The Wage Gap Persists: Teachers, Pensions, and Women in the Workforce

Kirsten Schmitz and Chad Aldeman
Publication Date: 
March 8, 2018

Statewide defined benefit pension plans, which today serve 90 percent of public school teachers, were originally justified on the grounds that pension plans were ideally suited to the needs of long-term female employees. They had all-or-nothing provisions such that a 19-year veteran got nothing, but a 20-year veteran earned a comfortable, although certainly not lucrative, retirement. Over time, teacher pension plans have improved somewhat, but they are still heavily tilted toward long-term employees.

However, this back-loaded structure no longer aligns with the opportunities available to women or to the modern realities of retirement. In our new report, "The Wage Gap Persists: Teachers, Pensions, and Women in the Workforce," we set out to explore whether pensions are indeed uniquely designed to support the needs of women by examining a data set of Nevada retirees. We found the following:

  1. Nevada educators, who are overwhelmingly women, lose out by being in the same pension plan as non-educators. On average, newly retired educators draw pensions that are worth $4,000 less per year than that of their non-educator peers. On a cumulative basis paid out over their lifetimes, Nevada’s educators will collect benefits that are, on average, worth $88,000 less than that of non-educators.
  2. Even among educators, Nevada’s female retirees worked slightly longer and retired slightly later than their male counterparts.
  3. Women’s extra longevity, on average, makes up for some of the salary gaps, but they’ll have to suffer from years of lower salaries and lower pensions to make up the difference. In fact, after adjusting for the time value of money, a typical Nevada female teacher must live past 82 to finally catch up to her male colleagues.

While this report is based on data from Nevada, there are implications well beyond the state’s borders. Every state lumps the female-dominated teaching profession in with male-dominated administrators, and Nevada is one of the 23 states that also lump the female-dominated teaching profession in with male-dominated non-educators.

The structure of defined benefit pension plans exacerbates these differences and does little to address large gender disparities in salary and roles. Examining the teachers’ years of experience, salaries, and pension benefits in this Nevada data set indicates that traditional pension systems do not benefit all women universally, and in fact, they leave many without secure retirement savings.

At their origin, teacher pensions were intended to support the needs of women. And for some women, they still work very well. But due to the way pensions are structured in Nevada and many other states, those plans also amplify salary-based pay gaps between men and women and educators and non-educators.

Download the full report below.