Social Security: The Windfall Elimination
Provision (WEP)
Updated February 1, 2021
Congressional Research Service
https://crsreports.congress.gov
98-35
Social Security: The Windfall Elimination Provision (WEP)
Summary
Social Security is a work-based, federal insurance program that provides income support to
workers and their eligible family members in the event of the worker’s retirement, disability, or
death. A worker’s employment or self-employment is considered covered by Social Security if the
services performed in that job result in earnings that are taxable and creditable for program
purposes. Although participation in Social Security is compulsory for most workers, about 7% of
al workers in paid employment or self-employment were not covered by Social Security in 2020.
The windfall elimination provision (WEP) is a modified benefit formula that reduces the Social
Security benefits of certain retired or disabled workers who are also entitled to pension benefits
based on earnings from jobs that were not covered by Social Security and thus not subject to the
Social Security payroll tax. Its purpose is to remove an unintended advantage or “windfal ” that
these workers would otherwise receive as a result of the interaction between the regular Social
Security benefit formula and the workers’ relatively short careers in Social Security-covered
employment.
In December 2020, about 1.9 mil ion people (or about 3% of al Social Security beneficiaries)
were affected by the WEP. Those workers mainly include state and local government employees
covered by alternative staff-retirement systems as wel as most permanent civilian federal
employees hired before January 1, 1984, who are covered by the Civil Service Retirement System
(CSRS).
WEP’s supporters argue that the formula is a reasonable means to prevent overgenerous payments
and unintended benefits to people who have earnings not covered by Social Security and receive
pensions from noncovered work. Opponents argue that the provision substantial y reduces a
benefit that workers may have included in their retirement plans, and it reduces benefits
disproportionately for lower-earning households. Others criticize the current WEP formula as an
imprecise way to determine the actual windfal when applied to individual cases.
Recent legislation has general y proposed either to eliminate the provision for al or some affected
beneficiaries, or replace the current-law provision with a new proportional formula based on past
earnings from both covered and noncovered employment.
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Contents
Introduction ................................................................................................................... 1
Background on the Social Security Benefit Formula ............................................................. 1
How the Windfal Elimination Provision Works ................................................................... 3
The Number of People Affected by the WEP ....................................................................... 5
Legislative History and Rationale ...................................................................................... 7
Arguments for the WEP.............................................................................................. 8
Arguments Against the WEP ....................................................................................... 8
The WEP’s Impact on Low-Income Workers ....................................................................... 8
Legislative Activity on the WEP in the 117th Congress .......................................................... 9
Legislative Activity on the WEP in the 116th Congress .......................................................... 9
Tables
Table 1. Social Security Benefit Formula for Workers Who First Become Eligible in
2021........................................................................................................................... 2
Table 2. Hypothetical Scenario: PIA for a Worker with AIME of $1,500 Who Becomes
Eligible in 2021 and Has 20 Years of Substantial Coverage ................................................. 3
Table 3. Maximum WEP Reduction for Workers Who Become Eligible in 2021, by Years
of Substantial Coverage................................................................................................. 4
Table 4. Number of Social Security Beneficiaries in Current Payment Status with
Benefits Affected by WEP, by State and Type of Beneficiary: December 2020 ....................... 5
Table 5. Number of Social Security Worker Beneficiaries in Current Payment Status with
Benefits Affected by WEP, by Gender and Type of Beneficiary, December 2020 .................... 7
Table A-1. Number of Social Security Beneficiaries in Current Payment Status with
Benefits Affected by WEP, by State and Type of Beneficiary, December 2019 ..................... 12
Table A-2. Percentage of Social Security Beneficiaries in Current Payment Status
Affected by the WEP, by State and Type of Beneficiary, December 2019 ............................ 13
Appendixes
Appendix. WEP Affected Beneficiaries, by State................................................................ 12
Contacts
Author Information ....................................................................................................... 15
Congressional Research Service
Social Security: The Windfall Elimination Provision (WEP)
Introduction
Social Security provides insured workers and their eligible family members with a measure of
protection against the loss of income due to the worker’s retirement, disability, or death. The
amount of the monthly benefit payable to workers and their family members is based on the
worker’s career-average earnings from jobs covered by Social Security (i.e., jobs in which the
worker’s earnings were subject to the Social Security payroll tax).1 The Social Security benefit
formula is weighted to replace a greater share of career-average earnings for low-paid workers
than for high-paid workers. This means that low-paid workers receive relatively high benefits in
relation to their payroll tax contributions, although the dollar amount of their benefits is lower
than that provided to high-paid workers.
The benefit formula, however, cannot distinguish between workers who have low career-average
earnings because they worked for many years at low earnings in Social Security-covered
employment and workers who appear to have low career-average earnings because they worked
for many years in jobs not covered by Social Security. (Those years show up as zeros in their
Social Security earnings records, which, when averaged, lower their career earnings from covered
work.) Consequently, workers who split their careers between covered and noncovered
employment—even highly paid ones—may also receive the advantage of the weighted formula.
The windfall elimination provision (WEP) is a modified benefit formula designed to remove the
unintended advantage, or “windfal ,” of the regular benefit formula for certain retired or disabled
workers who spent less than full careers in covered employment and who are also entitled to
pension benefits based on earnings from jobs not covered by Social Security. The reduction in
initial benefits caused by the WEP is designed to place affected workers in approximately the
same position they would have been in had all their earnings been covered by Social Security.
Background on the Social Security Benefit Formula
Workers qualify for Social Security benefits if they worked and paid Social Security payroll taxes
for a sufficient amount of time in covered employment.2 Retired workers need at least 40 earnings
credits (or about 10 years of covered work), whereas disabled workers general y need fewer
earnings credits.3 Initial benefits are based on a worker’s career-average earnings from jobs
covered by Social Security. In computing the initial benefit amount, a worker’s annual taxable
earnings are indexed (i.e., adjusted) to average wage growth in the national economy.4 This is
done to bring earlier years of earnings up to a comparable, current basis. Next, a summarized
measure of a worker’s career-average earnings is found by totaling the highest 35 years of
1 For the purposes of this report, the term payroll tax includes the Social Security self-employment tax.
2 Unless otherwise noted, the term covered employment includes self-employment covered by Social Security.
3 A worker may earn up to four earnings credits per calendar year. In 20 21, a worker earns one credit for each $1,470 of
covered earnings, up to a maximum of four credits for covered earnings of $5,880 or more. Earnings credits are also
called quarters of coverage. See Social Security Administration (SSA), How You Earn Credits, Publication No. 05-
10072, 2021, https://www.ssa.gov/pubs/EN-05-10072.pdf.
4 Years of earnings are indexed up to the second calendar year before the year of earliest eligibility (i.e., the year in
which the worker first attains aged 62, becomes disabled, or dies). Years of earnings aft er the last indexing year are
counted in nominal (i.e., unadjusted) dollars.
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covered earnings and then dividing by 35.5 After that, a monthly average, known as average
indexed monthly earnings (AIME), is found by dividing the annual average by 12.
Once the worker’s AIME has been derived, it is then entered into the Social Security benefit
formula to produce the worker’s initial benefit amount. The benefit formula is progressive,
replacing a greater share of career-average earnings for low-paid workers than for high-paid
workers. The benefit formula applies three factors—90%, 32%, and 15%—to three different
levels, or brackets, of AIME. The result is known as the primary insurance amount (PIA) and is
rounded down to the nearest 10 cents. The PIA is the worker’s basic benefit before any
adjustments are applied.6 The benefit formula applicable to a given worker is based on the
individual’s earliest eligibility year (ELY), that is, the year in which the worker first attains age
62, becomes disabled, or dies.7 For workers whose ELY is 2021, the PIA is determined as follows
in Table 1.
Table 1. Social Security Benefit Formula for
Workers Who First Become Eligible in 2021
Factor
Average Indexed Monthly Earnings (AIME)
90%
of the first $996, plus
32%
of AIME over $996 and through $6,002 (if any), plus
15%
of AIME over $6,002 (if any)
Source: CRS, based on Social Security Administration (SSA), Office of the Chief Actuary (OCACT), “Benefit
Formula Bend Points,” https://www.ssa.gov/oact/cola/bendpoints.html.
The averaging provision in the benefit formula tends to cause workers with short careers in Social
Security-covered employment to have low AIMEs, even if they had high earnings in their
noncovered career. This results in these workers having AIMEs that are similar to those of people
who worked for low earnings in covered employment throughout their careers. This is because
years of zero covered earnings are entered as zeros into the formula that averages the worker’s
earnings history over 35 years. For example, a person with 10 years in Social Security-covered
employment would have an AIME that reflects 25 years of zero earnings, even if that person
worked for 25 years in a high-paying, noncovered career.
Consequently, for a worker whose AIME is low because his or her career was split between
covered and noncovered employment, the benefit formula replaces more of covered earnings at
the 90% rate than if the worker had spent a full 35-year career in covered employment at the same
earnings level. The higher replacement rate8 for workers who have split their careers between
Social Security-covered and noncovered jobs is sometimes referred to as a “windfall.”9
5 T he number of benefit computation years for disabled or deceased workers may be fewer than 35 years.
6 T he worker’s primary insurance amount (PIA) is subsequently adjusted to account for inflation through cost-of-living
adjustments (COLAs). Additional adjustments may be made to the PIA to account for early retirement, delayed
retirement, or certain other factors.
7 Although the factors in the formula are fixed in law, the dollar amounts defining the brackets, also known as bend
points, are adjusted annually for average earnings growth in the national economy. Because the bend points change
each year, the benefit formula for a worker with an earliest eligibility year (ELY) in 2021 is different from the benefit
formula for a worker with an ELY in any other year. For bend point amount for years prior to 20 21, see SSA, Office of
the Chief Actuary (OCACT ), “Benefit Formula Bend Points,” https://www.ssa.gov/oact/cola/bendpoints.html.
8 T he replacement rate is the ratio of the program benefit to a worker’s prior earnings.
9 T he windfall elimination provision (WEP) is sometimes confused with the government pension offset (GPO), which
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How the Windfall Elimination Provision Works
A different Social Security benefit formula, known informal y as the windfall elimination
provision, applies to certain workers who are entitled to Social Security benefits as wel as to
pension benefits from employment not covered by Social Security.10 Under the WEP, the 90%
factor in the first bracket of the formula is reduced to as low as 40%. The effect is to lower the
proportion of earnings in the first bracket that are converted to benefits. Table 2 il ustrates how
the regular benefit formula and the WEP work in 2021for someone with a 40% factor.
Table 2. Hypothetical Scenario: PIA for a Worker with AIME of $1,500 Who
Becomes Eligible in 2021 and Has 20 Years of Substantial Coverage
Regular Formula
WEP Formula
90% of first $996
$896.40
40% of first $996
$398.40
32% of earnings over $996
161.28
32% of earnings over $996
161.28
and through $6,002
and through $6,002
15% over $6,002
0.00
15% over $6,002
0.00
Total after rounding
$1,057.60
Total after rounding
$559.60
Source: CRS.
Note: PIA = Primary Insurance Amount. AIME = Average Indexed Monthly Earnings. By law, the PIA is rounded
down to nearest 10 cents.
In this scenario, the monthly benefit is $498.00 lower under the WEP than under the regular
benefit formula ($1,057.60 minus $559.60). Note that the WEP reduction is limited to the first
bracket in the AIME formula (90% vs. 40%), while the 32% and 15% factors for the second and
third brackets are unchanged. As a result, for AIME amounts that exceed the first formula
threshold of $996, the WEP reduction remains a flat $498 per month. For example, if the worker
had an AIME of $4,000 instead of $1,500, the WEP reduction would stil be $498 per month. The
WEP therefore causes a proportional y larger reduction in benefits for workers w ith lower AIMEs
and monthly benefit amounts.11
A guarantee in the WEP ensures that the WEP reduction cannot exceed half of the noncovered
pension based on the worker’s noncovered work. This guarantee is designed to help protect
workers with low pensions from noncovered work. The WEP does not apply to workers who have
30 or more years of substantial employment covered under Social Security, with an adjusted
reduces Social Security benefits paid to spouses and widow(er)s of insured workers if the spouse or widow(er) also
receives a pension based on government employment not covered by Social Security. See CRS Report RL32453, Social
Security: The Governm ent Pension Offset (GPO).
10 Section 215(a)(7) and (d)(3) of the Social Security Act; 42 U.S.C. §415(a)(7) and (d)(3). See also 20 C.F.R.
§§404.213 and 404.243. Moreover, see SSA, Program Operations Manual System, “RS 00605.360 WEP
Applicability,” June 24, 2013, https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605360. T he term windfall elimination
provision is not specified in statute or in SSA’s regulations.
11 For the worker shown in Table 2, with an AIME of $1,500 and a monthly benefit of $1,057.60 under the regular
benefit formula in 2021, the WEP reduction of $498.00 represents a cut of approximately 47% to the regular formula
monthly benefit amount. By comparison, a worker with an AIME of $4,000 would be entitled to a PIA of $1,857.60
under the 2021 regular benefit formula, and the same WEP reduction of $ 498.00 per month would represent a 27%
reduction in this worker’s monthly benefit amount.
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formula for workers with 21 to 29 years of substantial covered employment, as shown in Table
3.12
Table 3. Maximum WEP Reduction for Workers Who Become Eligible in 2021, by
Years of Substantial Coverage
Years of Social Security Coverage
20 or
fewer
21
22
23
24
25
26
27
28
29
30+
First factor in formula:
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
Maximum dol ar amount of monthly WEP reduction for workers who first become eligible for Social Security in
2021a:
$498
$448
$398
$349
$299
$249
$199
$149
$100
$50
$0
Source: CRS analysis.
Notes: The WEP reduction may be lower than the amount shown because the reduction is limited to one-half
of the worker’s pension from noncovered employment. In addition, because the WEP reduces the initial benefit
amount before it is reduced or increased due to early retirement, delayed retirement credits (DRCs), cost-of-
living adjustments (COLAs), or other factors, the difference between the final benefit with the WEP and the final
benefit without the WEP may be less than or greater than the amounts shown.
a. The maximum dol ar amount of the monthly WEP reduction is based on a worker’s ELY. Because the dol ar
amounts defining the brackets in the benefit formula change each year, the maximum dol ar amount of the
WEP reduction for a worker with an ELY of 2021 is different from the maximum deduction for a worker
with an ELY of any other year. For maximum WEP reduction amounts for workers with ELYs prior to
2021, see SSA, “Windfal Elimination Provision (WEP) Chart,” https://www.ssa.gov/planners/retire/wep-
chart.html.
The WEP applies to benefits payable to retired or disabled workers who meet the criteria above
and to their eligible dependents; however, it does not apply to benefits payable to survivors of
deceased insured workers. Groups of workers likely to be affected by the WEP include certain
state and local government employees who are covered by alternative pension plans through their
employers13 and most permanent civilian federal employees hired before January 1, 1984, who
are covered by the Civil Service Retirement System (CSRS).14 The WEP does not apply to
federal employees performing service on January 1, 1984, to which coverage was
extended on that date by reason of the Social Security Amendments of 1983 (P.L.
98-21);
12 For determining years of coverage after 1978 for individuals with pensions from noncovered employment,
“substantial coverage” is defined as 25% of the “old law” Social Security maximum taxable earnings base for each year
in question. T he old law maximum t axable earnings base refers to the earnings base that would have been in effect had
the Social Security Amendments of 1977 (P.L. 95-216) not been enacted. In 2021, the old-law taxable earnings base is
equal to $106,200; therefore, to earn credit for one year of substantial employment under the WEP, a worker would
have to earn at least $26,550 in Social Security-covered employment. For the thresholds for previous years, see SSA,
OCACT , “Old-Law Base and Year of Coverage,” https://www.ssa.gov/oact/cola/yoc.html.
13 See Department of the Treasury, Internal Revenue Service (IRS), Federal-State Reference Guide, IRS Publication
963 (Rev. 7-2020), https://www.irs.gov/pub/irs-pdf/p963.pdf.
14 See CRS Report 98-810, Federal Employees’ Retirement System: Benefits and Financing.
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employees of a nonprofit organization who were exempt from Social Security
coverage on December 31, 1983, and who became covered for the first time on
January 1, 1984, under P.L. 98-21;
workers who attained age 62, became disabled, or were first eligible for a
pension from noncovered employment before 1986;
workers who receive foreign pension payments after 1994 that are based on a
totalization agreement with the United States;15
workers whose only noncovered pension is based on earnings from noncovered
domestic or foreign employment before 1957;16 and
railroad workers whose only noncovered pension is based on earnings from
employment covered by the Railroad Retirement Act.17
The Number of People Affected by the WEP
According to the Social Security Administration (SSA), as of December 2020, about 1.9 mil ion
Social Security beneficiaries were affected by the WEP (Table 4). The overwhelming majority of
those affected (about 94%) were retired workers. Approximately 3% of al Social Security
beneficiaries (including disabled workers and dependent beneficiaries) and 4% of al retired-
worker beneficiaries were affected by the WEP in December 2020.18 Of retired workers affected
by the WEP, approximately 56% were men (Table 5).
Table 4. Number of Social Security Beneficiaries in Current Payment Status with
Benefits Affected by WEP, by State and Type of Beneficiary: December 2020
Type of Beneficiary
Retired
Disabled
Spouses and
State
Total
Workers
Workers
Children
Total
1,948,427
1,836,538
12,520
99,369
Alabama
18,233
17,193
158
882
Alaska
12,542
12,004
60
478
Arizona
38,103
36,106
213
1,784
Arkansas
10,642
10,147
117
378
California
273,399
258,520
1,639
13,240
Colorado
68,473
65,368
772
2,333
Connecticut
20,681
19,910
100
671
Delaware
4,454
4,262
34
158
District of Columbia
7,299
7,085
42
172
15 Totalization agreements are bilateral agreements that provide limited coordination of the U.S. Social Security
program with comparable social insurance programs of other countries. T he agreements are intended primarily to
eliminate dual Social Security taxation based on the same work and provide benefit protection for workers who divide
their careers between the United States and a foreign country.
16 T he WEP does not apply in cases where the pension is based, in part, on noncovered military reserve duty before
1988 but after 1956.
17 SSA, POMS, “ RS 00605.362 Windfall Elimination Provision (WEP) Exceptions,” November 1, 2019,
https://secure.ssa.gov/poms.nsf/lnx/0300605362.
18 Data on the total Social Security beneficiary and retired-worker populations used in these calculations are from SSA,
OCACT , “Benefits Paid By T ype Of Beneficiary,” https://www.ssa.gov/oact/ProgData/icp.html.
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Social Security: The Windfall Elimination Provision (WEP)
Type of Beneficiary
Retired
Disabled
Spouses and
State
Total
Workers
Workers
Children
Florida
107,178
101,174
575
5,429
Georgia
56,383
54,141
379
1,863
Hawai
11,492
10,739
40
713
Idaho
9,107
8,598
68
441
Il inois
99,640
95,836
381
3,423
Indiana
17,698
16,776
148
774
Iowa
8,338
7,983
69
286
Kansas
9,563
9,110
75
378
Kentucky
25,207
24,185
172
850
Louisiana
48,276
45,681
581
2,014
Maine
19,423
18,764
78
581
Maryland
47,253
45,178
251
1,824
Massachusetts
83,156
80,073
580
2,503
Michigan
22,510
21,213
190
1,107
Minnesota
16,698
16,031
75
592
Mississippi
9,757
9,267
86
404
Missouri
40,780
39,536
222
1,022
Montana
6,611
6,290
32
289
Nebraska
5,622
5,362
40
220
Nevada
35,773
34,422
217
1,134
New Hampshire
8,880
8,482
83
315
New Jersey
23,132
21,662
196
1,274
New Mexico
13,939
13,065
115
759
New York
32,893
30,673
229
1,991
North Carolina
31,696
30,259
190
1,247
North Dakota
2,317
2,219
12
86
Ohio
152,863
146,441
1,364
5,058
Oklahoma
17,519
16,629
146
744
Oregon
18,614
17,664
84
866
Pennsylvania
36,813
34,770
280
1,763
Rhode Island
6,058
5,847
46
165
South Carolina
19,418
18,501
106
811
South Dakota
4,004
3,859
20
125
Tennessee
22,007
20,944
131
932
Texas
195,135
185,689
1,165
8,281
Utah
14,341
13,346
94
901
Vermont
2,674
2,542
7
125
Virginia
48,697
46,132
149
2,416
Washington
34,712
32,488
148
2,076
West Virginia
6,354
5,924
69
361
Wisconsin
12,679
12,124
60
495
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Type of Beneficiary
Retired
Disabled
Spouses and
State
Total
Workers
Workers
Children
Wyoming
2,635
2,519
20
96
Outlying Areas and
Foreign Countries
106,756
83,805
412
22,539
Source: CRS, based on unpublished data from Social Security Administration (SSA), Office of Research,
Evaluation, and Statistics (ORES), Table B, January 2021.
Table 5. Number of Social Security Worker Beneficiaries in Current Payment Status
with Benefits Affected by WEP, by Gender and Type of Beneficiary, December 2020
Gender
All Workers
Retired Workers
Disabled Workers
All Beneficiaries
1,849,058
1,836,538
12,520
Women
816,502
810,447
6,055
Men
1,032,556
1,026,091
6,465
Source: CRS, based on unpublished data from SSA, ORES, Table W01, January 2021.
For data on the number and share of Social Security beneficiaries affected by the WEP in
December 2019, by state, see Table A-1 and Table A-2 in the Appendix, respectively.
Legislative History and Rationale
The WEP was enacted in 1983 as part of major amendments (P.L. 98-21) designed to shore up the
financing of the Social Security program. The 40% WEP formula factor was the result of a
compromise between a House bil that would have substituted a 61% factor for the regular 90%
factor and a Senate proposal that would have substituted a 32% factor.19
The purpose of the 1983 provision was to remove an unintended advantage that the regular Social
Security benefit formula provided to certain retired or disabled worker-beneficiaries who were
also entitled to pension benefits based on earnings from jobs not subject to the Social Security
payroll tax. The regular formula was intended to help workers who spent their lifetimes in low-
paying jobs, by providing them with a benefit that replaces a higher proportion of their career-
average earnings than the benefit provided to workers with high career-average earnings.
However, the formula does not differentiate between those who worked in low -paid jobs
throughout their careers and other workers who appear to have been low paid because they
worked many years in jobs not covered by Social Security and few years in covered jobs. Under
the old law, workers who were employed for only a portion of their careers in jobs covered by
Social Security—even highly paid ones—also received the advantage of the weighted formula,
because their few years of covered earnings were averaged over their entire working career to
determine the average covered earnings on which their Social Security benefits were based. The
WEP is intended to place affected workers in approximately the same position they would have
been in had all their earnings been covered by Social Security.
19 U.S. Congress, Committee of Conference, Social Security Amendments of 1983, conference report to accompany
H.R. 1900, 98th Cong., 1st sess., March 24, 1983, H.Rept. 98-47 (Washington: GPO, 1983), pp. 120-121,
http://www.finance.senate.gov/imo/media/doc/Conf-98-47.pdf.
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Social Security: The Windfall Elimination Provision (WEP)
Arguments for the WEP
Proponents of the measure say that it is a reasonable means to prevent payment of overgenerous
and unintended benefits to certain workers who otherwise would profit from happenstance (i.e.,
the mechanics of the Social Security benefit formula). Furthermore, they maintain that the
provision rarely causes hardship because by and large the people affected are reasonably wel off
because by definition they also receive pensions from noncovered work. The guarantee provision
ensures that the reduction in Social Security benefits cannot exceed half of the pension from
noncovered work, which protects people with smal pensions from noncovered work. In addition,
the impact of the WEP is reduced for workers who spend 21 to 29 years in Social Security-
covered work and is eliminated for people who spend 30 years or more in Social Security-
covered work.
Arguments Against the WEP
Some opponents believe the provision is unfair because it substantial y reduces a benefit that
workers may have included in their retirement plans. Others criticize how the provision works.
They say the arbitrary 40% factor in the windfal elimination formula is an imprecise way to
determine the actual windfal when applied to individual cases.20
The WEP’s Impact on Low-Income Workers
The impact of the WEP on low-income workers has been the subject of debate. Jeffrey Brown
and Scott Weisbenner (hereinafter “Brown and Weisbenner”) point out two reasons why the WEP
can be regressive.21 First, because the WEP adjustment is confined to the first bracket of the
benefit formula ($996 in 2021), it causes a proportional y larger reduction in benefits for workers
with lower AIMEs and benefit amounts. Second, a high earner is more likely than a low earner to
cross the “substantial work” threshold for accumulating years of covered earnings (in 2021 this
threshold is $26,550 in Social Security-covered earnings); therefore, high earners are more likely
to benefit from the provision that phases out the WEP for people with between 21 and 29 years of
covered employment.
Brown and Weisbenner found that the WEP does reduce benefits disproportionately for lower-
earning households.22 For some high-income households, applying the WEP to covered earnings
even provides a higher replacement rate than if the WEP were applied proportionately to al
earnings, covered and noncovered. Brown and Weisbenner found that the WEP can also lead to
large changes in Social Security replacement rates based on smal changes in covered earnings,
particularly when a smal increase in covered earnings carries a person over the threshold for an
additional year of substantial covered earnings, leading to an adjustment in the WEP formula
applied to the AIME.
20 See, for example, the Social Security Advisory Board, The Windfall Elimination Provision: It’s Time to Correct the
Math, October 1, 2015, http://www.ssab.gov/Portals/0/OUR_WORK/REPORT S/WEP_Position_Paper_2015.pdf.
21 Jeffrey R. Brown and Scot t Weisbenner, “T he Distributional Effects of the Social Security Windfall Elimination
Provision,” Journal of Pension Econom ics and Finance, vol. 12, iss. 04 (October 2013), pp. 415-434,
http://business.illinois.edu/weisbenn/RESEARCH/PAPERS/ JPEF_Brown_Weisbenner.pdf.
22 For more information, see CRS Report R46194, The Windfall Elimination Provision (WEP) in Social Security:
Com paring Current Law with Proposed Proportional Form ulas.
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Legislative Activity on the WEP in the
117th Congress
H.R. 82 (the Social Security Fairness Act of 2021) was introduced by Representative Rodney
Davis on January 4, 2021. The legislation would repeal the WEP and the government pension
offset (GPO), which reduces the Social Security benefits paid to spouses and widow(er)s of
insured workers if the spouse or widow(er) also receives a pension based on government
employment not covered by Social Security.23 The elimination of the WEP and GPO would apply
to benefits payable for months after December 2021. In 2016 (the most recent estimate available),
SSA’s Office of the Chief Actuary (OCACT) projected that repealing both the WEP and the GPO
would reduce the long-range actuarial balance (i.e., increase the net long-term cost) of the
combined Social Security trust funds by 0.13% of taxable payroll.24 The OCACT estimated that
repealing only the WEP would reduce the long-range actuarial balance of the combined trust
funds by 0.08% of taxable payroll.25
Legislative Activity on the WEP in the
116th Congress
In the 116th Congress, several proposals were introduced to replace or amend the WEP. None of
these was acted upon. These proposals are briefly described below.
H.R. 141 (the Social Security Fairness Act of 2019) and its companion bil , S. 521, were
introduced by Representative Rodney Davis on January 3, 2019, and Senator Sherrod Brown on
February 14, 2019, respectively. The bil s would have repealed the WEP and the GPO for benefits
payable for months after December 2020.26
S. 710 (the Social Security Fairness for Firefighters and Police Officers Act) was introduced by
Senator Pat Toomey on March 7, 2019. The bil would have exempted certain firefighters and
police officers with five years of qualified service from the WEP and the GPO.27
Past legislation has suggested replacing the WEP with a new proportional formula for new
beneficiaries. The proportional formula would apply the regular Social Security benefit formula
to al past earnings from covered and noncovered employment. The resulting benefit would then
be reduced by the ratio of career-average earnings from covered employment to career-average
earnings from both covered and noncovered employment (i.e., combined earnings). Based on the
estimate from OCACT, among al current beneficiaries in 2018, about 69% of those affected by
the WEP would receive an increase in Social Security benefits using the proportional formula,
23 See CRS Report RL32453, Social Security: The Government Pension Offset (GPO). See also CRS In Focus IF10203,
Social Security: The Windfall Elim ination Provision (WEP) and the Governm ent Pension Offset (GPO) .
24 Letter from Stephen C. Goss, Chief Actuary, SSA, to the Honorable Sherrod Brown, U.S. Senate, February 24, 2016,
https://www.ssa.gov/oact/solvency/SBrown_20160224.pdf. T he projection was based on the intermediate assumptions
of the 2015 Social Security trustees report. Taxable payroll is the total amount of earnings in the economy that is
subject to Social Security payroll and self-employment taxes (with some adjustments).
25 Informal cost estimate provided to CRS by OCACT on June 14, 2018. OCACT estimated that repealing only the
GPO would reduce the long-range actuarial balance of the combined trust funds by 0.06% of taxable payroll.
26 For more information, see “ Legislative Activity on the WEP in the 117th Congress.”
27 Qualified service is defined in 34 U.S.C. §10284.
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and the remaining 31% would receive a lower benefit. In addition, 13.5 mil ion beneficiaries who
are not affected by the current WEP would receive a lower benefit using the proportional
formula.28 Most workers who are not affected by the current WEP but would be affected by the
proportional formula are those with noncovered employment who have 30 or more years of
substantial covered earnings, or those with noncovered employment who are not receiving
noncovered pension benefits; both groups are exempt from the WEP under current law. To protect
future beneficiaries from further benefit reduction compared with the current law, the 2019
legislation based on the proportional formula would have general y attempted to hold
beneficiaries harmless to a certain degree by providing the higher benefit of the current-law WEP
or the proportional formula.
On July 24, 2019, H.R. 3934 (the Equal Treatment of Public Servants Act) was introduced by
Representative Kevin Brady. The legislation would have replaced the WEP with a new
proportional formula for individuals who would become eligible for OASDI benefits in 2022 or
later. Individuals becoming eligible between 2022 and 2060 would receive the higher of their
benefit under the current-law WEP or the proportional formula. The proposal would have also
provided a rebate payment starting in 2022 for workers (up to $100 per month) and their
dependents (up to $50 per month) affected by the current WEP. In 2019, OCACT estimated that
the legislation would increase program cost by about $23.1 bil ion (mainly from the rebate) over
the period 2020 through 2029, and would have no significant effect on the Social Security trust
funds’ long-range (75 years) actuarial balance.29
H.R. 4540 (the Public Servants Protection and Fairness Act) was introduced by Representative
Richard E. Neal on September 27, 2019. Similar to H.R. 3934, the legislation would have
replaced the WEP with the new proportional formula for individuals who would become eligible
for OASDI benefits in 2022 or later. However, unlike H.R. 3934, al individuals becoming
eligible on and after 2022 would receive the higher of their benefit under the current-law WEP or
the proportional formula. Also, as under current law, workers with 30 or more years of substantial
earnings and those not receiving noncovered pension benefits would be exempt from the WEP.
The proposal would have provided a rebate payment starting nine months after enactment for
retired-worker and disabled-worker beneficiaries affected by the current WEP (up to $150 per
month), but not for their dependents. The proposal’s cost would be covered by transfers from
general revenues. In 2019, OCACT estimated that the legislation would increase program
expenditures by about $34.3 bil ion (mainly from the rebate) between 2020 and 2029, which
would be reimbursed from the General Fund of the U.S. Treasury. In the long run (75 years), the
projected program cost would increase by an amount equal to 0.02% of taxable payroll, and the
projected program income would increase by the same amount with transfers from the General
Fund, thus having no significant effect on the combined trust funds’ actuarial balance.30
In addition, H.R. 5529 (the Social Security Equity Act of 2019) was introduced by Representative
Adam Smith on December 19, 2019. The bil would have changed the current-law WEP formula
28 Letter from Stephen C. Goss, Chief Actuary, SSA, to the Honorable Kevin Brady, U.S. House, July 24, 2019,
https://www.ssa.gov/oact/solvency/KBrady_20190724.pdf. T he projections are based on the intermediate assumptions
of the 2019 Social Security trustees report.
29 Ibid.
30 Letter from Stephen C. Goss, Chief Actuary, SSA, to the Honorable Richard Neal, U.S. House, September 30, 2019,
https://www.ssa.gov/oact/solvency/RNeal_20190930.pdf. T he projections are based on the intermediate assumptions of
the 2019 Social Security trustees report.
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such that the WEP benefit reduction for most affected workers would be lower relative to current
law.31
31 H.R. 5529 would have revised the current WEP formula for the PIA computation to (1) lower from 30 to 25 the
number of years of coverage required for exemption from the WEP; (2) alter the determination of partial exemptions
for those who have more than 20 but less t han 25 years of coverage; and (3) reduce the dollar amount required for a
year of substantial coverage.
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Appendix. WEP Affected Beneficiaries, by State
Table A-1. Number of Social Security Beneficiaries in Current Payment Status with
Benefits Affected by WEP, by State and Type of Beneficiary, December 2019
Type of Beneficiary
Retired
Disabled
Spouses and
State
Total
Workers
Workers
Children
Total
1,912,706
1,797,415
12,943
102,348
Alabama
18,590
17,421
175
994
Alaska
12,051
11,529
59
463
Arizona
37,048
35,007
207
1,834
Arkansas
10,650
10,120
125
405
California
266,728
251,501
1,664
13,563
Colorado
65,659
62,439
781
2,439
Connecticut
20,196
19,390
99
707
Delaware
4,376
4,182
31
163
District of Columbia
7,488
7,246
52
190
Florida
105,764
99,561
584
5,619
Georgia
55,458
53,113
430
1,915
Hawai
11,351
10,574
43
734
Idaho
8,699
8,165
67
467
Il inois
98,706
94,682
415
3,609
Indiana
17,553
16,591
147
815
Iowa
8,395
8,003
65
327
Kansas
9,522
9,050
83
389
Kentucky
25,022
23,942
182
898
Louisiana
46,507
43,835
598
2,074
Maine
18,961
18,239
88
634
Maryland
47,808
45,572
279
1,957
Massachusetts
80,097
77,043
560
2,494
Michigan
22,365
20,990
196
1,179
Minnesota
16,813
16,090
77
646
Mississippi
9,832
9,300
92
440
Missouri
40,251
38,879
235
1,137
Montana
6,516
6,187
29
300
Nebraska
5,635
5,369
43
223
Nevada
34,363
33,016
233
1,114
New Hampshire
8,636
8,223
81
332
New Jersey
23,284
21,739
209
1,336
New Mexico
13,855
12,933
116
806
New York
33,190
30,854
249
2,087
North Carolina
31,418
29,940
191
1,287
North Dakota
2,352
2,247
11
94
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Social Security: The Windfall Elimination Provision (WEP)
Type of Beneficiary
Retired
Disabled
Spouses and
State
Total
Workers
Workers
Children
Ohio
148,669
142,071
1,342
5,256
Oklahoma
17,645
16,682
154
809
Oregon
18,299
17,272
91
936
Pennsylvania
37,078
34,898
313
1,867
Rhode Island
5,935
5,702
46
187
South Carolina
19,362
18,388
126
848
South Dakota
4,000
3,842
21
137
Tennessee
21,752
20,651
135
966
Texas
189,031
179,306
1,176
8,549
Utah
14,183
13,157
91
935
Vermont
2,694
2,549
13
132
Virginia
49,184
46,405
173
2,606
Washington
34,257
31,939
167
2,151
West Virginia
6,373
5,920
70
383
Wisconsin
12,683
12,074
69
540
Wyoming
2,574
2,450
20
104
Outlying Areas and
Foreign Countries
103,848
81,137
440
22,271
Source: CRS, based on unpublished data from SSA, ORES, Table B, January 2020.
Table A-2. Percentage of Social Security Beneficiaries in Current Payment Status
Affected by the WEP, by State and Type of Beneficiary, December 2019
Type of Beneficiary
Retired
Disabled
Spouses and
State
All Beneficiaries
Workers
Workers
Children
Total
3.0%
4.0%
0.2%
2.2%
Alabama
1.6%
2.4%
0.1%
1.1%
Alaska
11.5%
15.3%
0.5%
6.2%
Arizona
2.6%
3.4%
0.1%
2.0%
Arkansas
1.5%
2.2%
0.1%
0.8%
California
4.4%
5.7%
0.3%
2.8%
Colorado
7.3%
9.4%
0.8%
4.0%
Connecticut
2.9%
3.8%
0.1%
1.6%
Delaware
2.0%
2.6%
0.1%
1.3%
District of Columbia
8.9%
12.3%
0.4%
4.3%
Florida
2.2%
2.8%
0.1%
1.8%
Georgia
3.0%
4.1%
0.2%
1.5%
Hawai
4.1%
4.8%
0.2%
4.2%
Idaho
2.4%
3.1%
0.2%
1.8%
Il inois
4.4%
5.8%
0.2%
2.3%
Indiana
1.3%
1.8%
0.1%
0.9%
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Social Security: The Windfall Elimination Provision (WEP)
Type of Beneficiary
Retired
Disabled
Spouses and
State
All Beneficiaries
Workers
Workers
Children
Iowa
1.3%
1.7%
0.1%
0.8%
Kansas
1.7%
2.3%
0.1%
1.0%
Kentucky
2.5%
3.9%
0.1%
1.1%
Louisiana
5.0%
7.8%
0.4%
2.4%
Maine
5.4%
7.5%
0.2%
2.6%
Maryland
4.7%
6.1%
0.2%
3.1%
Massachusetts
6.2%
8.5%
0.3%
2.6%
Michigan
1.0%
1.4%
0.1%
0.7%
Minnesota
1.6%
2.1%
0.1%
0.9%
Mississippi
1.5%
2.2%
0.1%
0.9%
Missouri
3.1%
4.3%
0.1%
1.4%
Montana
2.7%
3.5%
0.1%
2.1%
Nebraska
1.6%
2.1%
0.1%
1.0%
Nevada
6.2%
8.0%
0.4%
3.4%
New Hampshire
2.8%
3.7%
0.2%
1.5%
New Jersey
1.4%
1.8%
0.1%
1.2%
New Mexico
3.1%
4.2%
0.2%
2.5%
New York
0.9%
1.2%
0.1%
0.7%
North Carolina
1.5%
2.0%
0.1%
1.0%
North Dakota
1.7%
2.3%
0.1%
1.1%
Ohio
6.2%
8.8%
0.4%
3.2%
Oklahoma
2.2%
3.1%
0.1%
1.4%
Oregon
2.1%
2.6%
0.1%
1.6%
Pennsylvania
1.3%
1.7%
0.1%
1.0%
Rhode Island
2.6%
3.5%
0.1%
1.2%
South Carolina
1.6%
2.2%
0.1%
1.2%
South Dakota
2.2%
2.8%
0.1%
1.3%
Tennessee
1.5%
2.1%
0.1%
1.0%
Texas
4.4%
6.1%
0.2%
2.3%
Utah
3.4%
4.4%
0.2%
2.5%
Vermont
1.8%
2.3%
0.1%
1.2%
Virginia
3.2%
4.2%
0.1%
2.5%
Washington
2.5%
3.2%
0.1%
2.2%
West Virginia
1.3%
2.0%
0.1%
0.9%
Wisconsin
1.0%
1.3%
0.0%
0.7%
Wyoming
2.2%
2.9%
0.2%
1.5%
Outlying Areas and
Foreign Countries
6.7%
8.6%
0.3%
9.4%
Source: CRS analysis of data from the fol owing sources: SSA, ORES, Table B, January 2020 (unpublished); and
SSA, ORES, Congressional Statistics, 2019, released May 2020, at https://best.ssa.gov/policy/docs/factsheets/
cong_stats/index.html.
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Notes: The column “Al Beneficiaries” includes survivor beneficiaries who are not subject to the WEP. The row
“Outlying Areas and Foreign Countries” includes a smal number of Social Security beneficiaries whose state or
area is unknown.
Author Information
Zhe Li
Analyst in Social Policy
Acknowledgments
This report was previously authored by multiple former CRS analysts. SSA’s Office of Research,
Evaluation, and Statistics provided unpublished data on beneficiaries affected by the WEP.
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
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