Social Security of Millions at Mercy of Computer System

The Social Security Administration’s computer system threatens to shortchange millions of future retirees because it is making serious errors in recording the income of many wage earners--particularly women, Latinos and Asian Americans--according to an internal agency report obtained by The Times.

The report, issued by the agency’s San Bernardino district headquarters, asserts that the Social Security computer system is confounded by names that do not conform to a traditional Anglo format. The agency, it says, is failing to make an adequate effort to remedy the problem.

“Our findings indicate millions of beneficiaries may be receiving less than they have paid for,” the report warns. “For some, especially those in locales such as Puerto Rico, the Dakotas and inner cities, the loss may be very large.”

The SSA has $234 billion worth of wage reports--some dating from 1937--that it cannot match with individual accounts. The wage reports are used to compute benefits.

Until now, the agency has said that minorities and women have been affected no more than anyone else and has hotly denied that its policies or procedures are discriminatory.

Agency officials, arguing that they are doing a good job overall, say the $234-billion gap represents just a small portion of the wage reports the agency has handled since the program was enacted in 1935.

The San Bernardino report, however, details for the first time numerous cases in which individuals with Asian, Latino and Arabic names were mishandled by computers that did not know what to make of surnames with spaces (such as De la Rosa) or what to do with surnames that fall somewhere other than the end of a name (Park Chong Kyu and Carlos Romero Barcelo).

Women are the subjects of a large portion of the errors because they often do not notify the SSA when they change their last names after marriage.

California accounts for 35% of all the unmatched earnings, although the reasons for that are unclear. One small component involves Hollywood actors whose wages often are reported by studios under professional names different from those on file with Social Security, according to the report.

The report was written by Jim Hodgson, district director for San Bernardino County and chief of the six branch offices spread across the agency’s massive jurisdiction.

Under Hodgson’s direction, the San Bernardino district has undertaken a wide-ranging effort to correct as many of the unmatched wage reports as possible. So far, according to the report, it has managed to fix about 100,000 mismatches nationwide over the past year.

But with an estimated 200 million unmatched wage reports, the San Bernardino group has only skimmed the surface of the problem, Hodgson acknowledged.

The San Bernardino report was recently submitted to Social Security Commissioner Shirley S. Chater. Chater declined to be interviewed, as did other agency executives.

Social Security spokesman Phil Gambino said the agency is doing vastly better at recording wages than in the past and denied that unusual spellings or spaces in the names of minorities have caused serious problems. He added that the issue did not reflect a computer or software defect.

Rep. George E. Brown Jr. (D-San Bernardino) sought to get authorization for a General Accounting Office investigation of the matter but was blocked last summer by House Ways and Means Committee Chairman Bill Archer (R-Texas).

“There has never been a thorough examination of this problem,” Brown said.

A spokesman for Archer said he decided against a GAO investigation because the SSA’s inspector general already was looking into the matter. Gambino said the inspector general has been investigating the issue since last summer but is not close to issuing a report.

Among the 100,000 repairs made by the San Bernardino office, many involved cases in which back benefits in the thousands of dollars were owed to retirees and disabled people.

Rita Howell, disabled with lupus in the coal country of eastern Kentucky, said in an interview that she was shortchanged by $7,000 because Social Security had no record of three years of her earnings at the engineering firm Bechtel Corp.

Hodgson’s workers found Howell’s earnings reports while surfing through the so-called suspense file--an electronic lost and found. Howell said she never knew that she was supposed to notify Social Security when she changed her name after marriage. A badly needed $7,000 Social Security check arrived in the mail this year.

In another case, the project uncovered errors that led to a widow being shortchanged by $14,765 in retirement benefits, according to the report.

The report says Puerto Ricans face serious problems because of the island practice of giving children their mothers’ maiden names as part of their surnames. In addition, the report says that Native Americans, Arab Americans and converts to Islam face problems, since their names often use unconventional constructions.

“SSA needs to improve our responsiveness to religious and social realities by easing the burden on converts to Islam, members of blended families and all others who change their names at work,” the report says.

Among the case studies the report cites is a Defense Department civil servant who adopted a Muslim name in the 1970s and never again received a wage credit. The San Bernardino project was able to locate the lost wages and process an $800-per-month disability benefit for the woman, who has cancer.

“Her condition is terminal, but this will allow her to enjoy a little more dignity in her remaining days,” the report says.

Hodgson, a 31-year veteran of the agency, said he has been “condemned” for his efforts by officials at Social Security headquarters in Baltimore, who contend that they are already making a major effort to correct the problem.

“They never thought a field office would take it upon itself to discover errors in the central file,” Hodgson said. “SSA has known for years that locating gaps in earnings is the single biggest quality complaint about the agency.”

Gambino said the agency did not intend any form of retribution against Hodgson. He added that while senior agency officials disagreed with Hodgson’s conclusions, “nobody has ostracized him at this point.”

Gambino said that Hodgson, while well-intentioned, is misinformed about the agency’s practices and policies. Nonetheless, Gambino acknowledged that the agency has adopted some of Hodgson’s recommendations and is looking for ways to implement others.

Gambino said the errors that caused wage reports to go unposted were mainly the fault of employers who submitted erroneous data. The agency, he said, is doing everything possible to remedy the problem.

But the agency’s policies appear to be highly tolerant of erroneous reporting. Under SSA policy, its computers accept employer wage reports that are up to 90% inaccurate--meaning it accepts wage reports in which only 10% of the data can be posted to individual records. Gambino noted that next year, the agency will raise the standard to a 70% error acceptance rate.

When the SSA cannot match a wage report from an employer to an individual account, it is put into the suspense file.

Exactly why wage reports end up in the file involves a wide range of errors by individuals, employers and the agency itself.

The agency posts a wage report only if it can match both the name and the Social Security number on the wage report with a name and number in its computer files.

At one time, the match had to be perfect. But now, the agency has software routines that can detect simple errors, Gambino said. It can detect some misspellings and eliminate erroneous space in names--though it cannot create spaces in names where they should exist. Every two years, the agency “sweeps” through its computers looking for any errors made in the past, he added. The last sweep matched up 1.1 million wage reports.

For women only, the agency no longer requires a surname match. Rather, it posts wage reports based on a Social Security number and a first name and middle initial.

In addition, before sending reports into the suspense file, the agency now takes a range of steps, including mailing letters to individuals in cases where that is possible. The agency sent 5 million letters to individuals last year, though it received responses from just 10%.

Such improvements have helped, but the suspense file continues to grow by several million items per year. There is no estimate of the benefit loss in dollars because of the unmatched wage reports.

“This is a huge issue that is crying out for attention,” Hodgson said in an interview.

Gambino said the percentage of wage reports that end up in the suspense file is declining. Of 241 million wage reports processed last year, 21 million initially could not be matched to the agency’s record. After additional computerized and manual searching, the agency was left with 3.6 million wage reports that it still could not match. Of those, two-thirds lacked either a name or a Social Security number, Gambino said.

The report also deals with the issue of illegal immigrants, who sometimes use phony Social Security numbers and thus represent an unknown portion of unmatched wage reports.

“The specter of illegal immigrants hangs over any discussion of these issues,” the report says. “Yet illegals account for only a tiny fraction of the 200 million open items. Most invent bogus numbers that would never post under any system, or they work under the table with no number at all.”