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Women study, earn and work more than they did 100 years ago – a sign of progress in the fight against gender-based discrimination. However, women with equivalent qualifications and education still earn less than men, which leads to a much poorer pension in old age.
As a result of lower life earnings, lower retirement savings, and longer life expectancy, more than half of American women over 65 are economically vulnerable and much more likely to fall into poverty.
Let’s celebrate progress. The World Economic Forum’s Global Gender Gap Report reports that the education gap between women and men has been closing everywhere, no distinction between American men and women. But education isn’t everything. Men and women take out similar loans and pay the same tuition fees, but when they graduate and enter the job market, paying for the same and comparable work leaves women right at the start. In 2020, women in the United States were receiving only 84% of the average hourly wage of men.
Barbara Schuster, PhD student in economics at the New School, helped me with this report. We find that women’s lower pay is also harmful because women also have an unequal burden of unpaid work – work with zero wages. American women spend almost twice as much time in the United States as men doing unpaid chores. And parenting costs women more. As a rule, men receive a parental allowance; Women pay a “mother’s tax”. The unequal economic consequences of parenthood are caused in part by changes in working hours after birth. Fathers increase their working hours, while mothers shorten their working hours, which leads to career paths that are interrupted for life, part-time employment or employment in more flexible, low-wage occupations than in management positions. In addition, progressive income taxation on family income discourages married women from entering the labor market, but this is only a small factor compared to inadequate childcare.
Economists break down all of these factors to find out which factors play a bigger role in the gender pay gap – and the largest are: women professions pay less, women cut their working hours to look after the family, and employers still pay women less, because they think they are less valuable and women accept the lower wages.
What people may not realize is that decades of lower incomes translate into lower contributions to social security and retirement accounts, which translates into less retirement savings.
However, it is not only social security benefits that are affected by a lower lifetime income, but also the retirement assets accumulated through employer-funded pension plans. For the few who have defined benefit plans that have benefits based on seniority and salary, the highest-performing workers have long, uninterrupted careers. Most employees have retirement plans, and about half have nothing, most have 401 (k) plans. Women are also disadvantaged in this design because those with the highest benefits and lower fluctuations between job changes are people with long-term secure jobs with fewer interruptions, which is more the typical male than the female career path.
. The consequence of the lower pension provision for women is considerable, since the life expectancy of women is longer and they have to make do with their savings for a longer period of time. In addition, women usually retire earlier than men, as the spouse often retires at the same time and women are usually the younger partner.
Early retirement has a negative impact on women’s pension security, and therefore working longer has greater benefits for women than for men. This increases the willingness of women to work longer so that they have more time to build up retirement savings – however, the Covid 19 pandemic triggered 1.7 million involuntary retirement and age discrimination is an obstacle for women who want to work longer .
The negative effects of discrimination against women in the labor market last a lifetime. To address gender inequalities in the pension system, one must therefore start with changes in labor market policy and practice.
Policies should remove barriers for paid women: introduce solid government-paid family and sick leave programs and affordable childcare – perhaps a longer day and year at school. A triple win for students, parents and most of the workers in the schools.
Another option is to offer a social security long-term care loan, which provides financial compensation upon retirement to those who have left the labor force to look after their family members. For more ideas and resources, please visit my Gender Equality for Women website, Women’s Institute for a Secure Retirement with a catchy acronym – WISER.