Analysis by Keith Rankin.
This is a story that is not confined to New Zealand women in their early 60s, but which focusses on them as a surprisingly large group facing challenging circumstances. My focus narrows even further; my emphasis here is on ‘married’ women, and with partners presently (or soon to be) eligible of New Zealand Superannuation, New Zealand’s universal retirement pension.
These women are part of what the Americans call ‘Generation Jones’; in the absence of another label, we may use that moniker here, as Gen-J. For simplicity, we may think of Gen-J as people born from 1956 to 1965. People today in their early sixties – from 60 to 64 – were born from 1957 to 1962, the years of peak birth numbers in Aotearoa New Zealand.
Gen-J are commonly included as ‘boomers’, but they are not true post-war baby boomers. Boom generation, yes; post-war, no. Unlike classic baby boomers, their parents (for the most part) were too young to have participated as adults during World War Two. Typically, Gen-J parents were born in the years from 1926 to 1945. Further, many Gen-J people did not have grandparents who participated in World War One. Gen-J grandparents were mostly born after 1900.
Last decade, Gen-J recently constituted much of the political leadership in the world; think of people in the age group of Theresa May, Tony Abbott, Julia Gillard, Barrack Obama, John Key, and Boris Johnson. Now the leadership baton has largely passed to generations X and Y (b.1966 to 1986); consider these leaders, ex-leaders, and would-be leaders of western liberal democracies (from young to youngest): David Cameron, Mark Rutte, Marine Le Pen, Christopher Luxon, Nicola Sturgeon, Justin Trudeau, Pedro Sánchez, Alexis Tsipras, Elizabeth Truss, Giorgia Meloni, Emanuel Macron, Volodymyr Zelenskyy, Leo Varadkar, Rishi Sunak, Jacinda Ardern, Sviatlana Tsikhanouskaya, Sanna Marin, Gabriel Boric, Sebastian Kurz. (Chris Luxon and Nicola Sturgeon were born on the same day, but I give Mr Luxon seniority because of New Zealand’s more advanced time zone.)
Older generations are not entirely impotent, politically, though. Lula has just returned to power in Brazil. Vladimir Putin and Xi Jinping are baby boomers (b.1952 and 1953). Joe Biden and Nancy Pelosi are of the ‘lucky generation’ who parented the Joneses. (My prediction is that that lucky generation, born between 1935 and 1945, will prove to be the longest lived, ever; at least in western liberal democracies. Their longevity is presently distorting current life expectancy projections.)
Life Stage
Being in one’s sixties represents an important transitional life stage. Almost all women of this age have completed menopause; they are at a new beginning, not an end. Most women in New Zealand aged 60 are very much employed in the labour force, noting that being employed at this age often (and appropriately) means being self-employed or even an employer. In contrast, most women aged 70 are retired, although by no means inactive; there is much more to an active life than paid work.
A not insignificant minority of women in their 60s have had personal health challenges. One of the important challenges is cancer, which is more of an equal-opportunity condition than some others which affect men more. An important minority of women (and of course not only women) in their early-sixties will be cancer survivors. Other women are facing that challenge, at present, in a state of uncertainty.
Being in one’s sixties commonly means wishing to work fewer than forty hours per week; maybe working four days per week (for four days’ pay); or maybe joining the ranks of ‘relievers’, critically important in the education and health sectors.
Women in their early 60s are very likely to be grandmothers; indeed active grandmothers. Additionally, they may be mothers of millennials living ‘at home’, or of older adult children with special needs. (It is not only people under 25 who are facing mental health challenges, or debilitating circumstances such as long covid and other forms of chronic fatigue. There are peak working-age adults, now Gen-Y, who need care.) Many of the cohort of super-women we are focusing on have substantial responsibility towards their still-living parents (including parents resident in those rest homes which are understaffed, some of which may soon have to close); we remember that these parents, many now in their nineties, belong to a particularly long-lived generation.
Further, and noting that our particular focus is on women in their early 60s with older partners, most of those partners now have much lower incomes than they used to have. These older partners, mainly husbands, may have significant healthcare needs, and may no longer have health insurance. It is very common for women in their early sixties to be the ‘family breadwinner’, either as sole-breadwinner or principal breadwinner.
Some Gen-J women will be amongst the most vulnerable to online financial scammers. Many women of this generation are not entirely comfortable in our increasingly on-line world. Many, having low levels of financial confidence, may delegate financial expertise; they become a target demographic for financial predators.
In terms of housing, a substantial minority of women in their early 60s will be living in houses which are not mortgage-free. Some are renters. We should not assume that housing costs do not loom large in their lives; nor other (non-mortgage) debts. Indeed people who are to some degree ‘free-lance’ workers will normally get through hard times such as pandemics and recessions by extending house-mortgages. Or they will take business risks, meaning debt; part of normal life for businesspeople. Rising interest rates can be particularly problematic for our under-resourced and unsung community leaders.
Women in their early sixties have traditionally played substantial roles in running and staffing the ‘voluntary sector’. Charities and the like become particularly important when communities – and countries, and the world – are going through economic crises. When the going gets tough, the tough women get going.
Equal Pay
Women in this age cohort have always had pay equality – equal pay for equal work – thanks to legislation passed in 1972, towards the end of Robert Muldoon’s first tenure as Minister of Finance. They also became beneficiaries of a recommitment to universalist public income support, with the advent of the Domestic Purposes Benefit. And, again thanks to Robert Muldoon, in 1976 Gen-J’s grandmothers became eligible in their own right for a significant universal retirement income from age 60; and, as ‘non-qualifying spouses’, for a lesser universal retirement income before age 60 when their older husbands turned 60. Life was looking better for Aotearoan women in the 1970s; as mothers, as workers, and as older citizens whatever the nature of their working-age contributions might have been.
Despite the Equal Pay Act of 1972, women’s wage and salary earnings remain significantly lower than men’s. The reasons for this are substantially what statisticians call ‘the composition effect’. One composition effect relates to age and time-served; the age and experience attributes of female employees has always differed, on average, from those of their male colleagues. One significant issue here is that a new surge of inexperienced (mainly young) women gaining employment increases the overall gender earnings gap; this effect would be exacerbated if accompanied by a substantial departure of women in their 60s from their employed roles.
Another composition-like effect is that average hours worked by fulltime female employees are almost certainly less than average hours for fulltime males. Here it should be noted that, whereas the standard fulltime work-week is 37½ hours, people working 30 hours per week are still classed as fulltime workers. (Such people may be working four days at 7½ hours per day; others, especially workers with school-age children, may be working 6 hours per week over five days.)
While statistical analyses need to account more for hours worked by fulltime workers, another composition effect is the greater proportion of female than male employees working part-time; and it is likely that hourly wages for part-time work are lower on average than hourly wages for fulltime work. Also, regarding hours of work, it is entirely possible that men do more unpaid overtime for their employers, meaning that true male hourly wages may be being overstated. (Women almost certainly do more unpaid work than men, though probably not as much for their employers.)
Another composition effect is that of contractors versus employees. In human history, most workers have been contractors – self-employed, often casual, working on own account – rather than employees (who are bonded). The apex decade of the employee was the 1970s. Since then, there has been a growth in contractor labour, especially amongst older workers; and also more workers employed by sub-contractors. Earnings’ datasets have a systemic bias against self-employment.
The Employer Effect
The reason traditionally given for the male vis-à-vis female pay gap is that certain occupations are female dominated; and that there are employer biases as to why workers in female-dominant occupations are paid less on average than employees in male-dominated occupations.
Are systemic employer biases, if they exist at all, likely to be much different whether employers are male or female? Indeed, it is likely that female-dominated occupations are more likely than male-dominated occupations to have female employers, and we would be surprised if female employers have unconscious biases against female workers. (And we should note that ‘effective’ employers – hirers and firers – are often managers, employees themselves.)
The Government-as-Employer Effect
A version of the employer effect may be the most important composition effect of all. I understand that a substantial majority of female-dominated occupations have governments (central or local) as their effective employers. In most cases the government is not the direct employer; but government entities and government subsidies play crucial roles in the flow of wages to women.
An important distinction between government (and government entity) employers and private employers is a divergent approach to finance. In particular, private employers are expected to borrow and spend; to take risks, to fund and grow their enterprises by running financial deficits. Government employers have a completely different financial culture; in particular they are extremely deficit-averse, even in the face of the very low interest rates which predominated last decade. (This deficit-aversion – aka austerity – is commonly called ‘fiscal responsibility’.) Government employers, unlike private employers, claim that there is no money to pay workers more; they have very different relationships with their bank managers. And, as a consequence of their financial culture, governments create entities which separate governments, the effective employers of many if not most women, from the legal employers of those women.
Foremost among these entities are the organisations providing healthcare and education services. Two of the most important in New Zealand are Te Whatu Ora and Te Pūkenga. My focus here will be on the latter, while noting that most organisations in these sectors are in trouble, short of finance and short of labour. And, taking healthcare more broadly, we should add the Palliative Care sector and the Rest Home and Residential Care sector. And General Practice doctors.
Education Sector – Te Pūkenga
The education sector is made up almost entirely of ‘business and business-like organisations’ dependent on government funding. The smaller organisations are Early Childhood Centres. Bigger are the Primary Schools. Bigger again are the Secondary Schools, and then the Universities. Biggest of all is the new government behemoth – Te Pūkenga – which replaces a whole sector, the Polytechnic Sector.
Many would argue that the biggest economic challenge that New Zealand faces, at present, is labour supply; skilled, but not only skilled, workers. In this case, getting Te Pūkenga right, investing in skills’ education, is central to Aotearoa’s economic future. Yet the botched implementation of this underwhelming ‘flagship’ project gets almost no media coverage; and when it does the problems aired are almost entirely financial.
Te Pūkenga represent the sharp end of government financial retrenchment comparable with the closing down of Teachers’ Colleges during the Great Depression. (This is on top of a half-decade, the later 2010s, in which the two economic sectors showing the least employment growth were ‘education’, and ‘the media’.) At least with Te Whatu Ora, the public is invited by the media to evaluate its success on the basis of clinical outcomes, and not just on its ability to balance its budget. With Te Pūkenga the issues given public airing are almost entirely an inability to meet unreasonably tight financial targets; targets which create employment opportunities only to professional rationers.
Our main theme here, however, is the plight of women in their early-sixties. It so happens that the ‘Polytech’ sector is a substantial employer of older women, most of whom earn above the average female hourly wage. These are women whose personal circumstances will be such that almost all can relate to some of the challenges identified at the beginning of this essay.
It seems that the very-highly-paid men and women tasked by government to build Te Pūkenga as a ‘financially sustainable’ near-monopoly for skills’ education have been told by government that their proposals are insufficiently austere. Redundancies – potentially many redundancies – are in the wind.
Much of the coming attrition in skills’ education – whether the attrition is ‘natural’, or through artifice – will fall on women in their early sixties. Such attrition will aggravate the gender pay gap. But this big picture ‘macro’ impact pales into insignificance compared to the ‘micro’ impacts on many of these women, and on the people who depend on them.
Public Superannuation and the ‘Non-Qualifying Spouse’
In the New Zealand of 1984, women were well protected from financial distress. The country had high wage rates, and equal pay for equal work. (Price-adjusted wages peaked in New Zealand during the late 1970s.) In addition to National Superannuation (‘Super’), paid as of right to women on the same basis as to men, and regardless of their employment histories, many women could qualify early for Super (albeit receiving a lesser amount), as ‘non-qualifying spouses’. (There was at the time an egalitarian tax structure which clawed back substantial amounts of the universal Super being paid to those who needed it less.) There was also a Widow’s Benefit, a sex-discriminatory benefit which lasted into the present century; this helped a group of women in their fifties and early sixties, no longer spouses, who could not become ‘non-qualifying spouses’.
My story to tell here is about the fate of the ‘non-qualifying-spouse’ superannuation benefit. Although less so than in the past, a majority of households move into a ‘retirement’ context when men – most of whom are married, and to younger women – reach the age of 65. (65 is still commonly called the ‘retirement age’.)
From the 1970s until the 1990s, ‘Retirement age’ in Aotearoa New Zealand was 60; not 65. Before the 1970s, it was 65 for men and 60 for women. In the 1980s, in two steps the Labour Government dramatically cut the top tax rates which only higher-income-earners paid. Further, that Government introduced a quite different means to claw back Universal Super, as it was popularly called. They created a tax surcharge payable by Super recipients on their private earnings (above a threshold); Super became a ‘guaranteed’ income rather than a ‘universal’ income, making it increasingly an alternative to rather than a supplement to private income. The focus during the 1980s was to create low ‘marginal tax rates’ for people of working age, and to ‘target’ public income support.
In the 1990s, the National Government raised the ‘retirement age’ from 60 to 65. (This may have been an appropriate thing to have done during a period of labour shortage, but it was in fact done at a time of high unemployment, forcing labour supply to increase even more than usual at a time when labour demand was low. The usual effect of increased labour supply as a response to decreased labour demand is called ‘the Added-Worker Effect’.) Around the same time, National also held the referendums which led to proportional representation (multi-party government), a change which proved important to the full restoration of Universal Super.
Perhaps as a sop to those whose retirement aspirations had to be put aside, National created a ’55-plus Benefit’ which was widely interpreted as an unconditional unemployment benefit. Further, the option to receive early Super at a lower rate as a ‘non-qualifying spouse’ was retained. Then, during New Zealand’s first non-war coalition government since the Depression, superannuation was restored in 1998 as a fully universal benefit; the tax-surcharge was abandoned thanks to Winston Peters’ New Zealand First Party. (During the post-1984 stage of New Zealand’s economic history, neither National nor Labour have been keen on universal benefits; though both ‘major parties’ recognise that, for New Zealanders, universal benefits have been popular and undiscriminating.)
In 1998, the 55-plus Benefit was replaced by the ‘Community Wage’, a non-universal ‘Job-Seeker’ benefit. And the payment of Super to non-qualifying spouses of superannuitants had become, unlike Super itself, a means-tested benefit. Actually, it was worse than that. Not only would the non-qualifying spouse be subject to a means-test, so would the qualifying spouse. This meant, in practice, that many women in their early sixties were denied the option to be joint retirees; they would instead have to hustle in the labour market if they lost their jobs. Many would ‘serve time’ until they were 65, knowing that they would be more productive as volunteers or as small-business women.
But at least the non-qualifying spouse option was there, providing a degree of security to married women in their early sixties; married women without rich husbands. The non-qualifying-spouse benefit provided basic security in the event of an economic contraction.
Then, on 9 November 2020, even that was taken away, with barely a word in the press. This could not have happened had Winston Peters still been a part of government, as indeed he was from 2017 to October 2020. Instead we had, for the first time, a numerically female-dominated government – a majority Labour government with support from the Māori Party and the Green Party – take away, with indecent haste, the one remaining unconditional public income option that mainly benefited women. Even worse, for older unemployed women who prefer not to hustle for another job, their pensioner husbands continued to get their Super at the lowest rate, the ‘married rate’. If such an income-less woman leaves her husband, then the husband gets a ‘pay increase’, moving on to the top ‘living-alone unmarried’ rate. (She also is denied access to her Kiwi-Saver account.)
So now let’s consider the many older women employed by Te Pūkenga who are fearing redundancy before they reach pensionable age. Their circumstances might not be so bad in 2022; with labour shortages, most could probably find another reasonably well-paid job. Although having to hustle in the job market after having made substantial contributions in the education sector would be galling; especially given the many other things going on in many of their lives (as indicated above).
But at present the central banks of the world, including New Zealand’s own Reserve Bank, are doing their very best to create a recession; to induce an economic contraction in the belief that cost-pressures in today’s world can be magicked away through ‘monetary policy’. The Labour Market in 2024 will probably be very different to what it is today, with few opportunities for the soon-to-retire unemployed.
Even more important, the coming recession is going to require many community services – voluntary work, social entrepreneurship – for which this group of women have just the right set of skills. These are people who have been mothers and time jugglers; people who will be as well able as anyone to contribute to an easing of the ‘complex social circumstances’ faced by so many people today aged 15 to 50. (These younger people are the people who represent this decade’s new healthcare and educational challenges.) We are going to subject our older women to dole queues, instead of allowing them to supply the nuanced social capital that they would – if they could – be willing and able to provide.
Universal Benefits are particularly beneficial for older and younger residents
Since 1984, the Labour and National parties have spearheaded a movement to convert the mid-twentieth-century welfare state into a charity state in which Ministry people and people with government contracts provide the charity. This system of control and neglect works almost satisfactorily for many people, especially those in mid-career.
But, if we are to harness the full social and economic productivity of our under-25s and over-55s, we need universal supports, for them at least. We need our younger and our older people to be independent-minded risk-takers and social-entrepreneurs, not time-servers. Nor people jumping from one short-term employment contract to another, forever having to maintain polished résumés and flattering social media profiles.
If we cannot have a Basic Universal Income for all working-age adults, set at the level of a young adult’s unemployment benefit, then we should at least introduce an alternative tax code that achieves this outcome for people over 55 (and for people aged 18 to 25). Or, failing that, we could re-establish a ‘non-qualifying-spouse’ Super benefit, as an unconditional benefit payable to non-employed partners – aged 55 to 64 – of public superannuitants.
Conclusion
I have argued that governments of today and the recent past – governments, and government entities in which women may hold half the power – are particularly responsible for the present plight of older Aotearoan women of ‘working age’. In giving the example of undervalued senior polytechnic staff, I have barely mentioned the plights of older nurses, doctors, and school-teachers, and the many journeyman (and journeywoman) academics in our universities. These are all people who, for the most part, depend upon the government for their pay-cheques, and, if not appreciated where they are, could be released under conditions where they can be of value elsewhere, and without undue economic hardship.
Gen-J, despite their extraordinary range of skills, are now a governed rather than a governing generation; and a very large generation. In twenty years time, who will care about, let alone care for, those women (mostly single women by then) now in their early sixties?
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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.
