Under the guise of helping women, Sen. Marco Rubio (R-FL) recently released a package of bills, including a proposal purporting to “enable paid parental leave.” In practice, however, this proposal’s insidious design would undermine women’s economic security in the long term by compromising the Social Security benefits women disproportionately rely upon to pay their bills in retirement. Sen. Rubio’s bill offers a false choice between paid leave and a secure retirement, instead of a real investment in the supports women need over their lifetime.
How Social Security retirement benefits are determined
Social Security retirement benefits are determined by a formula that considers both how many years an individual has worked and what their earnings over their career have been.
The Social Security Administration calculates a worker’s average career earnings at their retirement, based on their highest-earning 35 years of work, to determine the monthly retirement benefit that worker will receive. If an individual has worked fewer than 35 years in the system, their benefit will be lower than if they had worked longer. If a worker’s earnings over their career are low, their retirement benefit will reflect that as well and will be lower. As a result, both the gender wage gap and breaks from the workforce, or reduced hours, due to caregiving or other reasons can lower Social Security benefits—disproportionately affecting women’s benefits, as this column will explore.
Every $1 a worker receives under the proposed parental leave benefit could cost that worker nearly $3 in Social Security benefits at retirement.
Sen. Rubio’s bill is not a real paid leave solution. If enacted, it would force workers who opt to replace a portion of their wages for up to three months of leave to bond with and care for a newborn or adopted child, to take a cut to their future Social Security retirement benefits. Any worker who uses the proposed parental leave program would see their Social Security benefits reduced when they retire, either through forcing a delay in retirement age or by lowering the amount they receive each month. And despite Sen. Rubio’s rhetoric, the bill would not offer a fair trade: Instead, every $1 a worker receives under the proposed parental leave benefit could cost that worker nearly $3 in Social Security benefits at retirement. In other words, workers using Sen. Rubio’s so-called benefit would take money out of their own pockets in the future—and at an exorbitant markup.
Figure 1
Across the board, asking workers to choose between funds they need to buy diapers and formula as new parents and benefits that will be critical to paying bills and living with dignity in retirement is unconscionable. Yet for those women who need paid leave the most and are least likely to have it—low-income women and women of color—the economic pressure of new motherhood may make any support seem appealing, even when attached to outrageous penalties down the line.
That’s what makes this proposal so profoundly predatory: At a time when women need real support, Sen. Rubio’s bill instead offers a poison promise.
Rubio’s bill would exacerbate existing gender gaps in retirement savings
This proposal is particularly harmful given the hurdles women already face in paying their bills and ensuring a secure retirement. While they are working, women typically earn 73 cents for each dollar men earn. For women of color, this gap is even greater: For each dollar a white, non-Hispanic man makes, Black women earn 58 cents, and Latinas earn just 49 cents. For parents—the titular so-called beneficiaries of Sen. Rubio’s bill—things are especially stark: Moms make just 58 cents for every dollar dads make. And because women still bear a disproportionate share of the caregiving burden, they are more likely than men to take time out of the workforce for caregiving needs. That time away means both a gap in earnings while they are out of the workforce and reduced earnings when they return, with lasting economic consequences.
As a result of the gender wage gap and other persistent economic disparities, women save less than men for retirement. Among those with private retirement savings, for workers of all ages, the median man has more than $50,000 more in private retirement savings than the median woman—around $125,000 for men versus $75,000 for women—according to CAP calculations of the Federal Reserve’s Survey of Consumer Finances. (see Figure 2) By the time workers reach retirement, this gap has compounded, with the median man having more than twice the private retirement savings of the median woman. And millions of Americans—including half of all women—have no private retirement savings at all.
Figure 2
Reduced private retirement savings in turn mean that women rely more heavily on Social Security to support them in retirement than men do. Yet because Social Security benefits are based on past earnings and time in the workforce, lower earnings, along with any unpaid gaps in employment, including due to caregiving, translate into lower benefits.
Women’s monthly Social Security retirement checks are, on average, 19 percent lower than men’s: Retired male workers get an average monthly Social Security benefit of $1,838.08, while retired female workers receive on average $1,483.75 per month. These gaps are even more pronounced for women of color. For instance, retired Black women receive on average slightly less than $1,400 per month in Social Security benefits, compared with about $1,525 for white women and nearly $1,920 for white men. In other words, women, especially women of color, need Social Security more yet receive less.
Figure 3
Conclusion
For many women, especially low-income women and women of color, who are less likely to have access to additional retirement savings, every dollar of Social Security benefits matters. Women cannot afford a cut to the benefits they rely upon to keep food on their tables and a roof over their heads in retirement—but a cut to benefits is exactly what Sen. Rubio’s bill would give them. Moms need real paid leave now and a secure retirement later, not a cruel forced choice between the two.
Women deserve better. Policymakers can and must guarantee women—and people of all genders—the paid leave they need to care for themselves and their families and provide for a secure retirement for all. Especially now, as the country continues its economic recovery from the COVID-19 pandemic, Americans must fight for the proven policies that will ensure real economic security for women throughout their lives and reject harmful proposals such as Sen. Rubio’s.
The author would like to thank Beth Almeida, Lauren Hoffman, Maggie Jo Buchanan, and Bela Salas-Betsch for their assistance with this column.