Social Security Reform: Improving Benefit Adequacy and Economic Security for Women

This policy brief is designed to raise awareness of the current and future economic circumstances of older women, and the ways in which Social Security reform can help alleviate their unmet needs. It considers the gaps in benefit adequacy and economic security that are not addressed by current Social Security reform proposals and then suggests a series of modest, low-cost reforms to help close these gaps. If our proposals are adopted, Social Security reform will not only close the long-run financial deficit, but it will also greatly reduce the future poverty status of older women, particularly those who live alone. This is an opportunity for progressive reform as well as for budgetary balance. The Social Security program was designed over 60 years ago for a world in which mothers worked at home, raised children, and were widowed young, but not divorced; where fathers worked in industrial settings; and where both men and women had much shorter life expectancies at older ages than those of succeeding generations. Back in 1935 the founders of Social Security did not anticipate that women would become the major beneficiaries of the program. Increasingly, women rely on Social Security as the major source of their economic security at older ages, much more so than do men. Therefore, women are the group with the most to gain or lose from reform of the Social Security system and modification of its benefit formulae. Future women beneficiaries will be different. Women's lives are changing rapidly in many ways. More women work outside the home today, and about half of all marriages end in divorce.

Recent Trends in the Distribution of Income: Labor, Wealth and More Complete Measures of Well Being

>The impact of the great recession on inequality is unclear. Because the crises in the housing and stock markets and mass job loss affect incomes from across the entire distribution, the overall impact on inequality is difficult to determine. Early speculation using a variety of narrow measures of earnings, income and consumption yield contradictory results. In this paper, we develop new estimates of income inequality based on ‘more complete income’ (MCI), which augments standard income measures with those that are accrued from the ownership of wealth. We use the 1989-2007 Surveys of Consumer Finances, and also construct MCI measures for 2009 based on projections of assets, income, and earnings. We investigate the level and trend in MCI inequality and compare it to other estimates of overall and ‘high incomes’ in the literature. Compared to standard measures of income, MCI suggests higher levels of inequality and slightly larger increases in inequality over time. Several MCI-based inequality measures peaked in 2007 at their highest levels in twenty years. The combined impact of the “great recession” on the housing, stock, and labor markets after 2007 has reduced some measures of income inequality at the top of the MCI distribution. Despite declining from the 2007 peak, however, inequality remains as high as levels experienced earlier in the decade, and much higher than most points over the last twenty years. In the middle of the income distribution, the declines in income from wealth after 2007 were the result of diminished value of residential real estate; at the top of the distribution declines in the value of business assets had the greatest impact. We also assess the level and trend in the functional distribution of income between capital and labor, and find a rising share of income accruing to real capital or wealth from 1989 to 2007. The recent economic crisis has diminished the capital share back to levels from 2004. Contrary to the findings of other researchers, we find that the labor share of income among high-income groups declined between 1992 and 2007.

Public policy and economic inequality: The United States in comparative perspective

This article compares recent economic inequality in industrialized nations, largely those belonging to the Organization for Economic Cooperation and Development (OECD). This research finds the United States has the highest overall level of inequality of any rich OECD nation in the mid-1990s. It also finds that the increases in the dispersion of total household income in the United States have been as large as, or larger than, those experienced elsewhere between 1979 and 2000, despite the fact that the US began the period with the highest level of inequality. The authors also look at the trend in inequality within the United States using various series from published and unpublished data to examine exactly how US inequality changed over the past several decades. Next, the authors examine the effects of government policies and social spending efforts on inequality, finding that the United States has lesser effects than any other rich nation, and that both low spending and low wages have a great impact on the final income distribution, especially among the non-elderly. The authors then are in a position to answer a number of questions. What role does policy; therefore, play in the final determination of income inequality? Can these differences be explained by demography (more single parents; more immigrants; or more elders?) or can they be attributed to American institutions and lack of spending effort on behalf of low-income families? And finally, does inequality of before tax and benefit income itself have anything to do with low social spending

Social Security Reform: Improving Benefit Adequacy and Economic Security for Women

This policy brief is designed to raise awareness of the current and future economic circumstances of older women, and the ways in which Social Security reform can help alleviate their unmet needs. It considers the gaps in benefit adequacy and economic security that are not addressed by current Social Security reform proposals and then suggests a series of modest, low-cost reforms to help close these gaps. If our proposals are adopted, Social Security reform will not only close the long-run financial deficit, but it will also greatly reduce the future poverty status of older women, particularly those who live alone. This is an opportunity for progressive reform as well as for budgetary balance. The Social Security program was designed over 60 years ago for a world in which mothers worked at home, raised children, and were widowed young, but not divorced; where fathers worked in industrial settings; and where both men and women had much shorter life expectancies at older ages than those of succeeding generations. Back in 1935 the founders of Social Security did not anticipate that women would become the major beneficiaries of the program. Increasingly, women rely on Social Security as the major source of their economic security at older ages, much more so than do men. Therefore, women are the group with the most to gain or lose from reform of the Social Security system and modification of its benefit formulae. Future women beneficiaries will be different. Women\u27s lives are changing rapidly in many ways. More women work outside the home today, and about half of all marriages end in divorce

Procuring Microdata Files for the LIS Project Databank: Progress and Promise

The Luxembourg Income Study (LIS) project is one of the oldest and best known examples of crossnational social science infrastructure. Some 25 nations and 20 sponsors team together to provide internet accessible, privacy-protected, household income microdata to over 400 users in 30 nations. The project is financed by annual contributions by 16 nations National Science Foundations and/or National Statistical Offices. One of the most crucial pieces of the LIS structure is the source and type of data that it offers to its users. This paper describes these data, how they are obtained, harmonized, and made available. It presents a critical discussion of where the project is today and where and how international data collection efforts can improve upon both the quality of income data and its dissemination to qualified researchers

Changing Income Inequality in OECD Countries: Updated Results from the Luxembourg Income Study (LIS)

The purpose of this study is to update the results first presented in 1995 in the OECD Monograph, 'Income Distribution in OECD Countries: Evidence from the Luxembourg Income Study' by Atkinson, Rainwater, and Smeeding (1995). Though only five years have passed since the publication of this volume, we are now able to compare the level of disposable income inequality across 20 nations, including Germany, in three separate periods using LIS. Moreover, we are now able to use several sets of national data to assess the changes in inequality that have taken place in recent years. The brief results are that the ranking of nations by the level of inequality at a point in time are more or less the same regardless of the year of comparison from roughly 1980-1997. But large changes in the distribution of income have taken place within many nations, with most finding a higher level of inequality in the mid-to-late 1990s than in the 1980s, and with Western Germany being no exception. Inequality, however, has not risen in Denmark or in Canada over this period, while its rise has slowed in several nations. This suggests that rising economic inequality is not inevitable. Strategies for improving these estimates are also discussed

Social Security Reform: A Budget Neutral Approach to Reducing Older Women's Disproportional Risk of Poverty

Perhaps the single greatest achievement of social policy in the United States over the last three decades has been reducing poverty in old age. The transition from work to retirement is no longer economically perilous for the vast majority of older American workers. For most married couples, the risk of falling into poverty even several years after retirement is small. But when one partner of the marriage dies, the survivor faces another much more risky economic transition. The single greatest risk of falling into poverty in old age now comes after the death of a spouse, as the survivor faces life after marriage. And this risk disproportionately affects older women, who are nearly three times as likely as older men to be widowed (49 percent to 14 percent) and can expect to remain widowed an average of 17 years. Here we document the disproportionate risk of poverty faced by such survivors and show that the Social Security system in the United States has been much less successful in protecting single older people from poverty, especially single older women, than government-administered social security systems in other post-industrialized countries. We argue that this lack of success stems in part from the failure of the Social Security program to transform the basis for its payout rules from a "traditional" one-earner family model to a model more consistent with today's families in which both the husband and wife work. We then offer a budget neutral plan to redistribute some of the benefits a married couple receive over their lifetime from the years they are both alive to the years following the death of a spouse, which we argue would substantially reduce the risk of poverty faced by older women.

Asset-based measurement of poverty

Poverty is generally defined as income or expenditure insufficiency, but the economic condition of a household also depends on its real and financial asset holdings. This paper investigates measures of poverty that rely on indicators of household net worth. We review and assess two main approaches followed in the literature: income-net worth measures and asset-poverty. We provide fresh cross-national evidence based on data from the Luxembourg Wealth Study.poverty indicators, income, wealth

Relative Inequality and Poverty in Germany and the United States Using Alternative Equivalence Scales

German and United States data from the Luxembourg Income Study are used to compare the relative economic well-being of Germans and Americans in the 1980s. In our analysis we use both official equivalence scales and consumption-based country-specific equivalence scales developed for Germany and the United States by Merz et al. (1993). We verify previous studies that show that inequality and the incidence of poverty are greater in the United States than in Germany. Overall inequality and poverty levels are found not to be sensitive to the equivalence scale used. But the official German equivalence scales yields quite different results from those using all other scales with respect to the relative income and poverty levels of vulnerable groups within the population, especially older single people.alternative equivalence scale, Germany, USA, distribution of income, inequality, poverty