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Employment, Social Security, and Future Retirement Outcomes for Single Mothers |
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Employment rates for single mothers with dependent children have been rising, partly because of welfare reform and expansions in the Earned Income Tax Credit. The results show that employment and earnings gains for single mothers during the late 1990s will translate into modestly higher Social Security benefits and better retirement outcomes when they reach later life, assuming these trends persist. However, most single mothers will fare worse in retirement than other women, primarily because they generally earned low wages over their lifetimes and many lack financial support from spouses. This paper examines this recent increase and analyzes the implications for future retirement security. Using the most recent longitudinal data available, the authors model employment, hours of work, and wages for women raising children outside of marriage. During the same period, employment rates for men and other women declined or held steady, while real wages among nonblack workers grew only half as fast for men and other women as for single mothers. For women born between 1984 and 1988 who spend at least 10 years raising children outside of marriage, the labor market gains of the late 1990s will increase real lifetime earnings by only 5 percent and will raise Social Security benefits by only 4 percent. These gains are driven primarily by increases in educational attainment among single mothers and strong growth in real wages for all workers that the Social Security trustees project over the next 50 years.
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