A study released by Social Security Works (SSW), an organization working to protect Social Security for those populations who are, or could become, financially dependent on it, has found that closing the wage gap between male and female workers could go a long way towards fixing the Social Security system.
The Equal Pay act was passed in 1963, but reports show that women still make anywhere between $0.77 to $0.83 to men’s $1 for doing the same work. According to the SSW study, by one year after college, the disparity between the wages of college-educated men and women is already 18 percent. By ten years out, these women can expect to make 31 percent less than their male counterparts. This adds up to a $654,000 career pay gap between men and women with college degrees. Across the entire workforce, the career pay gap is around $434,000.
Given that Social Security benefits are based upon lifetime earnings, this wage gap ultimately leads to a Social Security gap. “In 2012, women aged 65 or older received an average Social Security benefit of $12,520, compared to $16,396 for men,” the study said. “Further more, women’s longer life expectancies and lower levels of savings leave them with fewer resources as they age, making them increasingly reliant upon their Social Security benefits.”
Closing this gap would help women’s ability to supplement Social Security with retirement savings, close the poverty gap among elderly men and women, and improve disability, life, and unemployment insurance protections for women and their families.
“Today, women bring home at least a quarter of the earnings in nearly two thirds (64 percent) of American families, and over a third (34 percent) of employed women are their family’s sole breadwinner, “ the study said. “Eliminating the wage gap would improve … protections for families who rely on women’s earnings, especially in single parent households where there may not be additional sources of income.”
While making sure women have equal pay directly helps them and their families, it would also help the economy and strengthen Social Security’s finances.
A report by the Institute for Women’s Policy Research used in SSW’s study shows that closing the wage gap would increase the pay of 59.3 percent of women, and would have resulted in $447.6 billion of additional income in 2012. The study says,
“Since about 97 percent of female workers have earnings below Social Security’s tax cap ($117,000 in 2014), and the vast majority of these women work in employment covered by Social Security, most of this additional income would be subject to Social Security, generating tens of billions of additional Social Security revenue each year. This additional revenue, coupled with women receiving benefits on their own earnings records, as opposed to their spouses, could reduce Social Security’s projected long-term shortfall by roughly one-third.”
The study gives several policy solutions to helping decrease this gap, including passing the Paycheck Fairness Act and the Family and Medical Insurance Leave Act, providing credit toward Social Security for caregivers, and raising the minimum wage to $10.10 per hour.