Academic journal article AEI Paper & Studies

How to Improve Economic Opportunity for Women

Academic journal article AEI Paper & Studies

How to Improve Economic Opportunity for Women

Article excerpt

Key points:

* American women have made significant progress in the labor market over the last several decades, but many working women are still struggling with challenges related to child care, single motherhood, low-paying and low-promotion jobs, and an unfair tax code.

* In particular, high child care costs cause women to leave the workforce or take lower-paying jobs with less-demanding hours. Reforms to existing child care credits would increase professional opportunities, especially for low-income women.

* To improve economic opportunity in America, we must critically examine any and all factors that could hold back more than half of the population from full economic opportunity.

American women have made astounding progress in the labor market over the last 60 years. From 1950 to 2011, women's labor force participation nearly doubled from 33.9 percent to 58.1 percent. (1) Daughters' wages grew relative to their mothers' and relative to men's. In 2014, women's median wages were approximately 50 percent higher than what women earned a generation prior. (2) Women earned 82 percent of what men earned in 2011, up from 62 percent in 1979. (3) Bolstering these trends was a dramatic increase in women's educational attainment. As we write this paper, women now outnumber men in earning every type of college and advanced degree--associate's, bachelor's, master's, and doctoral. (4)

It is tempting to end the story here. But in the shadow of this success, millions of working women are struggling. Women continue to hold the majority of low-paying jobs, constituting 64 percent of minimum-wage earners. (5) A significant gap between male and female earnings remains. Women are twice as likely as men to work part time. (6) Work disincentives in government benefits and high marginal tax rates on secondary earners disproportionately affect women's labor supply, often causing them to leave the workforce or scale back the hours that they work. (7) Across nearly every income quintile, women have a higher likelihood than men of being downwardly mobile, according to research by Brookings. (8)

Economic risk is amplified for unmarried mothers, who constitute roughly a quarter of US households. Families led by an unmarried mother earn roughly $23,000 per year--a quarter of the median family income of married mothers, according to Pew Research. (9) This is barely above the poverty line, making it difficult for mothers to provide for daily needs or child care, let alone invest in human capital for themselves or their children. Hoynes and colleagues found that the rise in single motherhood may entirely explain the increase in poverty in the US from the 1980s to 2004. (10) Chetty and colleagues found that single motherhood is a very strong correlate of low intergenerational mobility, much more so than income inequality, education, or racial segregation. (11) Kearney and Levine found that the perceived and actual lack of economic opportunity may be the reason so many young girls choose single motherhood in the first place. (12)

Policies are needed to economically empower women in America and address the unique challenges that many working women face, such as child care costs, low-paying and low-promotion jobs, an unfair tax code, and single motherhood. In this paper, we begin by addressing problems currently facing female workers before discussing current solutions and their flaws. Lastly, we put forth policy proposals to begin the conversation on how to support women and help them create better lives for themselves and their families.

Problems Impeding Female Economic Opportunity

High child care costs, low-paying and low-promotion jobs, the structure of numerous tax and benefit programs, and raising a family on a single income are just a few of the economic challenges that disproportionately influence women. These factors reduce the rewards of women's work and limit their workforce participation and advancement. …

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