Writing a Future 'Off the Books'


Writing a Future 'Off the Books'

Representative Rick Mulvaney, Trump’s pick to head the Office of Management and Budget, is under fire for failing to pay more than $15,000 in payroll taxes for a nanny he employed between 2000 and 2004. Now this may not seem like a big deal. After all, he’s just ignoring some pesky government regulation and some boring paperwork. Not paying your taxes is illegal, but is it really immoral?

It is when you consider the problems that the nanny and millions of other Americans working under the table face. Without a legal employment history, they have no way of qualifying for credit cards or mortgages. Even more troubling, this type of work puts their long-term future in serious jeopardy.

If you’re paid “off the books” for any significant amount of time, your future social security benefits may be significantly limited. Social security benefits are largely determined by a worker’s earnings and contributions to social security in the past, and because of this, the difference between legal employment and illegal employment (“off the books” work) can drastically alter the amount of benefits received.

Let’s say we have two workers, each was born in January of 1950. Each made about $24,000 last year (working in child care) and is now planning to retire. Each has been working for many years, with earnings that kept up with inflation, but not much more.

Worker A, who worked for a law abiding employer, has been credited with 35 years of pay at $24,000, and the Social Security Administration calculates that entitles her (and I will use “her”, people earning $24,000 per years doing child care are mostly women…) to a pension of about $1,153.30 per month. Not a lot, but a lot more than zero.

Worker B also worked for at least 35 years, but only worked for a law abiding employer for 31 years. She worked “off the books” the rest of the time, and the Social Security Administration gives her no credit for those years. Based on only 31 years of earnings (for which her employers paid social security tax) she gets a pension of about $1,080.16 per year, compared to the $1,153.30 per month Worker A receives. That difference of $73 per month may not seem like a lot. In fact, it is not a lot for you or me, but to someone who is trying to live on less than $13,000 per year, $73 dollars means something.

A woman born in 1950 and alive today is expected to live another 19 years. That $73 adds up. It means she will lose over $16,000 in benefits overall. Rep. Mulvaney was stealing from American taxpayers, but he was stealing from his nanny as well. It’s not a victimless crime, every dollar that he saved was actually stolen from someone who has a lot less money than he does. “Under the table” arrangements like Rep. Mulvaney’s are all too common, and in the long run, workers end up suffering because of them. 

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