By Katica Roy, CEO, Pipeline
For the first time since 1982, the Social Security program’s annual costs will exceed its income, requiring it to dip into its nearly $3 trillion trust fund. It’s projected the Social Security program will continue dipping into this fund in the years to come, until the fund is completely tapped out in 16 years.
Social Security needs to overcome a $13.2 trillion cash shortfall between 2034 and 2092. An across-the-board benefits cut of up to 21 percent may be needed in order to sustain payouts through 2092.
However, rather than cutting benefits, there’s another option to save Social Security that ensures this valuable national resource continues: closing the gender pay gap.
How the Gender Pay Gap Plays Out Over a Woman’s Life, All Leading Up to Retirement
The gender pay gap impacts women in a measurable way either when they land their first job or go college. While women pay the same college tuition as their male counterparts, the wage gap makes it more difficult for them to pay down their student loan debt, resulting in women holding nearly two-thirds of all student loan debt in the United States.
Women are impacted by the wage gap upon entering the labor force, and the wage gap is smaller for younger women than older women.
- Women ages 15-24 working full-time, year-round are typically paid 88 cents for every dollar their male counterparts are paid.
- Women ages 45-64 working full-time, year-round are typically paid only 76 cents for every dollar their male counterparts are paid.
- For women still working at age 65 and older, the figure is 67 cents.
On average, women earn 80 cents for every dollar paid to men. On an annual basis, this leads to about $10,000 per year in lost earnings for women. Over a 40-year career, women who work full-time, year-round typically lose $403,440. Women would have to work nearly 10 years longer than their male colleagues to make up this lifetime wage gap.
In retirement, the effects of the pay gap are even worse, and women are more likely to live in poverty during retirement. As a result of the wage gap women experience during working years, they face a gap in retirement income. Lost wages during women’s working years reduces their ability to save for retirement and, as a result, the average Social Security benefit for women during retirement is $14,044 per year, compared to $18,173 for men of the same age.
Closing the Gender Pay Gap Could Save Social Security
When we leave women behind, we constrict our economy. Undervaluing and underpaying women costs us today and in the future. However, if we’re willing to invest today and turn the trend around, we can soon start reaping the benefits.
If we close the pay gap and increase earnings for women, then we can close Social Security savings shortfall by $4.7 trillion, or 35 percent. Why? Because most women’s earnings are currently under the Social Security taxable earnings cap. Ensuring the solvency of Social Security benefits women and almost every U.S. citizen. After all, we’re each paying into Social Security and many are expecting to receive the benefit when we retire.
Closing the gender pay gap moves us toward the solvency of Social Security, benefiting all working Americans and ensuring everyone paying into Social Security actually receives their benefits.
Practical Ways We Can Close the Gender Pay Gap for Social Security’s Betterment
One way our country could work toward closing the gender pay gap for Social Security’s betterment is by following Iceland’s example and passing a true equal pay law. Icelandic companies are required to demonstrate fair payment of male and female employees. Companies must prove that they are paying equitably.
Employers can begin now by making practical decisions to close the gender pay gap.
1. Determine if You Have a Pay Gap
First, determine if you have a pay gap within your company. This can be done by compiling and analyzing your company’s data on salaries, promotions and internal hiring decisions. Reviewing the data ensures that no unconscious bias exists and you end up with a true idea of your company’s current gender equity status (as it relates to pay).
2. Close the Pay Gap
Closing the pay gap is simple once you have the data needed to make the right decisions. Knowing where you are in terms of gender equity and where you need to go is key to accomplishing gender parity. Look at the facts and then begin implementing steps to increase female leadership, retain female talent and level the playing field.
3. Keep it Closed
Gender equity is a massive economic opportunity. Closing the pay gap can help you realize this opportunity if you can keep it closed. By monitoring the data you compiled in the steps above on a regular basis, you can follow your company’s progress toward gender parity and make decisions according to your gender equity goals.
Saving Social Security through closing the gender pay gap is a practical solution for a rapidly approaching national issue. Every citizen stands to benefit if we make the choice to commit to a better, brighter and more equitable future.
Katica Roy is the CEO of Pipeline. The views represented here are her own and do not necessarily reflect the opinion of Bloomberg LP and its owners.
Katica is also a member of Bloomberg Breakaway, a network of CEOs and founders who lead established and emerging industry leaders. Find out more about Bloomberg Breakaway here.