By Lisa Marsh Ryerson
Editor’s Note: This column, “Aging While…” is sponsored by AARP Public Policy Institute. It will focus on creating and advancing innovative solutions that help older Americans build economic opportunity and social connectedness.
Many women ages 50 and older who earn low-to-moderate income still lack safe and affordable housing, food and job security, sufficient emergency and retirement savings and robust social connections. Society has been slow to acknowledge these challenges that affect women’s financial security and well-being in later life.
Society also has been slow to recognize the concrete financial value that women’s perspectives bring to the workplace.
It wasn’t until 2016—232 years after the first U.S. company was listed on the New York Stock Exchange —that the Business Roundtable (BRT), an association of American CEOs, endorsed the link between gender diversity on boards and long-term shareholder value.
In so doing, the BRT made the first “business case” for gender diversity, which was subsequently confirmed by studies showing a strong connection between women’s presence on boards and increased corporate profits. Another 232 years should not pass before the business sector recognizes the full value women bring to the workforce—and employs, pays and promotes them accordingly.
Women Work Hard, But Remain Poor
Doreen, age 59 (a composite created from The Financial Health Network’s AARP Foundation–sponsored research), exemplifies challenges women face. After a lifetime of working, illness forced Doreen to retire from her police officer job. While awaiting approval of disability benefits, she withdrew her nest egg of $15,000 from her 401(k). Until she can take Social Security at age 62, she scrapes by on less than $900 a month. Doreen’s lack of sufficient savings to cover her unexpected illness replaced her vision of a secure retirement with chronic financial anxiety.
Doreen’s financial challenges are not uncommon. Nearly two-thirds of women ages 65 and older live in poverty. Older African American and Hispanic women are more than twice as likely to be poor as are older white women.
One reason women age into poverty is because they consistently earn less than men. Women still earn about 81 cents for every dollar men earn, and women of color fare worse, with African American women earning just 62 cents and Latina women bringing in only 54 cents to a man’s dollar.
Women also earn lower wages because they are segregated into low-paying occupations. Male- dominated jobs, such as construction and manufacturing, generally pay more than those jobs traditionally held by women, such as teaching, nursing and home healthcare. These jobs don’t pay less because they are low-skill jobs—they pay less because women do them.
Gender-related age discrimination also plays a part. Although both men and women suffer from age discrimination in the workplace, it begins earlier and is worse for women. Based on an examination of 40,000 job applications, a National Bureau of Economic Research study found “robust evidence of age discrimination in hiring against older women, especially those near retirement age” and much less discrimination against male candidates. Evidence suggests that women may be denied training and promotion opportunities as early as age 40, while this starts at age 45 for men.
Penalties Paid for Caregiving and Motherhood
While a labor of love, female caregiving is strongly linked to a woman’s risk of aging into poverty. According to a 2019 AARP study, family caregivers who reduce their hours, take more flexible or lower paying jobs or leave work can face short- and long-term financial difficulties.
Time off from work for caregiving results in an immediate loss of income, a reduction in the caregiver’s ability to save for retirement and a possible reduction in eventual Social Security benefits. A caregiver who leaves work may find it difficult to regain a job that pays well—or any job.
The same study found that 60 percent of caregivers are employed full or part time, a trend expected to grow in the future as more caregivers balance employment and complex caregiving. AARP recommends that flexible workplace policies, such as the ability to use sick days for caregiving, can help workers balance jobs with caregiving demands. Allowing caregivers the flexibility to work around caregiving responsibilities also could help.
Apart from caregiving, National Women’s Law Center research from 2018 confirms what many women understand instinctively: women pay a “motherhood penalty” for having children. Mothers earn only 71 cents to every dollar paid to fathers. That penalty translates to a loss of $16,000 annually, which over a lifetime adds up to a considerable amount, especially when considering the compound interest on greater wages, reduced Social Security and other benefits.
Contrary to the assumption that more education might reduce the penalty, the earnings gap only grows as women obtain advanced degrees. Mothers with doctorates earn $25,000 less annually than do men with equal education. The motherhood penalty persists across every age group, education level, occupation, race and ethnicity—and in every state.
Women Pay Higher Healthcare Costs
Healthcare costs also add to the expense of aging while female. Women pay more than one-third more per capita in healthcare costs than men pay over their lifetimes, due to spending for pregnancy, post-partum care, family planning and longer life. Even a woman who is age 65 will spend about $47,000 more, just during retirement, for healthcare expenses than her male counterparts.
The AARP Foundation believes that one way to tackle the problem inherent in aging while female is with programs that spark economic opportunity for older, low-income adults—programs that will help women create more opportunity and financial security across their lifetimes.
One way is to help older adults get jobs. AARP Foundation’s Back to Work 50+ helps workers build the skills and confidence to compete in today’s job market. One successful program took place at Jefferson State Community College, in Birmingham, Ala. It offered job seekers strategy workshops, job search coaching and tuition assistance for job training, serving 86 percent low-income job seekers, many of them women.
Self-Employment Is an Option
When women are consistently paid less, are forced out of the workforce early or become unable to get jobs after a certain age, it’s no surprise they might opt to work for themselves. Despite the lack of an employer-sponsored benefits safety net, more women are starting businesses than any other demographic group, and women-owned businesses now represent 42 percent of all U.S. businesses.
The AARP Foundation helps women explore this option. People with an entrepreneurial bent can join the Foundation’s Work for Yourself at 50+ program to investigate becoming entrepreneurs. With more than 40 partners across the country, the program gives older workers information on how to start and grow their businesses and access the capital needed to grow them.
The many systemic problems women face and the economic toll these problems exact are not new, nor are their harmful effects on women’s economic welfare surprising. Rather, the United States must support policy solutions to eradicate discrimination, and design programs that create pathways of opportunity for women throughout their lives.
Paid family and medical leave, as well as affordable childcare, can help remedy the effects of the gender pay gap, the motherhood penalty and caregiving on women’s careers.
Flexible workplace policies that let caregivers balance their responsibilities and use sick leave for care can be valuable options. Tax credits for caregiving are another possibility. Workforce development solutions that help employers continue to use older women’s talents, and that enable them to pay women fairly, would boost women’s earning power.
We will continue to harness women’s collective power and voice and work with them and our allies to develop creative and bold solutions to aging while female.
Lisa Marsh Ryerson is president of the AARP Foundation, in Washington, D.C.