April 8 is "Pay Equity Day," the day when a working woman’s earnings supposedly catch up to those of a working man for the previous year. The "pay gap" this day is designed to protest not only lacks support but pales in comparison to a retirement gap that victimizes working women.

Pay Equity Day is organized by the National Committee on Pay Equity and supported by numerous feminist groups and labor unions. The pay gap refers to the claim that an American woman earns about 74 cents for every dollar the average man earns. This number is derived by taking the national aggregate group of full-time working women and comparing their average earnings to their full-time working male counterparts.

But when comparing men and women with comparable education and qualifications, the pay gap narrows to about 87 cents for every dollar a man earns. When time spent in the workforce is considered, the pay gap virtually disappears. While the pay gap myth is unfounded, many women face an all-too-real "retirement gap," which elicits no protests from feminist groups.

Despite the many educational, career, and political achievements women have earned throughout this century, the Social Security program penalizes married women who work outside the home, creating the retirement gap. The program is based on the traditional family model that posits a male breadwinner with a stay-at-home wife. Stay-at-home women are rewarded with a cash bonanza at the expense of married women who work outside the home.

A married woman who does not participate in the labor force is automatically entitled to her own retirement benefit equal to her husband’s retirement benefit. This is known as the spousal benefit. Upon his death, she then receives a benefit equal to 100 percent of his retirement benefit. Yet a married woman who worked outside the home will only receive the greater of either her own cash benefit or her spousal benefit, but not both.

This "dual entitlement" rule is applied to the spouse with the lower earnings. In more than four out of five cases, this is the wife (but it can also apply to the husband). Many of these women will receive the same retirement benefit as their stay-at-home counterparts, regardless of her lifetime payroll tax contributions.

To illustrate the point, Mr. Jones is an average-wage husband in his first year of retirement. He will receive about $950 per month in Social Security retirement benefits. His wife, Mrs. Jones, also worked in an average-wage job throughout her working years. She will also receive about $950 per month. When Mr. Jones dies (women tend to live longer than men do), Mrs. Jones will receive $950 per month. That is the same amount she would receive had she never worked, essentially erasing her lifetime payroll tax contributions. Mrs. Jones effectively loses 50 percent of her benefits because she worked.

Advocacy groups, lawmakers, and policymakers should closely examine proposals that establish individually-owned personal retirement accounts, allow workers to opt-out of the current Social Security system, and provide earnings sharing for women to provide legal ownership over a portion of their spouse’s account. By implementing such an approach, Mrs. Jones could choose her own retirement age and receive recognition of her payroll tax contributions which would exceed $150,000 (including interest) throughout her working life.

Recent analyses confirm that diverting a portion of payroll taxes to individually-owned retirement accounts would provide almost all working women more generous benefits than the current Social Security system, while using the remaining payroll taxes to pay current retirees’ benefits. In these ways, working women would escape the government’s inherently paternalistic widows’ gap.

The government’s Social Security system is wreaking far more financial damage on many women’s economic well-being than a few narrow-minded male ogres who still can’t accept women as equals. Instead of protesting a mythical pay gap, gender victimization groups should turn their attention to failed government programs that confiscate women’s earnings during their working years and leave them with chump change for retirement.

* Naomi Lopez is director of the Center for Enterprise and Opportunity at the Pacific Research Institute in San Francisco. This paper is based on “A New Vision for Health Care in California” which appeared in the 1999 California Legislators’ Guide (Pacific Research Institute: 1999). For additional information, contact Naomi Lopez at (415) 989-0833.