Connecting People to Power

Mothers Group Urges Congress To Provide Social Security Earnings Credits To Mothers And Other Unpaid Family Caregivers

By Melody Webb (September 18, 2002)

 What do we want and why?

Motherhood is the biggest risk factor for poverty in old age.  While mothers demand no pay for their work; at the very least they deserve security at retirement.  Currently, mothers and family caregivers face a drastically reduced Social Security benefit for every year that they earn little or no income while raising children or nursing elderly or ill loved ones.  Family caregivers, in essence, in return for their hard work, receive a penalty for taking care of their families. Our political leadership must grant Social Security earnings credits to mothers and all family caregivers for unpaid loving work caring for our nation’s neediest citizens. 

Why does this problem exist?

Women generate fewer Social Security benefits than men, in part due to the significant wage gap between men and women; but principally because women work intermittently as a result of caretaking responsibilities.  As of 1993, only a little better than a third of women drew Social Security benefits derived from their own paid labor.  Most women do not generate high enough benefit levels to equal even half of that to which their spouse is entitled. This inadequate wage problem affects all mothers, all women  – rich and poor alike – whose primary job is to raise their sons and daughters or to care for other needy loved ones.  This problem is indefensible given the contribution that women make to the economy.  By some estimates, if we gave an overall monetary value to the unpaid care work performed primarily by women within families, it would equal a whopping $1 trillion, or 44% of the Gross national product in 1990.

This earnings credit reform would impute to caregivers $16,500 annual income for up to five years for unpaid part time and full time labor in the home caring for family members.  This means that $16,500 rather than $0 is averaged into the AIME, Average Indexed Monthly Earnings, at retirement.  The AIME is used to determine benefit levels.  In this manner, the proposal would ensure a higher benefit level for caregivers who would otherwise face drastic reductions in benefits.  Earnings credit reform would raise the retirement benefit level of at least 8 million citizens – primarily mothers, by an average of $600 per year.

How much Social Security income am I going to receive under the current system as a result of being an at-home family caregiver?

When claiming benefits at retirement, a woman who is married and whose spouse is living can expect the following.  Most at-home family caregivers will have one of two ways in which to claim retirement benefits. When seeking benefits, an at home caregiver chooses between whichever is greater – benefits based on her own work record or ‘dependent’s benefits’.  Dependent’s benefits flow from the work record of the higher earning spouse.  Dependent’s benefits equal half that of the spouse.  

How much would I receive in benefits based on my own work record, and on my spouse’s work record?  

By the year 2030, only four out of ten women will be earning more benefits based on their own records rather than their spouse’s.   At full retirement age - age 67 for those born after 1959 - you receive your full Social Security benefit, known as your PIA, Primary Insurance Amount. (Early retirement results in a permanent reduction in your full retirement age benefit).  The PIA is based on the AIME, the Average Indexed Monthly Earnings over the highest 35 different years of earnings, adjusted for inflation.  The government uses a progressive formula in determining benefit levels, whereby those who earned the most during their working years, get back a smaller amount of their Social Security tax contribution than those who earn less money.  Earning income for at least 35 years is critical, since those who have earned $0 will see the average wage pulled down by the years of no earnings.

At retirement, to receive dependent’s benefits, you must have been married to the spouse on whose record you claim the benefits for at least ten years.  If married for 9 years, 11 months and 25 days, you are not entitled to spousal dependent benefits.  A caregiver who remarries after a first marriage of more than 10 years to a lower earning spouse, and before the age of 60 loses the dependent spouse benefit based on the higher earning spouse’s work record, unless the second marriage ends by death, divorce or annulment

A caregiver who has multiple marriages, each for 10 years or more, becomes eligible for benefits from all ex-spouse records, but the caregiver can only collect on one benefit check – most likely the highest will be chosen.  Similarly a worker who had several caregiver spouses, each for 10 years and 1 day of marriage, can have several spouses collecting on his or her record, assuming that none of them loses benefits because of remarriage.

Who will pay for this proposal?

The various proposals for creating a program of earnings credits include these.

One proposal involves shared earnings in which $16,500 of spousal income would be imputed to the family caregiver and proportionately deducted from the worker, to cover the period of unpaid family caregiving for children and loved ones.  In this scenario, the Social Security tax contribution is paid by the spouse, whose AIME, earnings, are reduced in proportion to the earnings credited to the family caregiver.  The worker’s work record would reflect up to $16,500 fewer earnings, and the caregiver’s work record would be credited with $16,500 of earnings per year for up to 5 years.

 A second proposal includes a voluntary caregiver opt-in to pay one half of the Social Security tax contribution on the $16,500 earnings credit.  Thus, the caregiver and their family would voluntarily pay approximately $1,000 per year, 6.1%, of the 12.2% tax on the $16,500 earnings credit.  The government would then match the payment, in lieu of an employer, paying a total of $1,000 per year for up to 5 years for every year of qualified caregiving.  The argument for government matching stands strong.  For, primary caregivers save the nation large amounts of child care, hospice, and elder care expenses through their loving unpaid labor.  Moreover, caregivers, maintain the foundation of the nation’s economy through the high quality of their work. Their caregiving ensures that the nation’s human resources reach their fullest potential.

 A third option allows the government to assume the entire cost of the $2,000 per year Social Security tax contribution on behalf of the unpaid family caregiver.  Given the financial status of the Social Security Trust Funds, it is our recommendation that the government avoid using the Trust Funds, and instead draw upon general revenues to pay for this program.

 What can I personally do to aid the passage of this legislation?

First, learn more about this and related issues by visiting www.AnnCrittenden.com.  Second, join our effort by emailing us at MelodyWebb@SecureMom.com.  Third, visit www.SecureMom.com and write a Member of Congress to press for the passage.  Stay involved by visiting this website and calling and contacting your member of Congress and the President on a regular basis.

copyright (c) 2002  Melody Webb.  All rights reserved.