GAO Study Reports New Trends Push Older Women into Poverty

Published in Pawtucket Times, March 7, 2014

Following on the heels of a Government Accountability Office (GAO) report released last week on March 5, the U.S. Senate Special Committee on Aging held a hearing to put a Congressional spotlight on the alarming increase of older Americans becoming impoverished.  The GAO policy analysts concluded that a growing number of the nation’s elderly, especially women and minorities, could fall into poverty due to lower incomes associated with declining marriage rates and the higher living expenses that individuals bear.

As many as 48 percent of older Americans live in or on the edge of poverty. “While many gains have been made over the years to reduce poverty, too many seniors still can’t afford basic necessities such as food, shelter and medicines,” said Aging Committee Chairman Bill Nelson (D-FL).

Senate Aging Committee Looks at Income Security for Elders

Policy experts told Senate lawmakers on Wednesday that millions of seniors have been spared from abject poverty thanks to federal programs such as Social Security, Medicaid, Medicare, SSI, and food stamps.  The testimony contrasted with the picture painted by House Budget Committee Chairman Paul Ryan (R-WI) earlier this week, who produced a report that labeled the federal government’s five-decade long war on poverty a failure.

Appearing before the U.S. Senate Special Committee on Aging, Patricia Neuman, a senior vice president at the Henry J. Kaiser Family Foundation, stressed the importance of federal anti-poverty programs.

“Between 1966 and 2011, the share of seniors living in poverty fell from more than 28 percent to about 9 percent, with the steepest drop occurring in the decade immediately following the start of the Medicare program,” said Neuman.  “The introduction of Medicare, coupled with Social Security, played a key role in lifting seniors out of poverty.”

Neuman’s remarks were echoed by Joan Entmacher of the National Women’s Law              Center, who credited food stamps, unemployment insurance and Meals on Wheels, along with Social Security, for dramatically reducing poverty among seniors.  The report was highly critical of many programs designed to help the poor and elderly saying they contribute to the “poverty trap.”  Ryan and other House lawmakers have long proposed capping federal spending and turning Medicaid, food stamps and a host of other programs for the poor into state block grants.

Older Women and Pension Benefits

GAO’s Barbara Bovbjerg also brought her views to the Senate Select Committee on Aging hearing. Bovbjerg, Managing Director of Education, Workforce, and Income Security Issues, testified that the trends in marriage, work, and pension benefits have impacted the retirement incomes of older Americans.

Over the last five decades the composition of the American household has changed dramatically, stated Bovbjerg, noting that the proportion of unmarried individuals has increased steadily as couples have chosen to marry at ever-later ages and as divorce rates have risen.  “This is important because Social Security is not only available to workers but also to spouses and survivors.  The decline in marriage and the concomitant rise in single parenthood have been more pronounced among low-income, less educated individuals and some minorities,” she says.

As marriage and workforce patterns changed, so has the nation’s retirement system, adds Bovbjerg.  Since 1990, employers have increasingly turned away from traditional defined benefit pensions to defined contribution plans, such as 401(k)s, she says, this ultimately shifting risk to individual employees and making it more likely they will receive lump sum benefits rather than annuities.

These trends have affected retirement incomes, especially for women and minorities, says Bovbjerg, that is fewer women today receive Social Security spousal and survivor benefits than in the past; most qualify for benefits on their own work history. While this shift may be positive, especially for those women with higher incomes, unmarried elderly women with low levels of lifetime earnings are expected to get less from Social Security than any other demographic group.

According to Bovbjerg, these trends have also affected household savings Married households are more likely to have retirement savings, but the majority of single-headed households have none. Obviously, single parents in particular tend to have fewer resources available to save for retirement during their working years.  With Defined Contribution pension plans becoming the norm for most, and with significant numbers not having these benefits, older Americans may well have to rely increasingly on Social Security as their primary or perhaps only source of retirement income.

Inside the Ocean State

Although the GAO report findings acknowledge a gender-based wage gap that pushes older woman into poverty, Maureen Maigret, policy consultant for the Senior Agenda Coalition of Rhode Island and Coordinator of the Rhode Island Older Woman’s Policy Group, observes that this inequity has been around since the 1970s when she chaired a legislative commission studying pay equity. “Progress in closing the gender wage gap has stagnated since 2000 with the wage ratio hovering around 76.5 percent”, she says.

GAO’s recent findings on gender based differences in poverty rates are consistent with what Maigret found researching the issue for the Women’s Fund of Rhode Island in 2010.  She found that some of the differences in the Ocean State can be attributed to the fact that older women are far less likely to be married than older men.  Almost three times as many older women are widowed when compared to men.

Maigret says that her research revealed that older women in Rhode Island are also less likely to live in family households and almost twice as likely as older men to live alone. Of those older women living alone or with non family members an estimated one out of five was living in poverty. For Rhode Island older women in non-family households living alone, estimated median income in 2009 was 85% that of male non-family householders living alone ($18,375 vs. $21,540).

Finally, Maigret’s report findings indicate that around 11.3 percent of older Rhode Island women were living below the federal poverty level as compared to 7.3 percent of older men in the state. Older women’s average Social Security benefit was almost 30 percent less than that of older men and their earnings were only 58 percent that of older men’s earnings.

             There is no getting around peoples’ fears about outliving their savings becoming a reality if they live long enough,” said AARP Rhode Island State Director Kathleen Connell. “One thing that the latest statistics reveals [including the GAO report] is the critical role Social Security plays when it comes to the ability of many seniors to meet monthly expenses. Social Security keeps about 38 percent of  Rhode Islanders age 65 and older out of poverty, according to a new study from the AARP Public Policy Institute.”

“Nationally, figures jump off the page,” Connell added. “Without Social Security benefits, 44.4 percent of elderly Americans would have incomes below the official poverty line; all else being equal; with Social Security benefits, only 9.1 percent do, she says, noting that these benefits lift 15.3 million elderly Americans — including 9.0 million women — above the poverty line.”

“Just over 50 percent of Rhode Islanders age 65 and older rely on Social Security for at least half of their family income—and nearly 24 percent rely on Social Security for 90 percent of their family income” states Connell.

             “Seniors trying to meet the increasing cost of utilities, prescription drugs and groceries would be desperate without monthly Social Security benefits they worked hard for and planned on. As buying power decreases, protecting Social Security becomes more important than ever. Older people know this; younger people should be aware of it and become more active in saving for retirement. Members of Congress need to remain aware of this as well,” adds Connell.

Kate Brewster, Executive Director of Rhode Island’s The Economic Progress Institute, agrees with Maigret that older women in Rhode Island are already at greater risk of poverty and economic security than older men.   “This [GAO] report highlights several trends that make it increasingly important to improve women’s earnings today so that they are economically secure in retirement.  Among the “policy to-do list” is shrinking the wage gap, eliminating occupational segregation, and raising the minimum wage. State and federal proposals to increase the minimum wage to $10.10 would benefit more women than men, demonstrating the importance of this debate to women’s economic security today and tomorrow.”

House Speaker Gordon Fox is proud that the General Assembly in the last two legislation sessions voted to raise minimum wage to its current level of $8 per hour.  That puts Rhode Island at the same level as neighboring Massachusetts, and we far surpass the federal minimum wage of $7.25, he said.  He says he will carefully consider legislation that has been introduced to once again boost the minimum wage.

“Bridging this gap is not only the right thing to do to ensure that women are on the same financial footing as men, but it also makes economic sense”, says Rep. David N. Cicilline.  At the federal level, the  Democratic Congressman has supported the ‘When Women Succeed, America Succeeds’ economic agenda that would address issues like the minimum wage, paycheck fairness, and access to quality and affordable child care. “Tackling these issues is a step toward helping women save and earn a secure retirement, but we also have to ensure individuals have a safety net so they can live with dignity in their retirement years,” says Cicilline.

With Republican Congressman Ryan in a GOP-controlled House, captured by the Tea Party, leading the charge to dismantle the federal government’s 50 year war on poverty, the casualties of this ideological skirmish if he succeeds will be America’s seniors.  Cutting the safety net that these programs created will make economic insecurity in your older years a very common occurrence.

.             Herb Weiss, LRI ’12, is a Pawtucket writer who covers aging, health care and medical issues.  He can be contacted at hweissri@aol.com.

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Congressional Contenders Give Tips to Keep Social Security and Medicare Afloat

          Published June 1, 2012, Pawtucket Times

         When the creation of Social Security was debated by Congress in the 1930’s, this newly legislation was referred to as ‘socialism’ one of the many charges leveled against the program.  In 1935 this program became law.

          Over the program’s 77 years of existence, critics have continued to take political “pop at Social Security, now the nation’s largest domestic program.  Some have even charged that the program discriminated against the poor and middle class by redistributing wealth to the wealthy.  Others have even claimed that beneficiaries were getting the short end of the stick by receiving a low rate of return from their investment when compared to what they might have gotten through private retirement accounts. Over the last decade, some have even called Social Security a legalized Ponzi scheme where the money collected from payroll taxes of young workers is used to pay retirement benefits of older works who retire and file to collect Social Security, with the younger generation always picking up the tab for those ahead of them.    

          Even with the criticism leveled at the nation’s Social Security Program, aging baby boomers who are now reaching the eligible retirement age of 65 at a rate of 10,000 a day, and many of the 56 million beneficiaries receiving their monthly Social Security check, will tell you that their monthly check might mean the difference between their ability to pay their bills or sliding into poverty.\

An Ailing Social Security Programs

          With Congress and Presidential elections looming, the Social Security Trustees’ annual report was released on April 23, 2012.  The 242 page report detailed the fragile financial health of the Medicare and Social Security Trust Fund, this was not the news politicians wanted to hear as the November elections approach.  

         The nation’s media outlets churned out thousands of articles, ultimately picked up by television and cable news, reporting that the combined assets of the Old-Age and Survivors Insurance, and Disability Trust will be exhausted in 2033, three years sooner than projected last year. Meanwhile, the Program’s Disability Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate.  

        The Trustee’s 2012 Report also predicted that the Medicare Part A (Hospital Insurance Trust Funds) would be exhausted by 2024, forcing the program to only cover about 87 percent of anticipated Part A Medicare expenses.    

         With the release of the 2012 Social Security Trustee Report, press releases were being generated by Administration officials and Congressional Democrats and Republicans to quickly score their political points.

          Treasury Secretary Timothy Geithner, one of the seven Social Security Trustees, called the recently released assessment of America’s most popular benefit program “somewhat more pessimistic than last year’s report,” warning of “the importance of building a consensus on reforms that will put these programs on a sounder financial footing.” 

         Another Social Security Trustee, HHS Secretary Kathleen Sebelius, noted that President Obama’s Affordable Care Act, had “added another 8 years to the life of Medicare”. She estimated that these reforms would save the Medicare program more than $200 billion by 2016 while lowering costs for those who have traditional Medicare by nearly $60 billion.             

          In a press release, Republican Congressman John Fleming, a medical doctor who is a member of the GOP Doctors Caucus, countered the HHS Secretary’s assessment of the effectiveness of President Obama’s health care law.  “The idea that Obamacare will save Medicare would be laughable if the health care of millions of seniors was not at stake,” he said, alleging that the President used Medicare savings to foot some of the bill for Obamacare. 

 Keeping Social Security and Medicare Solvent      

         With the backdrop of a Congressional election that can either tilt the Senate to the Republicans or continue that party’s rule of the House, orRhode Islandpolitical candidates in Congressional District 1 gear up for a political fight.   Who can go to inside the Beltway to fix an Ailing Social Security System?

       When asked to comment on the recently released 2012 Social Security Trustee’s Report, Congressman David Cicilline, representingRhode Island’s Congressional District 1 that covers northern and easternRhode Island, acknowledges the accuracy of the report’s projection that full benefits can be paid to Social Security recipients for the next two decades.  However, “we have work to do to make sure that it, along with Medicare, will be their for all future generations of Americans,” he says.

         According to the Democratic Congressman, recent studies suggest that there is no need to fundamentally revamp these programs to strengthen them and ensure their sustainability.  “Modest changes, such as lifting or eliminating the $110,100 wage cap, which would affect only the top 6% wealthiest wage earners, would be enough to keep Social Security solvent for decades to come”, he says, stressing that he has already cosponsored legislation to accomplish just that.

          Working with the other side of the aisle, Congressman Cicilline has joined his GOP colleagues to support legislation that would allow the federal government to negotiate with pharmaceutical companies on behalf of Medicare helping to lower the cost of prescription drugs for seniors. 

           As the Congressional elections draw near, Congressman Cicilline warns that some of the Tea-Party backed Republicans in Congress are proposing radical plans that would end the Medicare guarantee, privatize Social Security, or raise the retirement age. “Instead of playing politics with these important programs, we need to commit to protect and strengthen both Social Security and Medicare now and for all future generations,” he says.

            Anthony Gemma, Democratic challenger to Congressman Cicilline, has read the 2012 Social Security Trustees’ Report, too. He gives his prescription for fixing the impending insolvency in Social Security and Medicare.  “The only reasonable way to reverse this trend is to drive more money into the Trust Fund,” he tells the Pawtucket Times. 

          Gemma, who ran for this Congressional seat in 2010, had initially called for the privatization of Social Security but changed his mind after researching the issue.  Today, he calls for the creation of more jobs to fixAmerica’s ailing Social Security Program and Medicare to keep those programs solvent.  He boasts that he is the only candidate for the Congressional District 1 seat that has a plan to create jobs — one that presumes and will succeed in spite of gridlock in Congress. “Its general model is applicable to all 50 states,” he says, predicting the creation of 10,000 new jobs in theOceanStatein five years.  “New jobs equal new cash flow into the Trust Fund,” he says.

            Like Congressman Cicilline, Gemma also calls for raising the $110,100 wage cap. “to increase funding of the Trust Fund, we must raise this cap,” he says.

         “Social Security was created by Franklin Delano Roosevelt as the centerpiece of his New Deal.  Then as now, Social Security is a reflection of Democratic Party values,” adds Gemma. In his last race for Congress in 2010, Gemma claims he was the only candidate who put forth a plan to increase COLAs for Social Security recipients.  “As a member of Congress, I shall take a back seat to no one as a defender of Social Security – not just for current recipients, but also for their children and grandchildren, and for theirs.”

             On his website, Republican challenger and political newcomer Brendan Doherty  states he will commit his congressional vote to opposing any attempts to privatize Social Security or Medicare, that he will work in a bipartisan fashion to protect these programs. He will consider the recommendations set forth in theSimpson-Bowles Commission on Fiscal Responsibility, and believes that the key to fixing Medicare is addressing health care reform in a way that results in lower costs to the overall health care system.

          Ensuring the longevity of Social Security and Medicare, Doherty pledges he will root out the inefficiency, waste, and fraud in the Social Security Disability Insurance (SSDI) and Supplemental Security Income Programs (SSDI).  With limited checks and balances for theses programs, some “may game the system at the expense of those who are truly in need,” he says. 

           As to ensuring the survival of Medicare, Doherty looks to using global health care reform to contain spiraling health care costs and rooting out Medicare fraud by the sharing of information, stiffer sentences, and increasing the number of investigators to find and prosecute those financially abusing the program.

          Doherty has put one fix on the table not offered by either of his Democratic challengers. On March 9, 2012, on Channel 12 Newsmakers, the Republican candidate came out in support of Social Security reform and said he favored establishing a “cut-off point” for future beneficiaries. “Let’s come up with a cut-off point, like 1960 or 1959,” he said. “Those people would only… It would take them another couple of weeks to get that benefit and then it’s just graduated. So it would be a few weeks, by birth date. So, when you say ‘10 years out,’ it could affect people 10 years out.”

        Doherty’s leaning to embrace Simpson-Bowles Commission-like recommendations to keep Social Security a float would be opposed by Democrats including groups like Strengthen Social Security a coalition of 300 state-level and national groups, representing unions, health care and senior groups.  The Washington-based coalition charges that this plan would “end Social Security as we know it” by reducing COLAs, raising the retirement age to 69 and earliest eligibility to 64, and even ending the link between benefits and earnings.

 Wait and See…

             Fixing Social Security is a high priority for aging baby boomers and seniors and will be a key domestic issue to be discussed by Congressional candidates looking for votes to put them into office inWashington,DCnext November.   According to an AARP survey, taken in January 2012, of respondents age 50 and over, Social Security and Medicare ranked three out of 13 issues, with job growth and rising health care costs being number one and two respectively.

          AARP Rhode Island, the Ocean State’s Rhode Island’s largest aging advocacy group, is gearing up to gather grassroots feedback from “Outside the Beltway” to bring to Congress as the lawmakers begin their debates as to how to bolster the solvency of Social Security.  

             “’You’ve Earned a Say’ is giving the American people a strong and visible voice in the Social Security and Medicare discussion,” says AARP Rhode Island State Director Kathleen S. Connell. “We are reaching out to our 130,000Rhode Islandmembers and nationally to nearly 40 million members. In June, we will advance the discussion by giving everyone access to clear, non-partisan explanations of all the options that are on the table.

             “AARP is exercising its power to move this critical discussion from behind closed doors in Washingtonout into mainstream America,” Connell added. “People who have paid into Social Security represent a large part of the population. They and those who are working and paying into the fund today deserve – indeed, have earned – a say in how we chart the future.”  

            As noted, while both Democratic and Republican candidates in the upcoming Congressional District 1 campaign seek common solutions to strengthening Social Security and Medicare, there are philosophical differences.  When the dust settles, whoever wins represents our interest in the upcoming, historic debates.  Partisan bickering may well be silenced by educated voters, those who take the time to understand the issues and demand both the Democratic and Republican Parties work together on their behalf.  It is as simple as that…

           Herb Weiss is a Pawtucket-based freelance writer who covers aging, health care and medical care issues.  His Commentaries appear in two Rhode Island Daily’s The Pawtucket Times and the Woonsocket Call.