Few debates about inequality address the differences between single people and couples. When economists and politicians discuss part-time work and dwindling pensions, they only discuss people’s careers, not their private lives.
“If a society has more single people and single parents, the number of households with little money inevitably rises, which then in turn has repercussions on inequality statistics,” says Stefan Kooths. The leader of the Forecasting Center at the Institute for the World Economy in Kiel estimates that inequality increased by 10 to 30 percent between 1985 and 2005 because of the trend of smaller households. “The state can’t judge these kinds of personal decisions and can only partly offset them.”
The Bertelsmann Foundation warned before the election that old-age poverty is going to rise dramatically until 2036 if politicians don’t act. Discussions focused on job insecurity and long-time unemployment in former East Germany, but the study pointed to separations as a main cause of poverty among pensioners. Single women are most at risk of becoming poor in their twilight years, with the probability growing from 16.2 percent today to 27.8 percent in the foundation’s forecast.
It is also a topic in the ongoing coalition discussions: The Christian Social Union, the Bavarian sister party to Angela Merkel’s Christian Democrats, has pushed improving pension payouts for mothers since 2013, which would cost €7 billion. If the discussions continue as four years ago, the coalition would raise the pensions of all women who had children before 1992 by €28 euro per child per month. But it doesn’t help very poor women, because pensions are tied to Hartz IV, the minimum level of welfare support. And much of that money would flow to people who are already well-prepared for retirement, perhaps with pensions from former full-time jobs.
Single parents and their children are the social group most at risk of sliding into poverty.
Economists also talk around the importance of household size in their analyses, wrote Marcel Fratzscher, president of the German Institute for Economic Research, in his recent book about inequality. The federal government’s annual report on poverty and wealth names single parents and their children as the social group most at risk of sliding into poverty.
The debate in the United States among economists and sociologists has focused more on the effects relationships have on income. The old trope of the doctor marrying a nurse or the manager marrying his secretary has been replaced by marriages of economic equals. Bill Clinton met Hillary Rodham in a university library, for example. Without that change, sociologist Jeremy Greenwood says, the difference between rich and poor in the US would still be as small as it was in the 1960s. In Germany similar research is still developing.
If economists and politicians would recognize this connection, many debates would go differently. Like the one regarding unequal living conditions and income levels between Eastern and Western Germany. In the West, the Baby Boomers going into retirement often have two full pensions plus additional savings and inheritances. Their Eastern counterparts, however, are described as Wendeverlierer, the losers of reunification, people who have been unemployed for a long time and expect little of their pensions.
That hasn’t always been the case, however. When the Wall first fell, married retirees in the East actually had higher incomes than in the West because almost all women worked in the years of the Socialist GDR, which wasn’t the case in the conservative West. Yet the difference in buying power between West and East is going to continue to grow, 27 years after Germany’s reunification.
Elisabeth Niejahr is chief reporter at WirtschaftsWoche, a sister publication of Handelsblatt Global. To contact the author: email@example.com.