Society For Human Resource Management (SHRM) Certified Professional Practice Exam

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How is Social Security provided to American workers categorized?

Compensation
Prerequisite
Benefit
Incentive

The correct answer is: Benefit

Social Security provided to American workers is categorized as a benefit because it is a government program designed to offer financial assistance and support to individuals during retirement, disability, or in the event of a worker's death. This system is funded through payroll taxes, and the benefits are paid to eligible individuals based on their earnings history and contributions to the Social Security system over their working life. Categorizing Social Security as a benefit underscores its role as a safety net that aims to ensure a basic level of income for workers and their families, rather than as a form of compensation for work performed or as an incentive to modify behavior in the workplace. This classification is essential in understanding how such programs are structured within the broader context of employee welfare and social support systems.