The Economic Argument for Raising Women’s Pay

About Mariya Strauss

As Amy Traub’s recent DEMOS report shows, women working in the retail industry face stark choices. A typical wage of $10.58 per hour in that industry means women must often choose between buying groceries or paying the electric bill. Traub writes, “if present trends continue, there will be 4.1 million American women working in low-paid retail jobs by 2025—a population larger than the entire city of Los Angeles.”

The situation for these millions of low-wage working women is dire. But why should the rest of America care? What reason is there for someone who is not working and struggling in poverty to take action on behalf of these working women? Many writers on the Left are failing to make the economic argument for raising women’s pay.

This failure is contributing to delayed action on the policy front, and is prolonging the poor conditions that many are enduring in the wider economy. The failure to properly show how depressed wages for some workers contribute to a depressed economy for all is akin to climate writers failing to point out that a coal-fired power plant that pollutes the air is contributing to the melting of the polar ice caps. It is not something people can easily observe, but once it is pointed out, they can’t un-know it.

Fortunately, the Shriver Center’s 2014 report, which uses 2012 data from the Institute for Women’s Policy Research (IWPR), can help to make this broader economic argument for raising women’s wages.

14x As Effective As Federal Assistance Programs

From the IWPR: “The total increase in women’s earnings with pay equity represents more than 14 times what the federal and state governments spent in fiscal year 2012 on Temporary Assistance to Needy Families (TANF).”

In other words, bringing women’s wages to a level on par with men’s wages would result in a transfer of 1400 percent of the amount spent on public assistance programs directly into families’ wallets. The return on investment will be much better than that of public assistance programs, too, since better wages don’t come with the time limits and strings attached that TANF does, and that severely limit families’ ability to escape poverty.

Overall Economic Growth

“The U.S. economy would have produced additional income of $447.6 billion if women received equal pay; this represents 2.9 percent of 2012 gross domestic product (GDP).” When GDP grows, if you own a small business, or run a coffee shop or a summer camp or a real estate company, you’ll have more customers walking in the door with money to spend.

Reducing Poverty

“The poverty rate for all working women would be cut in half, falling to 3.9 percent from 8.1 percent. The very high poverty rate for working single mothers would fall by nearly half, from 28.7 percent to 15.0 percent, and two-thirds would receive a pay increase.” Like Dorothy with her ruby slippers, the US doesn’t need a Wizard to eradicate poverty for half of all working women. It has the power to do so already—by mandating equal pay.

Increased Tax Revenues

Women who make more will also pay more in taxes, to be used for police, fire, trash collection, schools, and other county/city services that make communities safer, improve kids’ chances for success, and raise the quality of life. At present, much of that revenue has been drained away by tax breaks given willy-nilly to the same corporations that are employing women at poverty wages. The watchdog group Good Jobs First has tracked many of these public subsidies and tax breaks, and has built an online tool that taxpayers can use to see which corporations are taking public dollars.

Taxpayers and voters should demand of policymakers that they give women a raise and start letting all of these potential earnings–earnings that belong to everyone–flow into the economy. Additional research is also needed to provide a more robust economic argument for raising women’s wages—one that no right-wing Congressional hearing can puncture.

Not Waiting


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Click to enlarge

New research out this month from the Center on Economic and Policy Research (CEPR) shows that working women aren’t just waiting for politicians to give them a raise. They’re joining unions and demanding a raise. The graph on the right from CEPR’s Janelle Jones, John Schmitt, and Nicole Woo shows that women are on trend to become a majority of union members by 2030. Despite the well-documented decline of traditional unions’ membership thanks to conservative attacks, women’s steady climb to overtake men within unions could yield some beneficial results for all of us as their voices grow more dominant in collective bargaining, strikes, and policy debates.

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Mariya Strauss is PRA's former economic justice researcher and a former guest editor for The Public Eye magazine. A Maryland-based freelance writer, her investigative journalism and commentary have been published in The Nation, at the GlobalComment blog, and The Public Eye magazine, among others. You can follow her on Twitter at @mariyastrauss.