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Reader Chris Fawcett writes in with an intriguing question: How did the women’s liberation movement affect the income gap in the U.S.?
Income inequality has been on the rise in the U.S. since the 1970s, roughly the same time that women began entering the workforce in large numbers. Considering the amount of attention the widening income gap gets these days as a source of our economic woes, it seemed like something worth posting.
Here’s how Chris sees the issue:
There are a number of ways I believe this has had a big impact (maybe the biggest impact of any single issue):
1. Women’s participation in the workplace has doubled in the past half century.
2. The divorce rate has increased steadily in the past half century.
3. It is more socially acceptable to not have children (through choice or abortion).
4. People are getting married later in life.In relation to the commonly used CBO “household” income numbers, I think these issues may have had a huge effect on the perception of the widening income gap as follows:
Women’s lib has created more dual income households among married couples while simultaneously enabling and encouraging women to be in single-earner households. This has a drastic effect on household income levels and it’s in a 2-1 trade off in household numbers. For every household that could be dual-income that either breaks up or never gets together, you replace it with two single-income households at a lower income level.
I think women’s lib was generally a good thing for society, but this seems like in unobserved consequence that most people do not understand.
For evidence, Chris points to the following data points:
1. Stats at the U.S. dept of labor show a doubling of women laborers in the last 50 years.
2. This chart showing the number of earners in the various income ranges
3. The number of divorced people quadrupled between 1970 and 1996, from 4.3 million to 18.3 million.
The most important bit from the chart is the info on how households and income correlate. For obvious reasons, married couples are disproportionately represented in the upper income brackets, whereas both single male and female earners are concentrated toward the bottom. Chris’s point is that the rise in households headed by single working women over the last three decades has artificially widened the income gap by reducing the number of dual-earning married households, and increasing the number of low-earning single households. After dividing out the major quintiles to adjust for the number of earners per household, Chris comes up with the following breakdown:
Household Income Individual income
Q1 12,500 22,894
Q2 37,500 30,562
Q3 62,500 36,960
Q4 87,500 44,014
100k-250k 175,000 87,500When you adjust to show individual incomes, the income gap is only $65k, not $160k.
Interesting exercise, but is it right?
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Another important thing to note is that a move towards gender equality also means that men and women are looking for partners of a similar education and income level now. Earlier, men were probably way more likely to marry women outside of their income group, spreading a little more money around to not just her but her family. Today, equality makes it more likely that money/education will marry/couple with money/education.
That being said, I don’t think a return to gender inequality is the solution to this issue.
Well-loved. Like or Dislike:
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I just wonder if he’s actually adjusted for what I call the ‘maternity gap’ – which tends to drag womens’ wages down because of absence from work for childbearing. We should compare childless women vs. moms- I’ll bet that the ones w/o kids are at or near parity with their male peers. I seem to recall somewhere that unmarried childless women in certain fields (like technical ones) are actually making more than their male peers.
And let’s not forget the downward pressure and loss of value to EVERYONE’s wages in the last 30 years. My father was the sole earner in our 5-person household in that ‘sweet spot’ in the 60s and 70s where money actually bought more. After 1980, that pretty much vanished. The irony is that I make twice as much as he did at his peak, but my money only buys half as much. (and my home cost me three times what he paid.)
Well-loved. Like or Dislike:
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There certainly is a “maternity gap”, but I would also be interested in research on a “negotiation gap”. In my experience as an employee and employer women are just much less willing to negotiate hard when it comes to compensation.
Some of this might be insecurity about their perceived options, but I think a lot of it is ingrained sociobiological roles about competitiveness and willingness to precipitate confrontation.
My wife and I work in similar positions in similar industries. When I get offered a 3% raise I say “I know I am worth more to you,I’ll walk if you don’t give me 6%”. And then I’ll get something like like 5%. When my wife gets offered a 3% raise she says “Thank you” and goes on her merry way. Ditto with hiring, male employees frequently make a counter offer and often get it, female employees are much less likely to make a counter offer, and this is an industry that is more than 60% women.
The difference between a 3% raise every year and a 5% raise every year for someone making $40,000 is like $20,000 after 15 years. This also might be part of the reason (apart from the obvious one of being concentrated in old-economy industries) men tend to get hit harder by layoffs…they slowly become less affordable.
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Yech! Like or Dislike:
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Just a thought, but shouldn’t household income for the “traditional” male breadwinner, stay-at-home mom household properly be divided by two?
Well-loved. Like or Dislike:
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My thoughts exactly. Who cares if per-household income is down if per-person income is up? Just because households are getting smaller and more numerous does not mean that total income is down.
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Households enjoy some economies of scale (you don’t need to buy a TV or a sofa for each person under one roof). People get more utility per dollar earned in a household. If you’re a household of 1, then you’re on the hook for everything.
An interesting next step may be to look at the impact on women’s lib on the effect of extended male adolescence. If women are getting married later in life, do more men extend their college days by getting roommates, and living like they did at the frat house, while they’re working?
Well-loved. Like or Dislike:
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Because of that, I think it would be interesting to see how household expenses impact the disparity as well. More single, low income households would probably have even less money factoring in their higher relative expenses.
I don’t think that “divide by two” is the right adjustment. A homemaker (because back in the 50s, the wife of a well-paid man didn’t work even if they had no children) is not really significantly supporting the income-producing activity (at least, not to the extent of 50%). A stay-at-home parent is contributing far more, but even that might not be 50%.
Additionally, this suggests one of the possible differences in our dataset: Imagine a young couple shacked up together. In the 1950s, they would have gotten married. Is our modern unmarried couple “one household” or “two households” in this data? If they’re using tax returns as a major source of their data, then that’s “two” when it would have been “one” fifty years ago.
Finally, it’s worth finding out whether this data includes senior citizens. We’re much older than we used to be, and retired people have relatively low incomes that don’t tell you anything about current workforce equality.
Well-loved. Like or Dislike:
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There are many factors that explain the gap that have nothing to do with women’s lib. Productivity is a major component.
Computers destroyed the “stand here and turn this screw” jobs.
A college education is required if only because everyone else has one.
Technology means call-center jobs in India.
Lack of industrial work has further depressed earnings for the unskilled.
Also, increasing the number of participants in the labor force reduces the cost of that labor (wages). Simple supply and demand.
Here is a deeper philosophical question: hypothetically, if an omnipotent being offered you the choice of quadrupling national quality of life and happiness, but we no longer had freedom of speech or the right to vote, would you take it? If not, what level of happiness would you require to trade off these rights?
There are a lot of positive trends too.
Adjusted for inflation most goods are wildly cheaper.
Technology has created whole new types of utility and made pre-existing ones vastly cheaper.
What would an Ipod be valued at in 1950? The GDP of a small nation? Now its $75. Hell in 1990 I bet you could have sold them on a high end market (assuming an infrastructure to interface with them) for $25,000 a pop. The internet in its current form? In 1950 that would have been priceless. Now it is maybe $100/month for access + device.
I would much rather have 2010 income and access to 2010 goods then 1950 income and access to 1950 goods, even from behind a veil of ignorance, even if you could make it so I wouldn’t know what I was missing in 1950.
I have an objectively worse job then my grandfather had at my age (1959). At the same time despite my lower relative income and my wife’s need to work, we have a better and larger house then he at our age, and access to much much better consumer goods.
Sure my income hasn’t kept up with inflation, but only if you measure my income in dollars themselves instead of what those dollars get me.
Well-loved. Like or Dislike:
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All great points and indeed I agree. The measurement of the gap is strictly in dollars, so my explanation was more to that effect. But yes, I definitely agree with your point.
The lowest income earners today have a standard of living SUBSTANTIALLY higher than any other generation before them. The poor have cell phones, video games, they generally have a car, and most have the internet. So that is one thing to consider when looking at the wage gap.
“Adjusted for inflation most goods are wildly cheaper.”
But other goods are considerably more expensive. Land, for instance, especially that which would be considered to have access to open space.
Land is subject to supply and demand too. As the population has increased in this country, the values have increased, even without inflation or the housing bubble.
How exactly would there be ANY quality of life if we didn’t have freedom of speech? That’s an inane question.
It seems clear that women’s lib resulted in a lower individual wage as the number of workers increased, the marginal utility of each decreased. By now this increase has stabilized and individual wages are going back up though.
I think the numbers are interesting, but much of the rise in income inequality over the past 3 decades is due to the increased growth in incomes by the top 5%.
It is funny to me how economists will argue that women entering the work force do not lower wages. By the same token, they point to the huge wave of immigration that has occurred over the past 45 years and argue that it also didn’t lower wages.
How can this be, how can adding millions of people to the labor force not lower wages. After all when all these people enter the workforce it had the effect of greatly increasing the supply of labor. The law of supply and demand dictates that as the supply of a product / service increases the price decreases.
For those that argue that it is changes in technology that have led to lower wages need to consider the following labor statistics. Prior to 1970 the wages of high school drop-outs kept up with and exceeded inflation. Then in 1970 their wages failed to keep up with inflation, after 1970 you needed at least a high school diploma to keep up with inflation. In 1980, another switch has taken place, now it took not simply a high school diploma but also some additional training. In 1990, those with a high school diploma and some training got left behind and only those with college degrees kept up with inflation. The last change took place in 2000, beginning in 2000 even those with college degrees and some professional training failed to keep up with inflation.
During this time though GDP continued to grow, and yet a smaller and smaller group has benefited from this expanding GDP. The question is what can be done about this? Clearly the liberal policies of the past have not worked, and the current conservative policies seem to be exacerbating the problem.
Regards,
Joe Dokes
Damn women and immigrants, keeping the white man down!
Hot debate. What do you think?
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“How can this be, how can adding millions of people to the labor force not lower wages.”
Because the demand for labor is not set in stone. More people coming in means more demand for services. At a certain level there would be no difference in net jobs gained (from the increased demand for services) and the net wages lost (from an increased supply of labor). If 100 more people moved onto Gilligan’s Island, there would be more jobs in cocnut radio manufacture than there were with just seven.
Yeah, the number of jobs is not static for the reasons you cite, but people who come here probably aren’t adding to demand as much as they are adding to the labor supply. As for women, I don’t know how that would work out. Someone would have to run the numbers.
“I think women’s lib was generally a good thing for society, but this seems like in unobserved consequence that most people do not understand.”
I’m sorry but what? You THINK it was a good thing?
Hot debate. What do you think?
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This is not a religious discussion, we are trying to do science. Please take you’re demands for unconditional faith in the cause somewhere else.