Paid family leave has been at the fore of both the Sanders and Clinton campaigns. According to their campaign websites, both Sen. Bernie Sanders and former Secretary of State Hillary Clinton support creating an entitlement to at least 12 weeks of paid family leave. While paid family leave would be a tremendous step forward, it is not the only issue affecting caregivers. Another related challenge is the detrimental impact of long-term caregiver responsibilities on Social Security eligibility. Simply put, people who take long periods of time off of work to care for a child or sick family member can suffer from lower social security payments, decades after the fact. This post to raises awareness of this important issue and of some of the solutions that have been proposed.
The problem, as described on Clinton’s campaign website, is this:
“Millions of women—and men—take time out of the paid workforce to raise a child, take care of an aging parent or look after an ailing family member. … However, when Americans take time off to take care of a relative, that can reduce their Social Security benefits at retirement, since those benefits are calculated based on their top thirty-five years of earnings.”
Social Security benefits vary based on the number of years one earned an income and the amount of that income. To determine how much one will receive, the Social Security system takes account of the 35 highest earning years. Higher annual earnings (below the income cap) during those 35 years mean a higher benefit. If those 35 years include part-time work to care for children, or elderly family members, the reduction in wages will produce a corresponding reduction in social security payments. So much for workplace-flexibility. If those 35 years include a year or more in which the individual did not work (i.e. the individual worked a total of less than 35 years) this counts as a 0, which in many cases results in a lower benefit. If one is lucky enough to have worked for more than 35 years, but takes off 3 years in the middle of one’s prime earning years, those years will be replaced in Social Security calculations by 3 years that would otherwise have been too low-grossing to be taken into account. Depending on one’s career trajectory, this could be a significant loss.
As a result, people who are not working, or are working reduced schedules, during what would otherwise be among their more highly compensated years of employment could receive a relatively lower Social Security benefit. Stay-at-home parents and caregivers are two groups whose constituents are more likely to experience this reduction.
According to a 2012 L.A. Times article, the average woman spends 27 years in the workforce, in large part because of our role as caregivers. If this is true, the average woman is losing Social Security benefits.
This is wrong. It is wrong because, as Clinton’s campaign website observes, “[c]aregiving is hard work that benefits our entire economy.” Caregivers have already given up years of potential earnings to do difficult and socially important work. They should not lose out twice. And it is wrong because caregivers are no less in need of support during retirement than other retirees. In fact, they may, as a group, be less ready for retirement if their leaves have depleted private savings. Another reason that caregivers may, on average, be less prepared for retirement is linked to the reasons they took time off work in the first place. While the choice to stay home to take care of a child might indicate that a family possesses sufficient means to allow this choice, it may also imply that the family lacks sufficient funds to afford day-care or a nanny. Thus, middle-class parents and other caregivers could find themselves staying home or working part-time as a result of financial necessity, while their counterparts in higher-earning households may opt to continue working.
There is a potential counter-argument, in which working mothers, who have remained in the workforce either by choice or necessity, would object to the idea of women who choose to stay home to care for their families getting the same credit towards their Social Security entitlement as the mothers who work. Isn’t it unfair? And doesn’t it implicitly undervalue working mothers’ contributions qua mothers? To the first point, yes, it might be a little unfair to give someone credit towards social security for a period during which another person carrying out similar caregiving responsibilities works. But on the other hand, is it fair that someone who shoulders the responsibility of caring for a new-born or a sick family member receive the same credit towards Social Security as someone who takes a multi-year vacation? To the latter point, no, supporting some solution to the caregiver Social Security issue does not necessarily imply a preference for stay-at-home parenting. From a feminist perspective, it merely confronts the reality that women are disparately cast in caregiver roles and do, in fact, take substantial time off work for caregiving responsibilities. Also, it is worth noting that Social Security is not designed to provide a purely proportional benefit – the benefit is capped. It is also intended as a safety net, in proportion to need, and that purpose is well-served by providing caregivers some credit for the time they are not at work.
Clinton and many others have proposed solutions to this inequity. During last week’s Democratic Debate, Clinton broached this topic. Her campaign website confirms that she supports granting caregivers “credit toward their Social Security benefits when they are out of the paid workforce because they are acting as caregivers.” Sanders did not mention whether he supports a similar policy, though his Social Security plan could well negate or mitigate the detrimental impact of prolonged absence from the workplace. Numerous bills have been introduced to address this issue, so far with no success. HR 3377; timeline of failed bills resembling HR 3377. Last week, Representative Patrick Murphy introduced HR 4529, the “Social Security Parent Penalty Repeal Act,” which targets this issue insofar as it affects parents who take off time to care for their children while they are young. In addition to addressing only the issues of stay-at-home parents, rather than other kinds of caregivers, the legislation has several other substantial limitations, such as a 5-year cap and failure to address earning suppressed by flex-time arrangements. Nonetheless, it would be a step in the right direction if it could pass.
Restoring parity to caregivers’ social security entitlements should not be controversial. The fix is incredibly simple – most of the proposed bills cited in the above paragraph are unusually short– probably no more than 5 double spaced pages – making a few very straight-forward tweaks to the formula for calculating social security entitlements, usually paid for by an upward adjustment to the cap on income subject to the Social Security tax. Women and elderly or disabled individuals and their caregivers have good reason to support corrective legislation as they would likely benefit from it. Furthermore, such legislation could arguably, and in my opinion rightfully, be viewed as partial compensation for the public service that caregivers provide, thus deflecting the resistance that more exclusively need-based benefits tend to face.
Caregiver Social Security entitlements should be more prominent among the issues being vetted by both political parties in the upcoming election. Until we a have a solution, it is important that employees arm themselves with knowledge of the impacts of caregiver leave on their Social Security entitlements earlier, in order to make informed decisions about issues that could affect their retirement.