NCPA - National Center for Policy Analysis

Social Security's War on Working Wives

October 18, 2012

In the midst of a large debate about the role of women in society and politics, one overlooked issue is the sexist nature of one of the largest government programs: Social Security. The spousal and survivor benefit provisions create an incentive for spouses that want to stay out of the labor force. As debates continue to center on whether Social Security can remain solvent, policymakers may want to look at these outdated provisions to reflect the changing role of women in society, says Sita Nataraj Slavov, a resident scholar the American Enterprise Institute.

  • In 1940, less than 20 percent of married women were in the labor force.
  • In 1970, that number increased to 40.5 percent.
  • And in 2010, nearly 61 percent of women were in the labor force.
  • Today, two-earner couples outnumber single-earning couples.

In the status quo, people pay payroll taxes and can collect a spousal benefit or a benefit based on their earnings (whichever is higher). Married people can also choose to switch to a survivor benefit if they are widowed.

  • Under this design, one-earner couples get a higher rate of return on their Social Security contributions.
  • Two-earner couples and single earners receive an inflation-adjusted rate-of-return in the 2 to 2.5 percent range.
  • However, one-earner couples received an inflation-adjusted rate-of-return of more than 4.5 percent.

This system also creates a disincentive for married women to participate in the workforce. Rather than pay the payroll tax and receive benefits, married couples can simply earn benefits by deciding to stay at home.

One possible solution to the problem may be to reduce or eliminate spousal benefits for high-income families. Furthermore, the spousal benefit could be replaced with a system that divides a couple's earnings equally which would encourage more people to work.

Source: Sita Nataraj Slavov, "Social Security's War on Working Wives," Real Clear Markets, October 17, 2012.


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