Women's employment and the Social Security system.

The rapid rise in women's labor-force participation and the great increase in diversity of family and household structures raise serious questions about the equity and adequacy of a Social Security system developed primarily to meet the needs of traditional families with male wage earners and female homemakers. This article examines the changes in women's roles in the home and in the labor market, then goes on to consider possible reforms in the Social Security system that might help it to better meet the requirements of this profoundly altered society. It has become increasingly clear that the costs and benefits of the Social Security system accruing to individuals depend to a great extent on when these individuals were born, their labor-force participation and earnings over the life cycle, their marital status, and the division of earnings among family members.(1) A variety of reasons account for these differences. For instance, Social Security taxes have been raised a good deal over time because benefits collected by retirees have consistently been greater than could be financed by their prior contributions alone (Burkhauser and Warlick 1981). Hence, younger workers are increasingly faced with a lower rate of return than their elders. The ratio of benefits to payments is more favorable for people with lower earnings. Most of the objections voiced about these differences, however, from concerns about the inequity of benefits between one-and two-earner couples, and the treatment of divorced spouses, to complaints about the Social Security taxes paid by employed wives who may not receive additional benefits in return, in one way or another involve the role of women (Bergmann 1981, p. 229). This is so in part because when Social Security was instituted the traditional family, consisting of a wage-earner husband who was responsible for a dependent wife and children, was still the norm. The system retains important elements of this origin, even though only a minority of households conform to this pattern today. Nonemployed spouses of covered workers receive benefits at no expense to the family; employed spouses pay Social Security taxes but receive no additional benefits as long as they are eligible for a smaller amount as workers than as spouses. Hence, the cost benefit ratio tends to be far more favorable for traditional families than for households without full-time homemakers. Thus, it is not surprising that there is considerable concern both about the effect of Social Security on women's roles in the home and in the labor force, and about the effect that women's labor-force participation and retirement behavior in turn have on the costs of the Social Security system.(2) We shall examine the radical changes during the past 60 years in women's roles in the economy and in the family, but also focus on the substantial remaining differences in the economic status of women and men.(3) To the extent that these differences persist, gender neutral treatment under the Social Security system is not likely to be viewed as entirely appropriate. The first part of this article reviews information concerning the rapid influx of women into the labor market; differences in labor-force participation by race and ethnicity, and marital and parental status; women's labor-force attachment; occupational distribution; and variations in earnings. These issues are relevant, because they influence Social Security taxes women pay and benefits they receive. In order to better understand both the impetus for the changes that have taken place, and the constraints that have prevented them from going further, we also examine how the relevant decisions about working and retirement are made by women and families. This enables us to better predict probable future developments with respect to women's labor-force participation and life cycle labor-force attachment, both crucial in determining the appropriateness of possible reforms of the Social Security system. …