NEW YORK (MainStreet) -- One of 2016’s defining issues will be the gender gap. Women tend to vote Democratic, and as the presumptive nominee Hillary Clinton is trying to make the most of what her campaign anticipates will be a sizeable advantage in an otherwise close contest.
So it is with her recent move to try and recast Social Security as a women’s issue. Last month in a questionnaire for the AFL-CIO (reported on by Reuters) Clinton said that the system must be prepared to “meet new realities… especially focused on the fact that we need to improve how Social Security works for women.”
This questionnaire was confidential, which is a real shame. We need to know what Clinton has in mind, because it turns out she’s exactly right.
“It’s a well-known fact that women live longer, so they need the income for a longer time in retirement, but also it’s about the very real, still in existence wage gap," said Cynthia Vick, a financial advisor in Phoenix. "Women still make 70% of men’s wages for the same type of work, so not only do they need more in retirement but they’re still making less than men.”
Now, that 70% figure has come under fire from many who point out that it fails to properly account for women who choose to leave the work force or go part-time in order to care for their children, but specific numbers aside, that gender gap has a huge impact on women’s ability to build savings and contribute to their own Social Security benefits.
Women are nearly twice as likely as men to live in poverty during retirement, scraping by on an average $16,000 a year past the age of 65.
Less in savings, fewer benefits and longer lives that require those scant resources: the golden years these are not. The less said about what will happen to Millennial women (and men) who spent their 20s investing in student loans instead of 401(k)s, the better.
Although in typical Hillary fashion, Clinton has neglected to detail her solutions for how to make Social Security friendlier to women advocates and economists haven’t. Paradoxically, according to Economics Policy Institute economist Monique Morrissey, the best way to solve Social Security’s gender issues is to not treat it as one in the first place.
In fact, she said, the key to this program’s durability has been its sense of universality.
“Progressives are very aware that all of these programs, when they were targeted or means tested, they dwindled into nothing," she said. "When its contributory, there is a sense of ownership. One of the things that makes [Social Security] popular is that it’s always been seen as contributory. You contribute to the system and then you get out of it.”
The more specialized a program becomes -- or at least the more people perceive it as serving the needs of a particular niche -- the less support it has. Compare, for example, Medicare to Medicaid.
Instead, reformers should shore up the system with generally applicable changes that address the problems women face.
First and foremost, Morrissey suggests, America needs to care for caregivers.
Parents with dependent children on their tax returns who drop out of the work force should still get credits towards Social Security contributions, perhaps fixed to the median income for their area. It’s an idea that many groups have advocated, Morrissey said, and the one “most targeted at women.”
It would also solve one of the big problems with our system: it was built to assume the traditional family where Dad works, Mom bakes and 2.3 kids run around the household. But what if things don’t work out between Mom and Dad? Or what if Dad never stuck around in the first place?
Or as Joan Entmacher, vice president for family economic security at the National Women’s Law Center, pointed out, what if Mom and Dad stuck together and depend on each other’s income?
When one spouse dies, the other can keep collecting the higher of either Social Security checks. Today, however, an increasing number of families have come to depend on both earners, and that holds true through retirement.
“If you were in a household where you used to be getting two benefits and now you’re down to one, that’s a big hit on the household income,” Entmacher said. “What they could do is modernize the system to recognize that spouses depend on two incomes.”
Spouses should be able to continue collecting some portion of their decedent’s benefits, to keep a death from meaning financial calamity as well.
Finally, Entmacher and Morrissey agreed, simply raising benefits would help women enormously. Women make up two-thirds of workers in low wage jobs, often so that they can have the flexibility to take care of families. As a result they also fill out the ranks of retirees who collect minimum benefits.
“If you had a modest across the board benefit increase, somewhere on the order of $65 or $70 a month, that’s going to mean the most to people whose benefits are already quite small,” Entmacher said. “The current minimum benefits we have are virtually worthless, and most of the people who get it are women.”
In an election that will increasingly become all about gender issues, Social Security is a big one that has yet to really be discussed. We know already that it’s on Clinton’s radar. The question is, what does she plan to do about it?