Strengthening America's Economic Future Means Raising Women's Pay

Raising the federal minimum wage would significantly improve the lives of millions, help to spur wage growth, and reduce the gender pay gap.

David Cooper is a senior economic analyst at the Economic Policy Institute.  His research areas include employment and unemployment, poverty, the minimum wage, and economic mobility.   (National Journal)

More than ever before, the welfare of American households is tied to the welfare of working women. In fact, the only reason we've seen any improvement in living standards for most U.S. households over the past 40 years has been more women entering the workforce. Were it not for women working more hours, the typical American household would likely be no better off, and potentially far worse off, today than 40 years ago.

From 1979 to 2007 — we look to 2007 because it was the economic high point before the most recent downturn and the deep recession — median household income in the United States grew by a paltry 18 percent. Meanwhile, productivity grew by roughly 65 percent. Moreover, the 18 percent household income growth was not because workers were being paid more, a just reward for that increased productivity. Instead, that 18 percent gain happened almost entirely due to women in American households working more hours. Annual work hours for married women increased over that time period by more than 45 percent, according to an Economic Policy Institute analysis of federal labor data. For married women in the middle of the nation's income scale , the increase was nearly 60 percent. (For comparison, married men's hours grew by 1.7 percent in total, 2.6 percent for men in the middle of the income scale.)

A 2013 study by the Pew Research Center found that in 40 percent of U.S. households with children, women are the sole or primary earners of income. This share has grown fourfold since 1960. Yet despite their increasingly central role as breadwinners in U.S. families, too many women continue to be paid far too little. Women still make only 83 percent of what men earn at the median; women are disproportionately represented in low-wage occupations; and nearly one in every three working women earns a poverty-level wage — far too little to support a family, White House and Economic Policy Institute analyses of federal data have found.

Those findings make it clear. One simple way that we could significantly improve the lives of millions, help to spur wage growth, and reduce the gender pay gap, would be to raise the federal minimum wage. The minimum wage today is worth 25 percent less than its value in the late 1960s. Had the minimum wage grown at just one-fourth the speed of productivity growth since then, it would now sit above $12 per hour.

My colleagues and I have shown that if the federal minimum wage were raised to $10.10, as Sen. Tom Harkin, D-Ill., and Rep. George Miller, D-Calif., have proposed, it would lift wages for nearly 28 million working Americans. Roughly 55 percent of these workers who would get a raise are women. And they're not just teenagers or college students, as is often thought. In fact, only 12 percent are teenagers. The average age of workers who would get a raise from such an increase is 35.

Of the 15.3 million working women who would benefit from a minimum-wage increase, 4.7 million are mothers with children under 18 — that's more than one of every five working mothers in the United States. (There are 2.6 million working dads with children younger than 18 who would get a raise as well.) What's more, about half of these working mothers who would benefit are single moms.

Imagine what it would be like to try to raise a child on an income as low as $15,000 per year. That's the base income earned by someone at today's federal minimum wage if they work full-time, year-round. Even if they're able to supplement that income with tax credits and government assistance, the challenge of trying to raise a child on such low wages is enormous. Not to mention that many low-wage jobs do not provide child care services, paid sick leave, paid family medical leave, or flexible work hours. All told, there are more than 14 million children who have a parent who would earn more if the minimum wage were raised to $10.10.

Of course, opponents of raising the minimum wage claim that raising the wage floor will do more harm than good, forcing businesses to reduce staff or cut hours. But rigorous peer-reviewed research synthesized by think tanks such as the Center for Economic and Policy Research and the Economic Policy Institute has shown again and again that modest increases in the minimum wage, such as the proposed increase to $10.10, have little to no effect on employment. Even the Congressional Budget Office concluded that the policy would be beneficial for 98 percent of affected workers. How often do we have a policy option available to us that will benefit 98 percent of the affected population at essentially no cost to the government?

Some will also argue that government programs, such as the Earned Income Tax Credit or the Supplemental Nutrition Program for Women, Infants, and Children, are a better way to target assistance to women and families in need. These programs play a critical role in reducing poverty and protecting the welfare of struggling families, but we can expect government and taxpayers to do only so much. Income from work has always been and should continue to be the core of improving people's living standards. With corporations today earning record profits, we should expect the private sector to do its fair share to improve the lives of working families. Simply raising the minimum wage to where it was 45 years ago seems like more than a reasonable request.

If we want to ensure a brighter future for American households, we have to enact policies that will support broad-based wage growth. This is our strongest tool for preventing the growth of inequality, reducing poverty, and growing the middle class. Raising the minimum wage will not solve America's wage problem, but it would be a significant step in the right direction. And it would strengthen incomes for millions of working women who are the foundation of many households' economic well-being.

David Cooper is a senior economic analyst at the Economic Policy Institute. His research areas include employment and unemployment, poverty, the minimum wage, and economic mobility.