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Shattering the Pension Glass Ceiling

U.S. Labor Secretary Robert B. Reich

Business and Professional Women USA
Annual Conference

July 30, 1996

Thank you, Dr. Vacca. I am delighted and honored to be here and I commend you for your leadership.

And thank you, Audrey Tayes Haynes, for the fabulous work you are doing to keep BPW on the cutting edge of so many issues of vital importance to American women.

Business and Professional Women USA is an impressive organization. And you are an impressive group.

You have a reputation as a strong, national network of leaders, achievers and activists.

You are important members of your communities. People look to you for vision, for guidance and for ideas.

And you are working hard to make this country a better place -- particularly for working women -- by tackling some of the most vital issues of the day. Equity in the workplace. Economic self-sufficiency. And greater leadership opportunities for women.

With women now comprising nearly half the workforce -- and with the issues of family and work now on the front burner in our country -- your mandate is greater than ever before.

You know first-hand about the "glass ceiling" that hangs over many of our nation's most talented women -- women who are seeking to rise as high as their talents will take them and to participate fully in the leadership of their enterprises and organizations.

I'll bet that many of you have shattered some glass ceilings of your own. Our country has much to benefit from your experience and work.

That's why I've come here today. We need your help on an issue of critical importance to millions upon millions of women in this country.

I want you -- I challenge you -- to help lead the effort to break through another glass ceiling. I'm talking about the glass ceiling that is preventing so many American women from saving for a comfortable retirement. I'm talking about the glass ceiling of pension security.

I know that retirement security is an important issue for you. And I want to commend you for the trailblazing work that your organization is doing to address it -- in a very substantive way.

Our administration knows that this is a critical issue for working women.

A couple of years ago, the Women's Bureau at the Department of Labor surveyed some 250,000 women across the country. We asked them about their jobs -- what they liked and what they didn't like about them. You know what we found? Pensions and retirement benefits received the second most negative rating. Some 57 percent of our respondents were dissatisfied with their pensions.

I hear it all the time when I travel the country.

"I've worked hard for years, and I have so little to show for it."

"How will I live when I retire?"

"It's difficult enough to save for my kids' college tuition. How can I possibly be expected to save for a comfortable retirement?"

These are the concerns of working families in general. But women have special reason to worry about their retirement years.

There really is a "glass ceiling."

Twenty-five million working women do not have pension plans. That's nearly three out of every five women who work in the private sector.

More than half of retired men receive pension benefits other than Social Security. But less than a third of retired women do.

And among those women who are fortunate enough to be getting a pension benefit, the average amount of that benefit is less than half of what men are getting.
Why is this?

For the most part, the problem of pension inequity is the product of women's career patterns and the realities they face in the working world.

On average, women earn less money than men. Hence, they get lower earnings-based retirement coverage and are less able to put away enough money on their own. Once retired, they also tend to live longer than men, meaning what they have saved must last longer and is subject to further years of erosion by inflation.

There are other factors, as well.

Two-thirds of working women are employed in the sectors of the economy that have the lowest pension coverage rates.

Approximately half of the 25 million working women who lack pension coverage are employed by small firms. And small firms are much less likely to offer pension plans.

Women are only half as likely to be members of unions and thereby have access to collectively bargained pension benefits.

And women are nearly three-times as likely as men to be working part-time.

Another significant factor is that women's continuing family role as primary care-givers leads them to move in and out of the workforce, changing jobs many times. Taking time off or working part-time to rear a child or care for an elderly parent often cuts into a woman's years of service that are used to calculate pension benefits. She can pay a steep price when retirement day rolls around. Changing jobs can mean that pensions are left behind, and vesting requirements can prevent her from receiving any benefits at all.

As a result, elderly women are twice as likely as elderly men to be living in poverty.

Here is yet another example of how we, as a society, cannot and should not separate family values from economic values. It is simply wrong to financially penalize women because they have taken responsibility for bearing and rearing children.

So what can we do about this?

Earlier this month, the Senate passed most of the provisions contained in the President's retirement security bill, when it approved legislation raising the minimum wage. We're hopeful that these provisions will prevail in conference and will be included in the legislation that goes to the President's desk -- perhaps as early as this week.

As you know, the minimum wage increase is very important to working women. As the Vice President mentioned in his remarks to you yesterday, some 60 percent of minimum wage earners are women. Many are single parents. This increase will help them make ends meet. And it might even enable some women to put away something for their retirement.

The retirement security provisions passed by the Senate would also broaden pension coverage in sectors of the economy where so many women now work -- small businesses, services, retail, and non-profits such as schools, hospitals and social service agencies. It would enable more part-timers to accumulate pensions -- remember, women are much more likely to be part-timers. It has incentives for employers to eliminate waiting periods before workers can participate in 401(k) plans -- and that would benefit women, because they tend to have shorter job tenures. It would provide for shorter vesting periods and increased benefit insurance for workers participating in multi-employer plans -- again, many of them women.

It would also ease pension rules that are particularly hard on women, given their employment patterns. Abolishing the "family aggregation rule" would end limits on retirement savings for many women who work in family-owned businesses. Homemakers would also be eligible for a full IRA deduction.

Overall, it's a great step forward. And Senator Mosely-Braun, for one, deserves a great deal of credit for her efforts to strengthen women's retirement security.

But more needs to be done.

I pledge to you that our administration will continue to improve the integrity of 401(k) and other pension plans. We are working to ensure that employers don't dip into the pension fund for dubious, self-serving investment schemes.

You heard about what happened when Color Tile went bankrupt, and employees found that more than 80 percent of their 401(k) assets were invested in the company's stores. When the company encountered severe financial problems, the value of their accounts were called into question. That's wrong. Congress is concerned -- you've heard about Senator Boxer's efforts -- and we're concerned, too. We must change the law to see that this doesn't happen again.

Tomorrow, the Senate Labor Committee is expected to act on the President's proposal to strengthen auditing of pension benefit plans and require expedited reporting of evidence of criminal violations.

Right now, almost half of the 65,000 pension plans with annual financial statements have no meaningful audit. That's $950 billion of plan assets which neither participants nor sponsors nor even the federal government knows are secure.

What's more, even when plans are fully audited and criminal activity is discovered, there's no requirement that the "pensions cops" be quickly alerted so that participants have a better chance at getting their money back.

We want tough and speedy enforcement.

This is what government can and should be doing. But the fact remains that all working people -- including millions of working women -- are going to have to take more responsibility for their own retirements.

But to do that, women need the facts. So I ask that you join us in informing them how decisions they make today can mean a world of difference when they reach retirement age.

I'm pleased to unveil a new "pension checklist" for women. It enables women to do their own personal audit of their financial needs for retirement.

It provides the facts about pensions and helps women answer the basic questions of retirement security.

Does your employer provide a pension?

Are you included in the plan?

If you're not covered by a pension plan, are you taking full advantage of tax-deferred savings plans like 401(k)'s, IRA's and Keogh's?

Is your plan insured by the federal government?

What benefits will you be entitled to?

Will your benefits be reduced by the amount of Social Security benefits you receive?

What happens if you change jobs?

What benefits will you receive through your spouse's plan?

What benefits will you receive if your spouse dies or you get divorced?

These are the questions women should be answering for themselves. Unfortunately, many are not.

Take these checklists home with you. Spread them around. Send for more if you need them.

Make this topic number one at your local chapter meetings and among your peers, employees and co-workers.

For our part, the Department of Labor will be supporting you through a national public education campaign aimed at making all women aware of the importance of planning for retirement now. We have provided you with a package of materials to help you become "experts" on this subject. And we have produced a series of radio public service announcements urging women to get the informa- tion they need to plan for economic security, independence and peace of mind in retirement.

We're excited about this campaign and its potential for helping millions of women. Help us make it a success.

I'm convinced that the more women know about the "glass ceiling" of retirement security, the more likely they are to bust through it.

So get out your sledge hammers and let's go to work.

Thank you for your help and best of luck to you all.

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