.” Thanks for promoting big government, Uncle Sam.