Social Security for Women.
About 14 percent of women over 65 are living in poverty; without Social Security, more than half would be. In 1995 some 19 percent of widows and 24 percent of other unmarried women over 65 lived on incomes below the poverty line-about $7,500. Many women, especially those with low wages, don't have fat 401(k) plans, and just 30 percent of those over 65 receive pensions from their employers. Even with Medicare, many elderly women shoulder large out-of-pocket expenses for healthcare. On average, they pay about $2,600 each year for deductibles, coinsurance and premiums-about 22 percent of their income. It's not uncommon for one-third to one-half of their monthly checks to go for prescription drugs. In the coming years they'll pay even more as changes in Medicare mandated by the 1997 Balanced Budget Act take effect and if voucher or premium-support plans advocated by some in Congress become law.
Superimpose privatization on this picture, and women in retirement face financial disaster. Proposals to privatize do not include spouses' and widows' benefits. Currently, if a woman spends most of her career raising her family, Social Security guarantees a benefit that equals 50 percent of her husband's if she retires at the normal age, which is increasing gradually from 65 to 67. When her husband dies, she gets 100 percent of his benefits at normal retirement age. Social Security also gives benefits to a widow's children. Divorced women married for at least ten years receive benefits based on their husband's earnings.
The benefit formula is weighted toward low-wage workers, who get a larger percentage of preretirement earnings than a worker with higher wages. Since women tend to be low-wage workers, this progressivity helps them the most. So does the automatic inflation adjustment. Without it, the value of a 65-year-old woman's benefit would shrink significantly as she aged.
Supporters of privatization dismiss those benefits as unimportant, since more women are employed than forty or fifty years ago. But in reality, these protections will continue to be significant. Although women will work more, their life patterns, including leaving the work force to raise children, will not change much. In 1996 the Institute for Women's Policy Research looked at people who were 25 to 44 and examined their previous year's work experience. It found that nearly 31 percent of women worked less than full time, nearly 21 percent didn't work and about 50 percent worked full time. Moreover, women's incomes will continue to be low. "Privatization supposes that women have a sizable pot of money they can save and invest," says Deborah Briceland-Betts, executive director of the Older Women's League. "But three-fourths of women are still in clerical, sales and low-end jobs. Their future is not going to be all that different."
It's not surprising then that a recent study by The National Committee to Preserve Social Security and Medicare, a grassroots organization representing 5.5 million seniors, using data from the well-respected Employee Benefit Research Institute, found that the largest group of losers from privatizing Social Security would be women of every income class and marital status. Those benefiting the most: unmarried men with high incomes who are born well into the next century.
Congress does not have to tear up Social Security to improve the financial lot of poor elderly women, whom privatizers claim will be particularly helped by their plans. Proposals to help this group have been floating around for years. The 1994-96 Social Security Advisory Council recommended that the spouse's benefit be reduced and the widow's benefit increased, a revenue-neutral solution that redirects money to women when they need it most. (The theory is that when their husbands are still living, women don't fare as badly as they do when they become widows.) Another proposal would make it easier for women to keep more of their Social Security benefits if they apply for Supplemental Security Income, a means-tested federal program that provides benefits for low-income elderly people.
The women's issue is indeed a defining one in the debate. Do we keep the income redistribution and gender equity built into the current system, or do we trade them in for an untried, every- person-for-him- or-herself arrangement that may benefit a few high-earning savvy investors who will most likely be men?
Trudy Lieberman, health policy editor at Consumer Reports, is a contributing editor of Columbia Journalism Review. These views are hers, not those of Consumer Reports.