As the Trump administration seeks to reduce federal spending, the Social Security Administration plans to lay off 7,000 employees.
On Friday, the agency confirmed the figure, which will reduce its total staff to 50,000 from 57,000.
Previous reports that the Social Security Administration planned to reduce its headcount by 50% were “false,” according to the agency.
Nonetheless, the plan to cut 7,000 jobs has raised concerns about the agency’s ability to continue providing services, particularly benefit payments, to tens of millions of older Americans, given that its staff is already at a 50-year low.
“It’s going to extend the amount of time that it takes for them to have their claim processed,” said Greg Senden, a paralegal analyst with the Social Security Administration for 27 years.
“It’s going to increase the amount of time they have to wait to get benefits,” said Senden, who also assists the American Federation of Government Employees in overseeing Social Security employees in six central states.
Officials from the White House and the Social Security Administration were unavailable for comment at press time.
The Social Security Administration said on Friday that “much of” the staff reductions required to meet its target will come from resignations, retirement, and Voluntary Separation Incentive Payments, or VSIP.
More cuts could come from “reduction-in-force actions that could include abolishment of organizations and positions” or reassignments to other positions, according to the agency.
Federal agencies must submit reduction-in-force plans to the Office of Personnel Management by March 13 for approval.
Cuts may affect benefit payments, experts say
Former Social Security Administration Commissioner Martin O’Malley told CNBC.com last week that benefit payments could be disrupted for the first time in the program’s history.
“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley warned. “I believe you will see that within the next 30 to 90 days.”
According to other experts, the changes may have an impact on benefits, but it is unclear how.
“It’s unclear to me whether the staff cuts are more likely to result in an interruption of benefits or an increase in improper payments,” said Charles Blahous, senior research strategist at George Mason University’s Mercatus Center and a former Social Security and Medicare trustee.
Improper payments occur when the agency overpays or underpays benefits based on inaccurate information.
With fewer employees, the Social Security Administration will have to choose between processing all claims, which may result in more improper payments, and avoiding errors, which could cause processing delays, according to Blahous.
Disability benefits, which require more agency staff attention to process initial claims and continue to verify beneficiaries’ eligibility, may be more prone to errors than retirement benefits, he said.
Cuts may have minimal impact on trust funds
Under the Trump administration, Social Security intends to reduce its geographic footprint to four regions from ten, the agency announced on Friday.
Finally, it remains to be seen how much savings the overall reforms will produce.
Administrative costs are paid for by the Social Security Administration using trust funds that are also used to pay benefits. Based on current projections, the trust funds will be depleted within the next decade, and Social Security will be unable to pay full benefits unless Congress acts sooner.
Cost-cutting efforts at the Social Security Administration would most likely only help the trust fund’s solvency “in some miniscule way,” according to Andrew Biggs, a senior fellow at the American Enterprise Institute and former principal deputy commissioner.
What President Donald Trump is likely looking to do broadly is reset the baseline on government spending and employment, he said.
“I’m not disagreeing with the idea that the agency could be more efficient,” Biggs said. “I just wonder whether you can come up with that by cutting the positions first and figuring out how to have the efficiencies later.”