Eliminate the Social Security caregiving penalty to boost women’s economic security

By Tatsuko Go Hollo, EOI Intern

Women have long been identified as society’s caregivers, and there’s plenty of research to back that up. Not only do women spend twice as much time as men caring for members of the household, but nearly three quarters of elder care is performed by women.

Unfortunately, much of this caregiving is unpaid, which can result in disproportionate economic insecurity among women. You might have heard of this referred to as the “motherhood penalty” or “caregiver penalty.”

This penalty affects women’s ability to obtain full-time work, maintain consistent employment and receive benefits through employers. It also reduces the amount of Social Security benefits a caregiver receives in older age. Because so much of this work is unpaid, caregivers have a shorter history of wage work.

This penalty is obvious in the Social Security benefit calculations, as Social Security benefits are based on an average of wages collected over 35 years. For people who spend periods of time out of the workforce to raise children or care for a vulnerable family member, those years are counted as ‘zeros’ in the benefit formula. This results in a lower overall benefit, which is reflected in the lesser benefits received by women over 65 compared to men of the same age.

One alternative to help mitigate this penalty is to provide a credit for time spent caregiving. For example: for each year spent raising children, a parent could eliminate one year – up to a total of five years – from the 35 year averaging period. This means benefits would be calculated based on a 30 year average, offering stay-at-home parents a higher benefit and more economic security in older age.

This idea isn’t novel, as a similar method of calculating benefits is used for disabled beneficiaries.  However, it is an approach that could boost Social Security’s already powerful ability to keep women out of poverty. It’s also an approach that deserves more consideration from policymakers who are committed to ensuring Social Security is most effective in providing the economic security it promises.

This blog post is part of the #HERvotes blog carnival.

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Posted in A Fair Deal at Work, Retirement Security, Social Security

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