The key to understanding the WEP provision is to realize that the word "social" in Social Security means something. Unlike private and other public sector pension plans, there are social goals built into the Social Security program. One of those goals is to raise the standard of living of lower-income workers in retirement. This is accomplished through a benefit formula that is designed to give lower-paid workers a better deal than their more highly paid counterparts. Very low-paid workers could get a Social Security benefit that represents up to 90 percent of their earnings. This percentage is known as a "replacement rate." People with average incomes (the middle class) generally get a 40 percent replacement rate. Higher-income people get a rate around 30 percent.
The problem is that if you spend the bulk of your working life not paying into Social Security, you are automatically treated as a low-income person by the Social Security Administration's computers. That's because there are "zeros" on your Social Security earnings record for every year you spent in your non-Social Security job. SSA's records won't show that you were actually working at the other job and earning another pension. Instead, your Social Security earnings record simply shows gaps in your work history. So when figuring your Social Security retirement benefit, SSA's computers automatically use the formula intended to compensate a lower income person.