RE: Women and Minorities

[National Dialogue Moderator <moderator>]

Karen Scott cites research from the University of North Carolina to 
indicate that women will not fare badly under individual accounts.  
This research states the following:

"For his study, Clark analyzed data from 87 companies and 150,000 
employees, with annual salaries ranging from $10,000 to $150,000. 
Counter to popular beliefs, he found that compared to men, women of 
similar age, job tenure and earnings are more likely to participate in 
voluntary 401 (k) plans and tend to contribute a larger percentage of 
their annual earnings; In plans that do not offer or require 
investments in company stock, women tend to hold about the same 
percentage of their retirement funds in fixed income assets as do men; 
And, in plans that offered company stock as an investment option, 
women allocated a higher portion of their contributions to fixed 
income assets. 

"Clark said that nearly every social security reform proposal to shift 
to individual accounts would require mandatory contributions, so that 
potential gender differences in participation is a moot point. Some 
proposals would maintain the basic benefit structure of the current 
system and would permit voluntary additional contributions to 
individual accounts on top of the mandatory component. Clark's 
research indicates that women are as likely as men to take advantage 
of such a voluntary option. 

"While Clark challenges assumptions about gender investment choice 
differences, he notes that gender differences in total retirement fund 
assets are possible in a shift to a pure individual account plan. For 
example, women have lower incomes and fewer years of service. (Of all 
workers beginning Social Security benefits in 1996, the median woman 
had worked 27 years, while the median man had worked 39 years.) Under 
the present Social Security System, women receive a greater share of 
subsidy associated with its progressive benefit formula."

Clark's research indicates the expected result for women in similar 
jobs with similar earnings.  The big concern about women and 
individual accounts is that many of them are in lower earning jobs, 
and that there are not in similar positions.  It is very low earners 
who get subsidized under the current system, and who would stand to 
lose that subsidy with individual accounts.  I remain concerned that 
individual accounts would not do well for people with very low 
earnings.

Anna Rappaport