In the midst of the coronavirus-driven economic crisis (which has disproportionately impacted women of color), policymakers must work to close this pay gap because it matters for retirement security.
Earning lower wages makes a big difference in preparing for retirement. According to the Economic Policy Institute (EPI), as of 2016, 41 percent of black households do not have any retirement savings at all. This is likely because routine household expenses like groceries, health care, and housing take up a greater share of income for their households, leaving fewer resources available to save for retirement.
Even for black families that do have retirement savings, they pale in comparison to the retirement savings of a typical white family. According to the EPI, black families had median savings of $29,200 saved for retirement, while white families had more than twice as much saved with median savings of $79,500.
However, there is one major way policymakers can close both the pay and retirement savings gaps, which is by protecting defined-benefit pensions for African-American women who serve as public employees. According to the National Institute of Retirement Security (NIRS), the proportion of older African-Americans receiving income from pensions is roughly the same as it is for older white Americans, making them a critical source of their retirement security. Since nearly 18 percent of public sector workers are African-American women, according to the EPI, this means most of them will thankfully be offered this valuable safety net in retirement.
On today’s African-American Women Equal Pay Day (and every day of the year), policymakers should work to close this damaging pay gap and protect African-American women’s retirement security.
