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Senate Committee Holds Hearing on Social Security and Women

On December 9, the Senate Finance Committee held a hearing, “Social Security: Is a Key Foundation of Economic Security Working for Women?

Chair Ron Wyden (D-OR) explained the purpose of the hearing, noting that “When Americans envision the retirement they’d like to someday enjoy, they imagine it being worry-free…But for millions of elderly American women – a growing number every year – that dream never comes to pass. According to the Census Bureau, retired women are nearly twice as likely as retired men to live in poverty…Instead of living the worry-free ideal, they struggle to make ends meet – to pay for grocery bills and keep their homes heated in winter. And their experiences stand in stark contrast to the national trend of seniors living in the middle class.”

“Much of the structure of the Social Security system was designed long ago, when labor-market and life experiences of women were far different from what they are today and what they will be in the future,” said Ranking Member Orrin Hatch (R-UT). He added, “Social Security benefits earned by women are influenced by their labor market experiences, which generated the wages that get fed into the benefit-determination formula. Benefits for women also depend on marital status, life spans, and other factors, all of which have been subject to significant changes over time, which has affected how women experience Social Security.”

Dr. Catherine J. Dodd, chair of the Board of Directors, National Committee to Preserve Social Security and Medicare, urged the committee to examine proposals that “improve benefit equity and safeguard benefits for women,” saying, “The National Committee believes women deserve an adequate retirement income whether a work life is spent in the home, in the paid workforce, or a combination of the two. We support changes that safeguard benefits for women, especially those with the greatest need, and that improve benefit equity between one-earner and two-earner couples.” Citing several proposals, Dr. Dodd said, “Providing a widow or widower with 75 percent of the couple’s combined benefit treats one-earner and two-earner couples more fairly and reduces the likelihood of leaving the survivor in poverty.” She added, “The Special Minimum Benefit is intended to provide a slightly more generous benefit amount to individuals who work for many years in low-wage employment. We propose to update the method by which this benefit amount is calculated so that more individuals, many of them women, can qualify for this computation.”

Sita Nataraj Slavov, professor of Public Policy, George Mason University and Visiting Scholar, American Enterprise Institute, described ways in which Social Security could be reformed to better help women: “Reforms that modernize Social Security’s family benefits also would improve the way Social Security treats women. The Social Security retirement program was designed in the 1930s, when single-earner families were the norm. The Social Security spousal benefit allows spouses who stay out of the labor force to collect a benefit even if they paid no payroll tax. The spousal benefit is paid regardless of financial need, and the spouses of higher-income individuals qualify for higher spousal benefits. This formula punishes two-earner families, in which both spouses pay payroll tax, by giving them a lower rate of return on their Social Security contributions compared to one-earner families. It also provides a financial disincentive for women who expect to claim a spousal benefit to work outside the home, as these women will need to pay payroll taxes on their earnings without receiving any additional Social Security benefits.”

The following witnesses also testified: