Through a Gendered Lens
April 17, 2019
With Responses From
Apr 17, 2019
5 Min read time
Using a gendered lens provides a new interpretation.
Richard Freeman's analysis of why we should be concerned about growing inequality in the United States and his suggestions for what we can do about it are good starting points for discussion, but looking at the same issues through a gendered lens provides a different understanding of the same phenomena and several alternative policy directions to explore.
For example: In discussing the growing inequality in earnings, Freeman stresses declining real wages for the majority of men, especially men at the bottom, since the mid-1970s. He mentions in passing that women were the only low-earning group who saw their real wages rise. (Actually, women's wages have fallen at the very bottom, too, but for most women they rose, and thus they rose on average.) During the 1980s, the wage gap between women and men closed by about 10 percentage points-from a gap of 40 percent at a ratio of 0.60 (women's earnings to men's) to a gap of 30 percent at the current earnings ratio of 0.70. The gap closed both because men's real wages fell and because women's real wages increased.
While earnings inequality was increasing among both women and men (though more among men), the addition of women's earnings to family income helped to equalize the income distribution among families. Thus an important, though unmentioned, way to reduce inequality among families in the United States would be to continue to bring women's wages up to men's. Not only would achieving pay equity increase fairness for individuals-perhaps increasing their faith in the markets Freeman reveres-it would also serve to reduce poverty significantly, especially the poverty of our poorest families: those headed by women alone. Such families now account for 24 percent of all families with minor children and 60 percent of all poor families with children. The set of policies Freeman proposes, though worthy of further exploration, would do little to address the specific needs of these families. The social welfare policies of the European states, which Freeman seems ambivalent about (on the one hand he disparages their social insurance, tax-transfer base; on the other he lauds their tendency to shift resources towards the early years) do address these needs. More on this point below.
Let's consider why women's earnings rose. In doing so, we can see both the advantages and the limits of one of Freeman's proposed strategies, equalizing human capital accumulation through educational opportunities. At least partly as a result of federal legislation such as Title IX, women are closing the educational gap between themselves and men; more women than men are now graduating from college and earning masters' degrees. And there's no question that their more rapid accumulation of human capital contributed to the narrowing of the wage gap noted above. Yet women's earnings, at 70 percent of men's on average, still lag far behind. Without effective anti-discrimination measures in the labor market to monitor how the race is run, the starting-gate equality Freeman stresses won't lead to the results we want.
More generally, Freeman's endorsement of the marketplace as the sorting and rewarding mechanism for us all must give those of us who fare less well in the market substantial reason for concern. While Freeman may be right that the ascendancy of free-enterprise conservatives in US political life behooves all of us to look for the equality-enhancing opportunities in market-oriented policies, I hope that at least some progressive economists (and others) will train their sights on market failure and the ways in which we must regulate markets to help them come closer to achieving their theoretical efficiencies. If, as has been said, markets come out of the barrel of a gun, then it would be difficult to isolate markets and market outcomes from the underlying distribution of power.
The only challenge to the present distribution of market power endorsed by Freeman is the union movement. A good choice, but not sufficient (though it is true that now that unions have become more inclusive in their membership, they help women and minority men as much as, if not more than, their traditional membership of white men). A strong government and rational, reasonable regulations are needed to control the worst excesses of capital and of markets run amok. And income transfers, taxes, and government programs are needed when markets can't or won't work.
Transfers deal with a fundamental problem of market capitalism: some people don't have enough dollar votes to buy what they need to survive, and especially not to survive at a level beneficial to society as a whole. (I'm not sure why Freeman thinks there will be less resistance to assets transfers than income transfers, and I note he proposes to fund the transition with taxes.)
Taxes and government programs are necessary when the operation of markets won't result in a socially optimum outcome, the classic example being defense. As Jesse Jackson was fond of asking during his presidential campaigns: How many of you have Cruise missiles in your back yard? (No hands up.) Now, how many of you have VCR's in your homes? (Lots of hands.) Jesse was actually illustrating something else (that the US produces what no one wants, while Japan produces what everyone wants) but his point applies here as well: if you buy a missile it will also protect me, and I won't have to pay; but if nobody buys one then we won't have enough defense. There's some evidence to suggest that, on average, parents don't buy enough goods and services for their children even when they have enough dollar votes. (And since we expect less and less that children will take care of us when we are infirm, why is such spending rational anyway?) So societies use taxes to transfer resources from adults to children, in support of public education, for example. In the United States, the share of income taxes paid by corporations has fallen, while that paid by individuals and families has increased. Perhaps corporations can pick up more of the tab for children.
A much greater investment in children-free, universally available child care, more health care, and income support when needed-is warranted, then, for many reasons. Paid family leave for working parents is another way to shift resources to the benefit of the young. A recent study by the Institute for Women's Policy Research shows that a program providing up to 12 weeks of paid leave (for the same reasons that many workers are now entitled to unpaid leave under the 1993 Family and Medical Leave Act), if all employers were required to participate, would cost about the same as our current unemployment insurance system. Programs such as these would help all families with children but would do most for the poorest and for single parents who lack a spouse for back up child care or income support.
Many social insurance programs work well. Medicare and Medicaid, for example, have very low administrative costs compared to private health insurance plans. Let's look twice before we abandon tried and true income-based vehicles for the asset-based schemes of academic economists.
I fear that Richard Freeman's "ideal virgin capitalism" will somehow wind up screwing us all.
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April 17, 2019
5 Min read time