Income inequality has been rising at an alarming pace since the 1970s. But things would have been far worse if American women hadn’t entered the workforce and significantly increased their earnings.
A new analysis from the Center for American Progress (CAP), which houses ThinkProgress, finds that between 1963 and 2013, income inequality among the bottom 95 percent of married couples increased by nearly 25 percent. Yet without a concurrent increase in women’s earnings, which rose fivefold over the same period, inequality would have grown more than 50 percent faster, rising instead by 38 percent. “This analysis shows that married women’s rising earnings have been a critical countervailing force against the growth of income inequality over the past 50 years,” writes Brendan V. Duke, who produced the analysis.
The analysis builds on a paper in 1998 from economists Maria Cancian and Deborah Reed, which measured the impact of an increase in wives’ earnings on inequality between 1979 and 1989. They compared the actual data to a counterfactual in which married women’s earnings didn’t change at all after 1979, finding that inequality would have grown about 28 percent faster. Economist Susan Harkness also conducted research that used data from 2004 to compare a hypothetical in which no American women worked and all of them worked, finding that if no women worked inequality would be 63 percent higher, whereas if all women worked it would be 22 percent lower.
Things could be even better, of course, if women were making greater gains. They made huge gains in their average earnings between 1960 and the late 1990s. But since then their earning growth has been all but stagnant, as has progress in closing gender wage gap.
One culprit is the flagging number of women joining the workforce. American women made huge strides in entering the labor force between the 1970s and 1990s, but their ranks have begun to flatline since then. Women’s labor force participation rate was 74 percent in 1990, enough to rank us at number six among developed countries, but since then the rate has only inched up to 75.2 percent. Yet other developed countries have continued to grow the female portion of their workforces, dropping us to number 17.
“The positive effect of women’s increasing earnings contribution on mitigating the growth of income inequality, though considerable, could have been larger still if American women’s workforce participation in recent decades had increased on a level consistent with that of other advanced industrialized nations,” writes Judith Warner, senior fellow at CAP and author of the report on the new analysis. “Making that a reality, however, would have required a very different policy environment.” Economists Francine D. Blau and Lawrence M. Kahn have found that a big reason that the U.S. has been left behind is because there is no guarantee of paid maternity leave, little support for flexible schedules, and not nearly the same level of spending on child care.
That could hold a clue for one way to address the growth of income inequality: pass policies that make it easier for women to enter and stay in the workforce such as paid family leave, accessible and affordable child care, and other supports such as paid sick days or scheduling reform. The CAP paper comes on the heels of another from the Brookings Institution finding that while changing the tax code so that it no longer so overwhelmingly favors the wealthy would reduce income inequality, the effect is not enough to reverse course on its own. We’ll need other solutions too.