Disparity in Benefits : Retirees Try to Whittle ‘the Notch’

The “notch babies,” they call themselves, the 10 million persons born in the years from 1917 through 1921. And they share a common grievance--they think the Social Security system is short-changing them.

Dear Abby, a notch baby herself, got a million letters on the issue before she stopped counting. The group even has its own fight song: “We are notch babies fighting for our rights, here today to bring this cause to right. Born 1917 through ‘21, and all we want is true justice done.”

The injustice, in their eyes, is clear. Notch babies, whose benefits were stripped by Congress of the double inflation adjustment that is received by their older brothers and sisters, collect as much as $150 a month less in Social Security benefits than if they had been born between 1910 and 1916. They are campaigning hard--mass demonstrations are scheduled for Washington in June--to get Congress to change that.

Faith in Government

“We have to stand firm to restore our rights,” said Effie Hetrick, a 66-year-old notch baby from Hawthorne and leader of the 50,000-member notch-baby organization in California. “I have faith in our government, that the elected officials will do the right thing.”

More than 100 House members have joined Edward R. Roybal (D-Los Angeles), chairman of the House Aging Committee, in sponsoring a bill to use the Social Security trust fund, which is currently running a surplus, to finance greater benefits for the notch babies. The bill would cost $195 billion in the first 10 years alone, according to the Social Security Administration.

Social Security Commissioner Dorcas R. Hardy calls that a $195-billion raid on the Social Security trust fund. “We need all the surplus for future beneficiaries,” she said. “Do they want to take it away from workers who will retire in the year 2000 or 2010?”

Wallets ‘on the Curb’

Many advocates for the elderly, including the American Assn. of Retired Persons and Rep. Claude Pepper (D-Fla.), agree. Rep. Andrew Jacobs Jr. (D-Ind.), chairman of the House Ways and Means subcommittee on Social Security, said that changing the benefit formula would be like “laying the wallets of the people now paying Social Security taxes on the curb.”

It was Congress that caused the problem in the first place. In 1972, when Congress guaranteed that Social Security benefits would rise with the cost of living, it inadvertently wrote into the law a double adjustment for inflation--an error that ultimately could have bankrupted the system.

Congress eliminated that quirk in 1977 by phasing in a change over a four-year period, beginning with persons born in 1917. Those born in 1921 and later receive none of the fruits of the double inflation offset.

The “notch” is the gap in benefits between those born before Jan. 1, 1917, and those born later. The average monthly Social Security check last year was $702 for a person born in 1916 who retired at age 65 but only $634 for a person born the next year who retired at 65.

And, in some cases, the gap is more dramatic still. Sisters Audrey Webb and Edith Detviler worked in identical jobs for a printing company in Bell Gardens, Calif., starting on the same day in 1957 and retiring on the same day in 1982. Yet Webb, who was born in 1916, receives $735 a month from Social Security, and Detviler, who was born in 1917, gets only $583.

“Audrey offered to divide the difference with me because she thought it was so unfair,” Detviler said. “I politely refused. The fault was certainly not hers. My contributions to the job and Social Security should treat me as fairly as my sister.”

Lower Benefits Supported

To Hardy and many other experts, it is Detviler’s lower benefits that are at the proper level. If they look small compared with those of her older sister, it is because the benefits of Webb and others born between 1910 and 1916 are unreasonably inflated.

“These are the windfall babies,” Hardy said.

The windfall resulted from the way Congress wrote the 1972 Social Security law. Benefits are computed from wages prior to retirement, and, under the 1972 formula, the value of those wages was automatically raised each year to keep pace with inflation.

If monthly benefits had simply been computed from these inflated wages, all would have been fine. But, instead, the benefits themselves were given another boost for inflation--hence the double adjustment.

Consequently, for those born in 1916 with average earnings over their working lives, Social Security equals 54% of their wages in the year before they retired. That compares with a Social Security replacement rate of only 41% of pre-retirement earnings for those born before 1910, when the double adjustment for inflation began having its effect.

The 1977 law gradually brought this replacement rate back down in four steps until it returned to 41% for persons born in 1921 and later.

The rates for the notch group are below 54% but above 41%, with the rate declining by year from 1917 to 1921.

Roybal’s bill would also gradually reduce the replacement rate to 41%--but it would phase in the change over 30 years instead of just four. What’s more, notch babies collecting benefits under the current formula would receive a retroactive increase.

Congress’ fiscal conservatives aren’t the only ones opposing Roybal’s bill. One non-conservative opponent is Pepper, who at 86 is both the oldest member of Congress and the elderly’s most unflagging advocate in Congress.

In his standard reply to hundreds of notch babies writing for help, Pepper says: “I hope you will understand it saddens me deeply to have to hold to my position that the notch is not the problem. It is the result of correcting a problem that posed a serious threat to Social Security.”

The American Assn. of Retired Persons similarly refuses to endorse legislation to eliminate the notch. Although many association members are active in the notch baby campaign--and 50 to 100 members have resigned over its position on the issue--the organization itself said in the February news bulletin that it mailed to its 25 million members:

“AARP fears . . . that efforts to give the ‘notch babies’ higher benefits than they are entitled to under current law would seriously jeopardize the financial stability of the Social Security system.”

The association’s executive director, Cyril Brickfield, warned: “Even well-meaning attempts to fix the notch would destroy this delicate balance.”

Many notch babies are unmoved. “The money is there,” insisted Anthony Purcell of Pittsburgh, an organizer of the rallies scheduled for Washington in June. The trust fund’s surplus will reach $500 billion by 1995, he said, far more than the estimated $195-billion cost of giving the notch babies what they consider their due.

In the June rallies, Purcell said, thousands of notch babies will parade in front of the White House and then move on to the headquarters of the American Assn. of Retired Persons unless the organization “supports us on this issue.”

The notch babies are getting extensive support from a 4-year-old but fast-growing group called the National Committee to Preserve Social Security and Medicare. The committee, which has drawn fire from some members of Congress for its aggressive mail solicitation techniques, paid transportation and hotel expenses for a meeting of notch leaders here last year and is helping local leaders with postage and telephone costs.

“The notch babies are an extraordinarily vocal and well-organized group,” said Fernando Torres-Gil, who works for Roybal as staff director of the House Aging Committee. “Even if Mr. Roybal backed off, they would continue to march and yell and scream, to force Congress to deal with the issue.”

‘Best Bargain Possible’

Torres-Gil said that Roybal is “ready to deal to get the best possible bargain for the notch babies. We’re willing to come up with a bill that doesn’t cost as much. But everyone else hopes the issue will go away. No one wants to talk about it, not the AARP, not the Ways and Means Committee.”

It is the notch babies’ misfortune that only the Ways and Means Committee, not Roybal’s Aging Committee, has authority over Social Security legislation in the House. And Jacobs, chairman of the Ways and Means subcommittee on Social Security, remains firmly opposed to tapping the surplus.

“The mere fact that you have a great deal of money” does not mean that it should be turned over to anyone who demands it, he said.

Rep. Hal Daub (R-Neb.), a member of the Social Security subcommittee, proposed a $21.2-billion version of notch baby relief, with no retroactive benefits to notch babies who have already retired. “It’s a hot potato,” he said.

Allen Johnston of the National Committee to Preserve Social Security and Medicare called the Daub bill a “credible piece of legislation.” The notch babies, he said, are willing to settle for less than their original demands.

Notch leader Effie Hetrick acknowledged that the demand for full retroactive benefits “was just unreal and devastating to our cause. Members of Congress tell us that, without retroactivity, we are now living and talking in a world of reality where something can be done.

“If anyone wants to protect Social Security,” she said, “it’s Effie Hetrick. I have two kids and five grandchildren.”