Older Women May Be Discouraged From Working

While the percentage of older women who participate in the workforce is expected to grow over the next several years, a recently published report by the Center for Retirement Research at Boston College asserts that married women in particular are discouraged from working by a variety of factors, including relatively low earning power, high tax rates, and barriers to earning Social Security benefits.

In their report, "What Makes Older Women Work," researchers Alicia Munnell and Natalia Jivan said the share of women aged 55–64 in the labor force rose from 43% in 1970 to 52% in 2000 and is expected to jump to 61% by 2012. This increased labor force participation among older women, the report suggested, is likely due to improvements in health status and the rising incidence of divorce.

At the same time, however, the financial incentives for older married women to work are not as great as for other groups, Munnell and Jivan observed. In 2002, they noted, the median earnings for female full-time employees were 78% of that of their male counterparts, and women earned less than men at every level of education and across occupational categories.

In addition, the researchers pointed out, married women tend to face higher marginal tax rates than men or single women because, in 76% of married households in which both partners work, husbands earn more than their spouses. Women who earn less than their husbands receive a lower return on their wages because they are taxed at higher rates.

A woman whose husband earns significantly more than she does may also be discouraged from working because, under current rules, her continued employment generates little or no additional Social Security income. An estimated two-thirds of women age 62 or older receive Social Security benefits based entirely or partially on their husbands’ earnings. Moreover, the report added, family responsibilities and a desire to stop working when their husbands retire may pull married women out of the labor force.

After examining the factors that keep women in the workforce, Munnell and Jivan found that older women are more likely to be employed if they are divorced, have no younger children, lack substantial financial assets, or earn more than their partners. Women who could improve their Social Security benefits through employment were shown to be 14% more likely to work than women with lower projected benefits.

As women of all ages participate in greater numbers in the labor force, more older women will have greater incentives to work than in the past, the researchers concluded. As women become more likely to earn their own Social Security benefits and less likely to be the marginal earner in the household, Munnell and Jivan predicted, "their work decisions and careers [will] look more like those of men."

The researchers added, however, that while current trends suggest both women and men will have insufficient resources to retire early, causing them to continue working until their mid-60s, "the challenge is greater for women given their weaker attachment to the labor force and smaller financial incentives."