In 1978, Congress declared that March is observed as Women’s History Month, honoring and observing the contributions of women to the fabric of American society.
At that time, the gender pay gap was significant. On average, women earned only 62.7% of men’s wages. While that gap has narrowed to around 84% (even less for women of color–Black women earn approximately .64 cents for every dollar a man makes, and Latinx women fall even further behind at .57 cents per dollar), the difference in earnings eventually leads to retirement income inequity.
Since female workers are more likely to step into caregiving roles, this can reduce or eliminate income earned. It also means that any employer-provided retirement plan that offers a match on contributions is greatly diminished. The National Institute on Retirement Security (NIRS) reported in 2020 that defined contribution (DC) retirement plans further that complication, concluding that men who have invested in DC plans have a much higher earnings trajectory than women who have their savings in a DC plan.
In comparison, a defined benefit pension provides women with income security in retirement. By providing guaranteed income, those who receive pensions, including women, do not have to worry if money will run out, unlike in defined-contribution plans. This is especially important now that the inflation rate soared to 7.5% in January 2022. Women are disproportionately affected by inflation, due to a phenomenon known as the gender expectations gap. Gender-specific roles such as grocery shopping in a volatile price market affect the perception of inflation trends, and can therefore influence important decisions regarding future finances, such as saving for retirement. This social conditioning leads women to have expectations of higher inflation rates, and negatively impacts their future financial security.
Pensions are a promise made to workers, regardless of race or gender. The public sector has long been an equal earning space for all workers, and the preservation of defined benefit plans is essential to keeping that promise to the women–and all workers–who earn it.