The sting of the weakened economy, depressed home values, and the slumping stock market is especially severe for retirees who are living on fixed incomes from Social Security, IRAs, and pensions. And retired women, who still lag behind men in private retirement and Social Security benefits despite growing participation in nearly every sector of the labor force, are among the most vulnerable to economic shocks.
Retirees of both sexes are facing a significant erosion of their retirement savings after recent losses in the stock market. But women have significantly lower retirement savings than men, and the gender gap in retirement benefits could, in part, be the result of benefit calculations by employers based on discriminatory policies.
This is certainly the case for some retired women who took pregnancy leave before federal protections were put in place. A group of retired women contend in AT&T v. Hulteen—a lawsuit that will be heard before the Supreme Court this Wednesday—that their former employer did not properly credit their pregnancy leave toward their retirement and other benefits, as they allege is required under the Pregnancy Discrimination Act. Prior to the enactment of that law, AT&T’s predecessor company provided service credit to pregnant women for only up to 30 days of leave, while giving disabled employees unlimited leave credit towards retirement and other benefits. After the Act went into effect in 1979, AT&T treated pregnancy leave the same as disability leave, but it did not retroactively credit the women who took pregnancy leave before the law changed.
The four women in the lawsuit each lost between 67 and 261 days of retirement credit. AT&T has argued that it is not required to credit leave taken before the law changed—an argument rejected by the 9th Circuit Court of Appeals. The 9th Circuit found that, regardless of the legality of the company’s pre-1979 benefits, the company’s current method for calculating benefits for women who took pregnancy leave prior to 1979 means that the company ìcontinues to operate its system in a discriminatory fashion.î The Supreme Court’s decision will determine if these and thousands of women across the country are entitled to retirement credit for pregnancy leave taken before the passage of the Act.
It was not uncommon prior to the Pregnancy Discrimination Act for companies to fire a woman simply because she was pregnant; other women were sometimes forced to take unpaid leave or denied basic medical benefits related to their pregnancy. The Act established that discrimination on the basis of pregnancy, childbirth, or a related medical condition constitutes sex discrimination and mandated that pregnant women be entitled to the same benefits and accommodations as a disabled employee. In sum, the Pregnancy Discrimination Act made it possible for pregnant and postpartum women to maintain a constant income and secure fair benefits.
Despite this victory, women still do not obtain the same retirement benefits as men, and lag behind men in saving for retirement. Over the course of their careers, women are more likely to take time out of the workforce to act as a caregiver to family members and to work in low-paying jobs, in part-time jobs, or in jobs that do not provide retirement benefits. Moreover, a working woman faces a median loss of $434,000 in earnings over 40 years due to unequal pay, which perpetuates the gender gap in retirement savings. The gender gap is even significant among women who do receive private retirement benefits—the median female worker approaching retirement in 2005 held $34,000 in a 401(k) plan or IRA, while her male counterpart held $70,000. As a result, women face higher rates of poverty in retirement.
Social Security provides a critical lifeline for those who have not been able to secure a pension or contribute to an IRA or a 401(k) plan. Social Security is by far the most common source of income for both women and men during retirement, with approximately 90 percent of women and men 65 and older receiving Social Security. Without Social Security, more than two-thirds of unmarried women over the age of 65 who live alone would fall into poverty.
Gender gaps persist in Social Security, as well; women’s median annual benefits reach only 70 percent of men’s benefits. And even with Social Security, both women and men need an additional private source of retirement benefits in order to have enough income to maintain an adequate standard of living. Women of color are especially likely to retire in poverty. They receive the least income from Social Security benefits and are less likely to have an additional source of income from private retirement benefits.
The protections afforded by the Pregnancy Discrimination Act and newer laws such as the Family Medical Leave Act are particularly critical right now as the economy flounders and women work more consistently during their childbearing years. The Census Bureau reported earlier this year that women take increasingly shorter maternity leaves and work longer into their pregnancies than they did four decades ago. American families have become increasingly more dependent on women’s earnings, enabled in some part by their gains in workforce participation due to protections provided by laws like the Pregnancy Discrimination Act. In fact, rising women’s wages have allowed for an overall rise in family incomes over the past 30 years despite flat or declining wages for men.
Whether the economy is booming or dragging, retired women consistently face risks to their economic security. Women are less financially secure in retirement than men both due to less time in the paid workforce and the legacy and continuation of a range of discriminatory practices. Despite laws protecting pregnant women on the job, pregnancy discrimination complaints have jumped 65 percent in the last 15 years. It is important that the Supreme Court send a message that the unfair treatment of pregnant women in the workplace will not be tolerated, especially as more families rely on women’s earnings to achieve economic stability.
The Supreme Court’s decision, due in the spring, will determine for thousands of women how difficult retirement in this uncertain economy will be. In the meantime, policymakers must focus more attention on reforms that will help women secure access to sufficient resources to fund their retirements. Women need equal pay and equal benefits in order to achieve economic equality.