Personal Finance
New Social Security benefit legislation points to need for broader reform
Richard Stephen | Istock | Getty Images
When President Joe Biden signed the Social Security Fairness Act on Jan. 5, it was a victory for those who tirelessly lobbied for years for new changes that will provide more generous benefits to public workers with pensions.
Yet for the policy community, the enacted change backed by overwhelming bipartisan support in both the House and Senate is a huge disappointment.
“Literally, you cannot find a Social Security expert who thought Social Security Fairness Act was a good idea,” said Andrew Biggs, senior fellow at the American Enterprise Institute.
The new law eliminates two provisions that adjusted Social Security benefits for individuals who also receive pension income from work performed in the public sector where payroll taxes to Social Security were not paid.
The now defunct Windfall Elimination Provision, or WEP, reduced Social Security benefits for approximately 2 million individuals who also have pension or disability benefits from work where they did not contribute to Social Security. The WEP was enacted in 1983.
The Government Pension Offset, or GPO, reduced Social Security benefits for nearly 750,000 spouses, widows and widowers who receive their own pensions from work in the public sector. The GPO was created in 1977.
More from Personal Finance:
Maximize your 401(k) plan in 2025 with higher limits and catch-up contributions
Here are changes retirees will see from Social Security and Medicare in 2025
Biden withdrew student loan forgiveness plans. There is still debt relief available
The provisions were intended to help ensure all Social Security beneficiaries get a comparable payout from the program. Because Social Security is progressive and intended to be an anti-poverty program, low-income workers receive a higher income replacement rate when they collect benefits. The WEP and GPO were intended to adjust public workers’ benefits so they were not treated as low-income workers.
Once the bill was signed, organizations that lobbied for the change praised the new law for finally providing affected workers the full Social Security benefits they had earned. For the National Committee to Preserve Social Security and Medicare, the new law caps off a decades-long fight to either modify or repeal the rules.
“It’s a way of cutting benefits for a class of people who are providing a public service for our communities,” said Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare.
“They got singled out, and their Social Security earns them less in benefits than a person who decided not to go into public service,” Freese said.
As the new law is phased in, Social Security beneficiaries may see monthly benefit increases ranging from an average of $360 to $1,190, the Congressional Budget Office has estimated. Affected beneficiaries will also get lump-sum payments for the extra benefits they would have received throughout 2024.
The law makes the program “more fair” now that people will no longer be penalized for income earned outside of the system, said John Hatton, staff vice president for policy and programs at the National Active and Retired Federal Employees Association, or NARFE.
Notably, income from capital gains or inheritances already did not influence the size of Social Security benefits. The same should be true for income earned outside of the program, Hatton said.
Yet many policy experts maintain the changes never should have been enacted.
“What we saw was a huge special interest push for a very poorly developed and poorly targeted policy which is creating windfalls for a number of recipients,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.
Notably, that change will cost almost $200 billion over 10 years, according to the CBO, at a time when Social Security’s trust funds are already running low. The program’s combined trust funds are expected to last until 2035, at which point 83% of benefits will be payable, Social Security’s trustees projected last year. Eliminating the WEP and GPO will bring move that depletion date six months closer.
Experts both for and against the Social Security Fairness Act agree Congress needs to address the program’s funding shortfall sooner rather than later.
Provisions aimed to prevent benefit windfalls
The WEP and GPO rules, and how their intricacies affect individual beneficiaries, are complex.
“There is an injustice here that the provisions tried to correct, maybe not perfectly,” said Alicia Munnell, senior advisor at the Center for Retirement Research at Boston College.
Despite experts’ tireless efforts to explain the provisions to lawmakers, “we all failed,” Munnell said. Now what’s left is “bad policy,” she said.
Put simply, without the WEP, state and local workers who only work in jobs that pay into Social Security for a short time look like low earners and consequently get the extra benefits aimed at low earners, she said.
The elimination of the GPO also now makes it so a nonworking spousal Social Security benefit goes to a full-time worker with their own pension benefit, noted Charles Blahous, senior research strategist at George Mason University’s Mercatus Center.
“There’s zero justification for doing that,” said Blahous, who called the legislation “unserious” and “disappointing.”
While the WEP and GPO were imperfect, they were needed to prevent the payment of benefit windfalls to a small number of people who didn’t pay Social Security taxes for years, he said.
“It’s a very concerning indicator of Social Security’s future,” Blahous said.
Lawmakers face Social Security solvency dilemma
The Social Security Fairness Act was passed by the Senate with a 76-vote bipartisan majority. Amendments that were introduced in those final legislative hours in December — including efforts to add ways to pay for the change or alter the provisions instead of replacing them — failed. The Senate took up the bill after the House passed it in November with a 327 bipartisan majority.
Now that the WEP and GPO elimination has become law, one way to make the changes more equitable would be bring the 25% of state and local workers who do not currently contribute to Social Security into the program, according to Munnell.
While Congress could revisit the changes it just made with the Social Security Fairness Act, experts say that’s unlikely.
The bigger problem lawmakers now face is when and how to restore the program’s solvency.
“We are still in a place where politically it’s very difficult for members of Congress to come out in support of any substantive, responsible changes to the program that will address its long-term fiscal issues,” said Emerson Sprick, associate director of economic policy at the Bipartisan Policy Center.
Future action will require presidential leadership and a commitment to address the issue, Sprick said.
However, for now, President-elect Donald Trump has promised not to touch Social Security. Trump has also said he wants to eliminate taxes on Social Security benefit income. Trump’s presidential transition team did not immediately respond to a request for comment.
Because that change would be expensive, over $100 billion a year, and does not have the same fairness argument to it, it would be less likely to go through, according to Biggs.
While Trump has promised no benefit cuts, that creates a mathematical problem for Republicans, who are typically a low-tax party, he said.
Ultimately, restoring Social Security’s solvency may require benefit cuts, tax increases or a combination of both.
“We know that we need to be addressing Social Security and Medicare because of the insolvency that they both face within roughly a decade,” MacGuineas said. “Neither party, no leader, seems to have the political will or the integrity to start talking about how to get that done.”
Freshmen college enrollment increased in fall 2024, the National Student Clearinghouse Research Center said — contrary to its previous report that the enrollment declined.
A “methodological error” in the preliminary enrollment report, released in October, caused the miscalculation, Executive Director Doug Shapiro said in a statement Monday.
“The error in research methodology caused the mislabeling of certain students as dual-enrolled rather than as freshmen and, as a result, the number of freshmen was undercounted, and the number of dual-enrolled was overcounted,” Shapiro wrote.
Because of the error, the October report showed a decline in freshmen enrollment at both two- and four-year institutions. It also showed an even steeper drop in freshmen student enrollment at four-year colleges where large shares of students receive Pell Grants.
CNBC had included the original, erroneous data in several articles, which can be found here, here, here, here, here and here.
“Our subsequent research finds freshman enrollment increased this fall,” Shapiro wrote. He said the new research “is not based on preliminary data … and uses different methodologies to determine freshman enrollees.”
The final freshmen enrollment numbers will be released Jan. 23, the center said.
More from Personal Finance:
Health-care jobs are in demand in 2025
How much if any bitcoin should you own?
Nearly half of credit card users are carrying debt
Shapiro said the center is “conducting a thorough review to understand the root cause [of the error] and implement measures to prevent such occurrences in the future.”
Revised data shows a 3% rise in overall undergraduate enrollment in the fall compared with that period in 2023, according to the center’s updated analysis. Enrollment was also higher at four-year colleges where large shares of students receive Pell Grants.
“We are encouraged and relieved that updated data from the National Student Clearinghouse shows freshman enrollment is up this school year,” U.S. Under Secretary of Education James Kvaal said in a statement.
“The increase is consistent with what we are seeing on the financial aid side: More than 5% more students are receiving federal aid this year,” Kvaal said.
Some experts had warned that problems with the new Free Application for Federal Student Aid could result in fewer students applying for financial aid and fewer students enrolling in college.
However, because of changes to the FAFSA, more students can now qualify for a Pell Grant, a type of aid that is awarded based solely on financial need.
‘We are not out of the woods’
Higher education expert Mark Kantrowitz said that although there have been improvements with the new FAFSA, “we are not out of the woods yet.”
“The new FAFSA should have yielded a significant increase in the number of applications by low-income and first-generation college students by making the form easier to file. It has not yet fulfilled this promise,” Kantrowitz said. “This year’s form is better than last year, but there is still a lot of room for improvement.”
The U.S. Department of Education released the FAFSA for 2025-26 ahead of schedule, saying it did so with the goal of improving college access.
Overall, total college application volume through Dec. 1 rose 8% for the 2024-25 application season, compared with a year earlier, according to the latest data from the Common Application, an online college application platform.
Kantrowitz, who is not affiliated with the National Student Clearinghouse Research Center, said an error on the part of the research group was “very rare.”
Jose Luis Pelaez Inc | Digitalvision | Getty Images
The health sector holds many of the best job opportunities for workers in 2025, due to factors like high labor demand and pay, according to a new ranking from job search site Indeed.
Health care roles account for five of the top 25 jobs for 2025, according to Indeed: physician (No. 3), clinical psychologist (No. 8), radiologist (No. 14), registered nurse (No. 18) and director of clinical services (No. 22).
That’s the highest share of top jobs relative to other sectors, and the second year in a row health care dominated the list.
An animal-focused health care role — veterinarians — ranked No. 1, according to Indeed.
Indeed’s analysis looked at professions that met three criteria: a minimum salary of $75,000 per year, growth of at least 20% in postings on the site over the last three years and offerings of remote or hybrid roles for at least 5% of postings. The jobs are ranked by their share of postings on Indeed.
Health care has seen “extremely, extremely rapid” job growth, said Julia Pollak, chief economist at ZipRecruiter.
“It is just relentless,” Pollak said. “It’s extremely robust and consistent, and we don’t see any slowdown at all.”
The U.S. economy added 902,000 health care and social assistance jobs in 2024 — more than double the closest competing segment, government, which added 480,000 jobs, according to the Bureau of Labor Statistics.
Total employment in health care occupations is “projected to grow much faster than the average” for all U.S. jobs from 2023 to 2033, according to the Bureau of Labor Statistics.
Ample job opportunity in the sector stems from many factors, said Jennifer Herrity, a career expert at Indeed.
For example, an aging U.S. population increases the need for health care; retirements among workers in the health field have created shortages in some roles; and health care jobs are at a lower risk of being replaced by artificial intelligence than those in other industries like software developers and engineers, Herrity said.
‘Surprisingly high’ salaries, high barrier to entry
Strong labor demand has contributed to many health care jobs being “surprisingly high paying,” Pollak said.
For example, radiologists earn a median annual salary of about $385,000, the top-paying job on Indeed’s list. The typical physician earns $225,000 a year, the second-highest salary of the bunch.
“High salaries and a history of stability make health care a highly attractive field, albeit with a high barrier to entry, especially for roles like radiology, which require a minimum of 13 years of school,” Indeed wrote about its 2025 list.
More from Personal Finance:
How much if any bitcoin should you own?
Prices of top 25 Medicare Part D drugs have doubled
Nearly half of credit card users are carrying debt
The incoming administration of President-elect Donald Trump may bring a shake-up to the health care sector, though.
For example, Trump and Republican allies may cut federal spending for Medicaid or allow Affordable Care Act subsidies to expire to raise money for other policy priorities like tax cuts, which could lower health care demand.
Conversely, mass deportations could exacerbate labor shortages and lead to higher pay. Immigrants accounted for 18% of health care workers in 2021, according to the Migration Policy Institute.
Job seekers hoping to “cash in on high-paying and fast-growing jobs without a long-term investment in education” can perhaps look outside the health sector, in an occupation such as a sales representative, Indeed said. Many companies hiring sales reps may consider applicants with a high school diploma and the right mix of skills, it said. Sales reps make a $182,000 median annual salary, according to Indeed.
Springline Advisory invests in Fiske Advisory
Insero receives PE investment from Rallyday Partners
New Zealand signs trade deal with the UAE
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics1 week agoBlockchain and Cryptocurrencies Transforming the Digital Economy
-
Economics1 week agoThe US Army needs inferior, cheaper drones to compete
-
Leaders1 week agoStrive Masiyiwa Is Reshaping Digital Future and Telecommunication in Africa
-
Personal Finance1 week agoWhy your paycheck is slightly bigger
-
Leaders3 days agoHow to Feature your business success on this page
-
Finance1 week agoThese jobs have been seeing notable growth: LinkedIn
-
Finance1 week agoAir China tapped as prime candidate to rebound among struggling mainland carriers
-
Personal Finance1 week agoHere’s how to maximize your 401(k) plan for 2025 with higher limits