Taking Note: Women and the Endless Income Gap

The U.S. Census Bureau recently released its current population survey. One of the most depressing findings is that “in 2007, the ratio of earnings of women who worked full time, year-round was 78 percent of that for corresponding men.” Moreover, although it is true that the wage gap has narrowed by about 15 percentage points over the past half century, from 63.9 in 1955 to 78 last year (see the table below), it is not necessarily due to improvements in the treatment of women.

Source: U.S. Women’s Bureau and the National Committee on Pay Equity.

The National Committee on Pay Equity explains that “since 1973, approximately 60 percent of the change in the wage gap is due to the fall in men’s real earnings and only about 40 percent to the increase in women’s wages. At this rate of change, the Institute for Women’s Policy Research estimates that it will take until 2057 to close the wage gap.”

What makes this state of affairs even more troubling is that the inequality in income suffered by women does not end when they retire; in fact, according to testimony before Congress by Joan Entmacher of the National Women’s Law Center in January 2008, “the overall poverty rate for older women is 11.5%, compared to 6.6% for older men.” And this gap is impossible to overcome in retirement. It is the result of women earning less than men while working, which means they cannot save as much; if they contribute to pension plans at the same rate as men, they are contributing less because the pay their contributions are based on is less; they receive smaller Social Security checks because they earn less while they work and they often have to leave the workforce for periods of time to take care of dependents; and they live longer so what they manage to accumulate has to be spread over more years.

Looking at the statistics about the economic status of women who started working some forty or fifty years ago and are now retired reveals the costs of earning less while working:

Elderly women living alone are more likely to be poor than their male counterparts. “Of the almost 2 million elderly poor living alone in 2003, more than 1.6 million were women,” according to a publication by The Century Foundation.
The same publication notes that “only 18 percent of elderly women receive a private pension, compared with 31 percent of older men. In 2000, the median private pension or annuity income for women sixty-five or older was about $4,164 annually, compared to $7,768 for men.”
“In 2005, the average Social Security income for retired women was $800 a month, compared to nearly $1,200 for men. In addition, more than 11 percent of women aged 65 and older live below [the] poverty line,” according to an article in Inc.com.
“Widowed, divorced, and never-married women, in particular, depend heavily on Social Security. Social Security accounts for half or more of the income of nearly three-fourths of these nonmarried female recipients of Social Security. For one in four, it is the only source of income,” according to an AARP fact sheet.
Because they live longer than men, even though they earn less, women need to save more. According to one study, a woman needs to save “2 percent of pay more per year than the average man, over 30 years, to achieve the same standard of living.”

Efforts are being made to put an end to the rampant discrimination in the workplace that has persisted in the face of the Equal Pay Act and the Civil Rights Act of 1964; for example, a Paycheck Fairness Act was introduced in the U.S. Senate by Senator Hillary Clinton and in the U.S. House by Representative Rosa DeLauro and a Fair Pay Act was introduced in the U.S. Senate by Senator Tom Harkin and in the U.S. House of Representatives by Delegate Eleanor Holmes Norton. Such legislation aims at closing some of the loopholes that have been found in those acts by employers seeking to avoid compliance with the concept of equal pay for equal work.

Those valuable and much needed efforts, however, will not help women who are already retired; moreover, the help they offer will have only a limited effect on women close to retirement, for they have far too much ground to make up.

The principal hope for women living in poverty in retirement because of past inequities lies in government action. One road to easing their plight is through some adjustments in Social Security:

Increasing the minimum benefit for people with low lifetime earnings;
Increasing benefits for surviving spouses, who currently receive just the amount the higher earning worker receives after that worker’s death (Currently, if the primary breadwinner, usually the man, receives $1,000 a month in benefits, and the other partner either did not work or would entitled to only a very small amount because of a broken work record, together they receive $1,500, but when either dies, the survivor, usually the woman, receives just $1,000. However, Using the Census Bureau’s poverty thresholds as a guide, a one-person elderly household needs 79 percent of the income of a two-person household to maintain the same standard of living. Increasing the benefit to a total of, say, 75 percent of the combined amount would increase the survivor’s benefit to $1,125 easing the difficulty many elderly women now face.);
Reducing the earnings threshold to qualify for a quarter of credit and making the change retroactive (The 25 percent of workers with the lowest lifetime earnings had, on average, only 23 years with any covered earnings between ages 22 and 61 because they did not received credit for many quarters when their earnings fell below the threshold required, which in 2008 is $1,050; these workers, often women engaged in domestic service or working only sporadically because of such things as lay-offs, receive benefits that fall well below the poverty threshold as a result.); and
Providing credits for years of caregiving.

If action is taken to eliminate the current pay gap, these changes would be necessary for only a limited time; moreover, the amount needed to cover the costs would decrease year by year both because those number of recipients who suffered the most from pay inequities would pass away and the next group would have earned somewhat more in proportion to their male counterparts. One way to pay for the increases needed in the interim would be to eliminate the cap on earnings subject to Social Security, currently $102,000.

Another way that our nation can make up for its failure to ensure equal pay for women who have already retired or are about to retire is to increase government and private support for those services that make a difference to them, many of which are overwhelmed due to increased gas prices and inflation in the price of food. Greater support for programs, such as Meals-on-Wheels, senior centers, food pantries, and other community-based services, will ease the suffering of those senior citizens living on the edge, most of whom are women.

Comments

Have you ever considered that both women AND men contribute to the gender wage gap?

Before replacing an old law that "hasn't worked" with a new law that still won't work, legislators may want to find out why it won't:

Here's a bit of the balance that has been omitted for over 20 years by pay-equity advocates and most journalists, who are trained to provide balance but don't and thus have only stoked the fires between the sexes:
An excerpt compiled from "An In-depth Look at 'Pay Equity' For Women" at http://battlinbog.blog-city.com/male_matters_looks_indepth_at_pay_equity_for_women.htm:

Re: "Imagine doing the same job as a co-worker, but getting paid 23 percent less."

Everybody says that. But do you yourself personally know of any woman who works right next to a man in his exact same job, and, all things being equal, earns 23 percent less than he does? In your office, do the female managers, editors, and reporters earn 23 percent less than their male counterparts? Do the female bumper installers at GM, Ford, and Chrysler earn 23 percent less than the male counterparts working 18 inches from their elbow?

If so, why haven't these women, as members of the group taught to sue over the slightest grievance, long ago sued under the 40-year-old law mandating equal pay for equal work? And if they don't know they're making less, how does anyone else know?

No doubt many of the same people who insist women are paid 23 percent less also say employers are greedy profit-mongers bent on doing anything to beat out their competitors. If so, and if employers can easily get away with paying women less than men, why don't Michigan's troubled Big Three auto makers kick out all their male employees and employ only women at 77 cents to the dollar paid to the men? Think about it: they could immediately outsell Toyota and Honda by pricing their cars at 77 cents to the foreign auto makers' dollar. No more red ink! No more lay-offs!

Facts:
Women control most of the wealth.
Women control most of the spending.
Women live longer than men and in better health.
Men incur over 90% of workplace deaths and accidents. (This is the gender gap that is never discussed because of what I say below my name.)

Taking Note

A Century Foundation Group Blog

September 03, 2008

Women and the Endless Income Gap

by Beverly Goldberg

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