Thursday, February 19, 2009

Equal Pay and Fair Pensions

Equal Pay and Fair Pensions

Women have known for years that they often receive less pay than their male counterparts. What has been less obvious is that because of pay discrimination, they also receive lower pensions. A number of changes have occurred in the last few weeks that could help women remedy both problems.

The story starts with a woman named Lily Ledbetter who sued her employer for violation of the equal pay requirement under Title VII of the Civil Rights Act of 1964. She was a supervisor in a Goodyear plant in Alabama for almost 20 years and discovered at the end of her career at Goodyear that she had been paid substantially less than men working in the same position that she worked. She sued under Title VII and a jury in the lower court found that she had indeed been paid less because of her gender, but in 2007, the U.S. Supreme Court decided to throw the case out because she had not filed her complaint within 180 days of the first discriminatory decision to pay her less. Essentially the court decided that a woman had to sue when the employer gave her a lower raise because of her sex and that the on-going affect of discrimination was not grounds to sue. Such a rule made it very difficult for women to pursue wage discrimination cases.

The first bill President Obama signed into law was the Lily Ledbetter Fair Pay Act which reversed the decision of the Supreme Court. Members of OWL had worked hard to push the passage of this act. The act makes it clear that every time a woman receives a pay check that is lower than a man’s because of a discriminatory decision on the part of the employer, a discriminatory act has occurred and the women may sue under Title VII.

The first application of this law may well be a case currently before the Supreme Court that highlights how employment discrimination affects women not only during their working years but well into retirement as well.

Four women who worked for AT&T took maternity leaves when AT&T didn’t credit maternity leave time toward their pension. AT&T did count other leave time, however. That practice has been outlawed by the Pregnancy Discrimination Act of 1978 but the company is maintaining that their pension plan should not have to include the maternity leave which will lower the amount of money these women, and thousands like them, will have in retirement. It is just one of many examples of how women end up with lower pensions in retirement than men.

How the Supreme Court decides this case will tell us how much progress we have made with the passage of the Lily Ledbetter Fair Pay Act. It was an important step but we know from experience that no single bill will solve the problem of fair pay or adequate retirement income. We must keep working to ensure economic security for all women, young and old.

Ellen A. Bruce, JD

OWL, President Emeritus

Wednesday, February 18, 2009

Entitlements - Fit Lincoln's View of Government's Proper Role

February 17, 2009


By Merton C. Bernstein, Coles Professor of Law Emeritus, Washington University;
served as the principal consultant to the National Commission on Social Security Reform;
a founding board member of the National Academy of Social Insurance

Lincoln declared that “The legitimate object of government is to do for people what needs to be done but which they cannot, by individual effort, do at all, or cannot do so well for themselves.” President Obama reminded us on Lincoln’s birthday. Social Security and Medicare fulfill this role. But groups like the Heritage Foundation [MCB1] distort what entitlement means, implying, among other things, that benefits are unearned, foolishly designed and unduly favor the elderly who, surprise, surprise, are really wealthy.

“Entitlements” means that claims must be determined by law rather than an official’s discretion. In an earlier day, private charity or public relief focused on the “deserving poor.” Who got help all too often turned on the race, religion, politics or “character” of the applicant. That sometimes led to abusive and exploitative actions by the deciders.

Eligibility for Social Security benefits and Medicare protections are “earned rights” enforceable at law. Nonetheless some disparage “entitlements” by assigning a quite different meaning to the term, as if program participants regard benefits as their due, that the world owes them a living. In sober fact, most economists regard the required payroll contributions, required equally of the employee and the employer, as part of employee compensation. Absent those contributions, employee wages would be commensurately higher.

Social Security and Medicare have another key protection – they are automatically funded. In contrast, Medicaid and other means-tested federal/state program benefits are payable only to the extent that each state legislatures decides annually how much to appropriate. Unfortunately, Medicaid is often the first target for cuts when budget problems arise.

The Earned Income Tax Credit Offsets the Double Whammy of the Payroll Tax and the Income Tax on the Low Paid

Some sneer that more people pay FICA (the Federal Income Contributions Act) than pay income tax, as if that were some loony federal government mistake. But that results purposefully from the Earned Income Tax Credit (EITC). Decades ago, policy makers understood the double burden that the income tax and FICA placed on low and moderate earners.. EITC was the answer. It rewards earned income by reducing or eliminating income tax for low earners but continues the FICA contributions; that preserves the “earned benefit” connection that FICA gives to Social Security. And by lessening the tax burden for low and modest earnings, EITC makes Social Security funding more progressive than FICA’s impact considered alone. Weighting the Social Security benefit formula so that low and moderate pay produce higher proportional benefits than high pay serves the same purpose. Even so, the higher one’s average lifetime pay, the higher are one’s benefits.

Entitlements Do Not Favor the Wealthy Elderly at the Expense of the Young ; Cuts Hit the Young Hardest

Some Social Security critics complain that the old people get more federal goodies than youngsters. This overlooks how much Social Security benefits young people, while the states address their traditional responsibility, education, with assists from the feds.

Some are hoodwinked into believing that the elderly are richer than everyone else.
Recently, Time columnist Michael Kinsley reported that in 2004 the “average” couple 65-74 had accumulated wealth of $691,000, a figure vastly inflated by a small number of extremely wealthy people; couples at the “median” (half had less) had accumulated $190,000. Singles did not do half so well. For most people, an owned home is the most valuable property. Since 2004, home values have gone the way of the glaciers.

Indeed, any reductions in benefits, and raising normal retirement age cuts benefits for all thereafter, bears most heavily on the young; the younger one is, the bigger the total benefit reductions.

Social Security – Our Best Anti-Poverty Program, Especially for Women
With Social Security, about 10% of the elderly are in poverty; without Social Security that figure would be over 50% - the majority of them women.

In sum, entitlements are just what Lincoln ordered.

Thursday, February 12, 2009


I have a problem with retirement—not doing it—naming it. Why?

After I retired three years ago, after 40 years and with a secure post-employment income, some well meaning people asked me how I was filling up all of my free time now. I felt vaguely uncomfortable with these questions, so I decided to seek out why I felt this way. It seemed to me that the noun "retirement" carries a negative valence to me, and in the larger western society, so I decided to look for various reasons and definitions. I learned that, until the mid-20th century, people died within two years of formal retirement, and many people worked until the day they died. It seems then, say the historians, that retirement simply became synonymous with old age, frailty and impending death. Well, where are we now? I first looked at present definitions of the word "retirement."

The dictionary defines "retirement" as… to withdraw from action or danger; to retreat; to withdraw especially for privacy; to fall back: recede; withdraw from one's position or occupation. A thesaurus search came up with … to sleep, depart, leave, and give up work. Some retired academics use the term emerita or emeritus professor (however, some people outside of the academic setting don’t know what this means), though this word does not necessarily put a negative valence on retirement, I believe in general perception, it is. Today, the word "retirement" conjures up a negative rather than positive impression. Presently, retirement seems to conjure up loss, or moving away from society. The mainstream mind’s eye image of a “retired person” seems to be generally old, frail, and unproductive.

However, there is a glimmer of positive movement away from this image. For example, what is your mind’s eye image of baby boomers? Vital? Engaged? Powerful? Of course, the oldest of this population is now only 62; however as they age, it is possible that the "look" of the retired person will continue to be vital, engaged and powerful. Another positive turn is the term "early retirement." The Beatles immediately come to mind—so do people who made millions in the computer industry in the '80s and '90s, cashed in their stock and left. They also project: vital; engaged; powerful. And magazine ads for “retirement living” homes usually show active, attractive, over-50 men and women playing tennis or golf 
(the other extreme?).

So, I believe that there is the beginning of a shift in societal perceptions of what retirement means in our larger society. Perhaps some day soon, dictionaries will add "moving on" to its list of definitions of retirement.

I just wish people will stop asking me, "Now that you are retired, what do you do to keep busy?"

Amy Hittner