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When Student Loans are the Only Way to Pay for Child Care

A Student Parent’s Story of Balancing School, Parenthood, and Debt

by Andrea Fitch

Andrea Fitch

Andrea Fitch

I. Deciding to Go Back to School: “We needed to be a dual income family.”

When I first learned I was going to be a parent, I was overwhelmed with a combination of joy and nerves. I was ecstatic to take on the journey of parenthood, but I had not realized the high cost of essentials, such as diapers, formula, strollers, and, especially, child care. I wondered how it would all work out.

I was fortunate to have my husband and father of my children along with me throughout my journey of parenthood. But even with a partner, it was difficult to meet our children’s basic needs. My husband worked a seasonal job in the landscape industry, and being a stay-at-home mother was never an option for me. We needed to be a dual income family. But with both of us working full-time, that also meant we needed to secure full-time child care.

After four years of struggling to pay for basic needs and child care, it became clear that high school degrees and the limited career fields they offered would not be enough. We knew we needed better paying jobs and that the way to achieve this goal was through higher education. With the support of my husband, I began a new journey: obtaining a bachelor’s degree.

II. Going to School Full-Time Still Requires Full-Time Child Care: “My only option was to take out more student loans.”

I reduced my work hours from 40 to 32 per week and started school part-time at a community college. Doing so allowed me to keep our health insurance and maintain our child care spots. But after one year, I was offered a significantly large scholarship that would extend throughout my graduation on the terms that I attend college full-time.

Quitting my job to attend college full-time meant that our monthly income would be dramatically reduced—but we still had the same expenses, including child care. Someone had to watch the kids while I was at school! I supplemented resources using public services such as Medicaid and SNAP. At the time—in 2010, when state economies faced many budget cuts—the Colorado Childcare Assistance Program (CCAP) was on a freeze and child care resources were not available. There just wasn’t enough money for all families in Colorado that needed the assistance. I needed to find an alternative way to pay for child care, which at the time averaged about $800 per month through a home care provider.

Although the college I attended had a child care facility on campus, there was a long waiting list and most of the spots were taken by faculty and staff at the university. Furthermore, the cost of the on-campus child care facility, which would have been the most convenient option, was more than our family could afford. My husband’s paychecks went to rent, cars, gas, and other needs public assistance services couldn’t provide. My only option was to take out more in school loans to pay for child care.

The logistics of sorting out child care arrangements were time-consuming and often stressful, but eventually, I found reliable, affordable child care for the kids while I was at school or studying. I was also grateful the kids were not in harm and loved the people they spent time with when I couldn’t be around. I had earned a 4.0 GPA my junior year and made the Dean’s list. Everything seemed to be working out as I progressed through my journey to a degree. This felt like a huge accomplishment for someone who thought a college degree was impossible.

But beyond all this joy lurked a new reality: paying back all the student loan money I borrowed. For two years, I took out additional money from my school loans to pay for child care—and the money was adding up.

III. Dealing with Debt: “Half of my school loan debt was due to child care costs alone.”

By my senior year, I had earned 5 scholarships and various grants, which was enough to fully fund my senior year of college. I was relieved that I didn’t have to take out extra loan money to pay for school fees, but these scholarships and grants did not cover child care. To get through my senior year and graduate, I had to take out more student loans just for child care.

After graduation, I was glad to have achieved a goal that would benefit not only me as an individual, but also benefit my family and our future. A few months later, however, the reality of my student debt began to sink in. My total school loan debt was near $30,000, a rather small amount compared to other graduates, but I still hoped it would be less due to the size of the scholarships and grants I had received. Then I realized that half of my school loan debt was due to child care costs alone. As I stared at the numbers my only thought was, “My school loan debt would be so much less if I didn’t need childcare.” I often wonder how much more freeing it would be for the financial future of my family if I didn’t have that extra debt. The quicker I pay off my student loan debt, the sooner I will be able to better provide for my family.

Although there were several roadblocks along the way, I achieved my goal and am better able to provide for my family because of my education.  But even with a better paying job, I am still overwhelmed when I think about paying off my student loan debt. Loans were essential in paying for school and basic needs when I couldn’t, but it’s a debt that I must pay every month.

Andrea Fitch is a teacher in Colorado.


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Learn more about IWPR’s Student Parent Success Initiative, and read the new report, College Affordability for Low-Income Adults: Improving Returns on Investment for Families and Society.

 

My Brother’s Keeper Skating on Thin Evidence?

by Heidi Hartmann, Ph.D.

Once again the President’s advisors in the White House do not appear to be serving him well.  Despite a thin base of evidence regarding the effectiveness of programs targeting boys and men of color, the President is going all out to exclude girls and women of color for an important initiative.

The President announced My Brother’s Keeper as a new initiative at the end of February and called upon the task force that he formed to review data and develop indicators to measure progress for boys and young men of color, survey government programs to see what is working or not working, reach out to private sector (including nonprofit) partners, and report to him at the end of May.  So far, counting today’s announcements, the task force (consisting of federal officials) has raised more than $300 million in private funds that the White House says will be targeted at improving the opportunities of boys and young men of color.

Almost immediately questions were raised first by women of color in the media, then by 200 black men writing an open letter, and then by more than 1200 women of color doing the same, and then by mainstream women’s organizations issuing statements to the press: where are the girls and young women of color?

Girls and boys of color grow up in the same families, live in the same neighborhoods, and attend the same schools.  Girls and boys of color share many of the same challenges but also face a few that are unique to each gender.  While boys of color score lower than girls on some indicators, girls of color score lower than boys on others.  All would benefit from good programs.

Today, the President announced that several government agencies will make special efforts to increase services that can help boys and young men of color succeed.  Surely women’s organizations will be watching closely to make sure those tax dollars are spent in a gender equitable way.

Unfortunately, there is no comparable, ongoing federal effort to identify challenges facing girls and women of color, review data and develop indicators to measure their progress, survey federal programs to see what is working and or not working for them, or, crucially, raise $300 million from private sources to develop solutions for them.

According to the MBK task force report itself, there is very little evidence that any programs for boys of color work, and, of course to exclude girls, the evidence would have to prove that those that do work do not work as well for boys when girls of color are included.  Although the White House claims the MBK initiative is evidence-based, the report presents no evidence to justify excluding girls and young women of color from the initiative.  Boys are rarely compared with girls in the report and no programs are identified as being successful for boys alone. In other words, the inference that boys of color need this investment of resources more than their female counterparts has yet to be substantiated by the MBK initiative.

In the face of all the criticism, the White House has stonewalled.  Finally six weeks after the report was released and months after the criticism began in the media, White House leaders, including Broderick Johnson, who has led the MBK initiative, Valerie Jarrett, and Tina Tchen, met with a few critics and supporters at the White House on July 15. At that meeting and since, White House officials have said MBK will remain all male.  They are happy to discuss ways to do something for girls and young women of color—perhaps collect better data, for instance—but not through MBK.

Since all federal programs generally must be open to everyone, what’s the point of excluding girls and women of color from this initiative?  I’m sure it comes across as a shocking and hurtful omission to young women and girls of color.

Heidi Hartmann, Ph.D., is the founder and president of the Institute for Women’s Policy Research.

As You Celebrate the 4th, Remember Why America’s Working Families Need Unions to Stay Strong

by Brigid O’Farrell

As you celebrate with your loved ones over the holiday, remember how unions have helped American families secure prosperity and opportunity, and why we should consider unions a basic form of democracy.

The decline of the American labor movement, now representing just 12 percent of the workforce, and the corresponding increase in inequality hurts working families. Whether a home health aide, teacher, electrician, or autoworker, you are less likely to have a voice at work. This means lower wages, fewer benefits, and less ability to care for your family. It also means less democracy in our country.

The union advantage for working families starts with higher wages. On average, union women earn 13 percent more per hour than women not in unions and this is especially true for low-wage jobs women hold. The union advantage for office cleaners, for example, is 28 percent. Collective bargaining also reduces the gender wage gap between women and men by half.

Higher wages are critical to the well being of working families, but not enough. The union advantage also includes better access to higher paying jobs, often through apprenticeship training, as well as access to paid sick days, short-term disability, family leave, better schedules, and child care.

Just last week, President Obama told his White House Summit on Working Families, that, “Family leave, childcare, workplace flexibility, a decent wage—these are not frills, they are basic needs… part of our bottom line as a society.” Labor was in the house: Over 250 union members and allies made their voices heard. Liz Shuler, Secretary-Treasurer of the AFL-CIO, representing 57 unions and over 13 million members, and Mary Kay Henry, president of the 2.1 million member Service Employees International Union (SEIU) highlighted union support for family friendly public policies and collective bargaining as a tried and true method for securing not only decent wages and safe working conditions, but for negotiating flexible schedules and paid leaves. For example:

Kay Thompson is the mother of four daughters who has worked at Macy’s flagship store on Herald Square in New York City for over 20 years. She is a proud member of Local 1-S, Retail, Wholesale & Department Store Union/UFCW. She told the audience that she was able to provide for her family with a flexible yet predictable schedule because of her union contract.

Connie Ashbrook, union elevator constructor and executive director of Oregon Tradeswomen, Inc., focused on the 50 percent of jobs that require science, technology, engineering or math skills (STEM), but don’t require a college degree. Women are capable and interested in skilled trade jobs, but still hold less than 3 percent of these occupations. Outreach, training and enforcing employment discrimination laws are policies that help her work with unions and contractors to increase the number of women in the trades.

Union members also gathered at the AFL-CIO headquarters the day before to share their stories at Working Families Speak Up!

Dina Yarmus is a hotel and restaurant worker who defended her healthcare plan through UNITEHERE Local 274 in Philadelphia. Joanne Hager is a construction laborer from Minneapolis and trainer for LiUNA Local 563. Being a tradeswoman transformed her life—a living wage, a pension plan, a union job. Connie Leak, president of the Coalition of Labor Union Women and UAW member, told other workers that this wasn’t just about boots on the ground, but about “heels, flats, and sneakers heading to the streets” to talk about working family issues and the importance of unions, collective bargaining, and public policy.

Working family polices are often a mix of public and private actions. California provides an example of how unions helped to secure a family friendly state policy that women and men now use to sustain their families, maintain their economic stability, and keep their jobs.

The United States is one of just three countries in the world without a paid family leave policy. California was the first state to take action to address this problem, now joined by New Jersey and Rhode Island.

Under the California Paid Family Leave Act employees pay into the insurance system regardless of the size of their employer and have access to six weeks of paid leave to care for new children or ill family members. Employers do not pay into the system, but have to accommodate the time off. The Labor Project for Working Families helped make paid leave in California a reality. They receive leadership and financial support from many unions and worked for years to help pass this bill. 

In Unfinished Business, Paid Family Leave in California and the Future of U.S. Work-Family Policy, professors Ruth Milkman and Eileen Appelbaum document labor’s role and their finding that there are almost no negative effects on business. Management executives talk about how good the program is for their companies. Many employees, however, are unaware that they pay into the fund and have access to the benefits. This is true in the building and construction industry where any kind of paid leave has not generally been available.

Krista Brooks and Johnathan Brooks, both apprentice electricians with IBEW Local 617 in San Mateo, CA, illustrate how having good apprenticeship jobs and a paid family leave policy are very important to families. Krista, one of the 2.6 percent of women in the skilled trades, just graduated from her apprenticeship program and is completing her work hours to reach journey-level status. Johnathan is a second year apprentice. Both parents were able to spend quality time with their newborn without sacrificing their much needed paychecks or their jobs.

The couple heard about paid family leave from other union members. Krista was able to take disability leave for part of her pregnancy and use paid family leave when her daughter was born. Johnathan was then able to take paid family leave in two phases. First he had two weeks right when the baby was born. A few weeks later when Krista went back to work he was able to take more time to bond with the new baby. The apprentices, their local union, and the contractors worked together maintaining insurance coverage and having jobs when the parents returned. They didn’t have their full salaries and things were tight, but paid family leave made a big difference.

While the number of women in the workforce has reached an historic proportion and more men are opting to stay home with children, the problems are not new. In 1963 President Kennedy released American Women, the report of his President’s Commission on the Status of Women. Fifty years ago the report noted that 70 other western industrialized countries offered paid maternity leave and called for the U.S. to do the same. They documented the urgent need for quality, affordable child care. The commission cited the concentration of women in low-wage jobs as the primary cause of the wage difference between women and men. They called for improved vocational education, counseling for non-traditional jobs, and an end employment discrimination against women.

The Commission stressed that the value of unions and collective bargaining had already been well established and secured through the National Labor Relations Act. They called for states to do the same. Eleanor Roosevelt, chair of the President’s Commission, wrote that “There are only two ways to bring about protection of the workers…legislation and unionization.” She later told the United Nations Human Rights Commission that “the right to form and join trades unions [is] an essential element of freedom.” For her, unions represented democracy in the workplace, with all of its strengths and weaknesses, and were a model for democracy in the country and around the world. 

Maybe it’s time for a summit on the importance of unions and collective bargaining for working families and for our democracy. But in Eleanor Roosevelt’s words, “We can’t just talk. We have got to act.” 

This post originally appeared on AlterNet. Brigid O’Farrell’s most recent book is She Was One of Us:  Eleanor Roosevelt and the American Worker.  With Betty Freidan she edited Beyond Gender: The New Politics of Work and Family. See www.bofarrell.net.

IWPR Launches New National Work on the Status of Women in the States

by Cynthia Hess, Ph.D.

IWPR recently launched new work on its Status of Women in the States project, an influential series of research reports and data analyses that has provided reliable data on the economic, social, health, and political status of women for nearly two decades. With partial support from the Ford Foundation, IWPR is developing a national report with state-level data on the status of women, a report on the status of women in the U.S. South (including eleven Southern states and the District of Columbia), and  fact sheets on the status of women, one each for the 50 states and Washington, DC. This work will expand on IWPR’s long-running series: to date, IWPR has produced more than 100 Status of Women in the States publications, including comprehensive reports on each U.S. state and the District of Columbia, several city/area reports, and a series of reports and a toolkit on women in the Middle East and North Africa.

Developed in partnership with expert advisory committees, IWPR’s forthcoming reports will provide disaggregated data to explore how contextual factors such as gender, race/ethnicity, age, and sexual orientation correlate with higher or lower status on a range of indicators. Following the methodology developed by IWPR in the mid-1990s, the reports will provide a composite index for each of the main topical areas covered—employment and earnings, social and economic autonomy,health and well-being, reproductive rights, and political participation—and assign letter grades and rankings that reflect each state’s performance in these areas. IWPR will also develop new chapters for the national and Southern states reports on work-family issues and violence against women. The reports will be released in 2015.

In the initial project phase, IWPR has established advisory committees for the national and Southern states reports consisting of researchers, advocates, service providers, business and labor leaders, media and communications experts, philanthropists, and policymakers. In later phases IWPR will enhance outreach and dissemination through website development and online engagement. The project expects to develop interactive charts and maps, downloadable data tables, and other data visualizations that will all be available on the website. These visualizations will make the findings more user-friendly and communicate information about the status of women in an engaging and succinct way.

This phase of IWPR work on the Status of Women in the States marks an exciting new chapter in the Institute’s ongoing efforts to provide reliable information that can serve as a catalyst for positive changes for women and their families. For nearly two decades, state and federal policymakers, journalists, advocates, and community leaders have used IWPR’s Status of Women in the States reports to make the case for improved programs and public policies. The project’s many outcomes include strengthening the case for millions of dollars in additional state and local funding for services that benefit women; strengthening or creating organizations, councils, or task forces on women; informing the economic agendas of local, state, and federal policymakers; and determining programmatic investments. IWPR looks forward to continuing to provide targeted state and national data to organizations seeking to strengthen local communities and society as a whole by improving the status of women.

To find out more information and to learn how to support the project, click here.

Cynthia Hess, Ph.D., is a study director at the Institute for Women’s Policy Research.

Let’s shift up women’s representation!

by Marni Allen, Director, Political Parity

At the rate we’re going—with women representing only 20 percent of Congressional seats—we aren’t predicted to reach parity until 2121. The Washington Post writes that this estimation is on par with when humans are expected to begin setting up colonies on the moon.

We can’t wait 107 years to ensure women’s voices are equally represented in the halls of government. That road is too long. It’s time to shift gears.

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IWPR President Heidi Hartmann (second from right) discusses new research on women running for office. (Photo Credit: Fatah Sadaoui, Fatahgraphy.com)

Political Parity is putting the pedal to the metal. On May 21, Parity and the Institute for Women’s Policy Research (IWPR) launched Shifting Gears: How Women Navigate the Road to Higher Office, a report exploring how women build political careers. We were joined by researchers Bob Carpenter of Chesapeake Beach Consulting, Heidi Hartmann of IWPR, Celinda Lake of Lake Research Partners, and Shauna Shames of Parity.

Lake emphasized that the biggest barrier hindering women from seeking and securing public office is lack of access to well-resourced networks. Shames added that because of hyperpartisanship and the lack of diversity among current officeholders, women are less likely than their male counterparts to see politics as an avenue to address issues of importance to them. This disconnect between politics and positive change is deterring women’s candidacies.

Congresswoman Donna Edwards’ (D-MD) first candidacy challenged a seven-term incumbent in Congress. She shared that despite losing the first time around, this experience set her up for her future win. “If you don’t run risks, you don’t get to play in the game at all,” she said. “If you aren’t willing to run a second time, what’s the point of running the first time?” Former Lieutenant Governor Kerry Healey (R-MA) elaborated that “failure is an experience you use to pivot on for your next try.”

Transitioning into the importance of women’s voices in office, Assemblywoman Caroline Casagrande (R-NJ) hit on a key finding in Shifting Gears research: motherhood is a motivator. “Do I think about [my kids] every time I turn in a bill?” she asked. “Absolutely.” So few mothers, she explained, are serving in office. “We need more women going through that stage of their life [in politics],” she added.

Shifting Gears sparked a national political conversation, earning three mentions from The Washington Post political blogs:

  • She the People featured the report findings and charts, focusing on women’s initial motivations to run, barriers to running, and strategies employed by female politicians on the campaign trail.
  • On Leadership highlighted our key finding that just 35 percent of female legislator respondents considered politics a career, and also addressed women’s lack of party support and limited access to informal networks for fundraising.
  • The Fix turned its attention to Senate primaries, citing what women in politics literature knows so well: when women run, women win. But not many women are running.

The Daily Beast published an op-ed by Parity’s Director Marni Allen and Research Fellow Shauna Shames, injecting Shifting Gears into the national confidence-versus-structure debate. “To encourage more women to run for office,” they argue, “we need to confront the personal, structural AND social barriers standing in the way.”

#ShiftingGears spurred a lively conversation on Twitter, engaging scores of activists, researchers, and media outlets to spotlight women’s underrepresentation.

We need your voice. What can you do?

  1. Visit and share the Shifting Gears research page on Parity’s website with the hashtag #ShiftingGears.
  2. Read, comment on, and share Shifting Gears coverage: She the People, On Leadership, The Fix, and The Daily Beast.
  3. Incorporate Shifting Gears research into your curriculum or organization’s programming, if applicable.

Join Political Parity in accelerating women’s electoral progress. We’re not waiting for 2121.

Marni Allen is the director of Political Parity, a program of the Hunt Alternatives Fund. Political Parity is a nonpartisan platform for accelerating the energies of passionate and dedicated leaders, researchers, and funders changing the face of US politics.

6 Things Washington Post’s Glenn Kessler Missed about the Gender Wage Gap

by Heidi Hartmann, Ph.D., Barbara Gault, Ph.D., and Ariane Hegewisch

(This post is in response to Glenn Kessler’s two Pinocchio rating of “President Obama’s persistent ’77-cent’ claim” on April 9, 2014, in the Washington Post.)

Glenn Kessler presents a very one-sided discussion of the wage gap in this April 9th “Fact Checker” post in which he increased President Obama’s rating on his use of wage gap statistics from one Pinocchio (in the 2012 campaign) to two—he should have lowered it from one to zero.  President Obama has correctly used a long standing data series issued every year by the Census Bureau.  The 77 percent wage ratio figure is an accurate measure of the inequality in earnings between U.S. women and men who work full-time, year-round in the labor market.

Here are some other things to keep in mind about that statistic:

1) Kessler claims that President Obama uses the 77 percent wage ratio figure because it shows the biggest wage gap when other data series available from the Bureau of Labor Statistics show slightly smaller gaps.  Leaving aside how Kessler could get inside the President’s head and know why he picked a certain series, everyone who writes about this issue should know that this figure based on median annual earnings is the historical headline figure that allows the longest comparison across time.

2) Kessler claims that the other series—weekly or hourly earnings—are more accurate, but there is simply no basis for saying so.  The 77 percent figure actually includes the broadest range of kinds of earnings; for example annual bonus payments are a big part of remuneration in some fields and are included in the 77 percent figure, but are excluded from the weekly or hourly earnings figures.

3) In his first fact check column (posted online at 6:15 am on April 9, 2014), Kessler failed to note that other measures show a much larger gap than the 23 percent figure President Obama used.  If part-time workers were included, a figure that Statistics Canada uses, the wage ratio would be 71 percent and the gap 29 percent.  The United Kingdom has used life-time earnings ratios.  One IWPR study found that across 15 years (ending in 1998, using the Panel Study of Income Dynamics), the typical American woman earned just 38 percent of the typical man.  The Urban Institute, using Social Security earnings data, finds that the typical wife earns about 50 percent of what her husband does across their working lives. Kessler had updated his column to add mention of these other measures, but fails to alter his conclusion that the President used the biggest wage gap.  In fact, the figure the President used falls in the middle of the range and is the one most commonly used for the past 60 years.

4) Kessler emphasizes that women ‘choose’ different and lower-paying college majors than men and seems to think such differences mean that the wage gap measure is not a good measure of economy-wide wage inequality.  ‘Choice’ is, of course, an unverified assumption. There is considerable evidence of barriers to free choice of professions, ranging from lack of unbiased information about job prospects to actual harassment and discrimination in male dominated jobs. It is highly likely that there are many women who are freely choosing to become social workers, and are making well-informed decisions, and the same is likely to be true for men choosing to be engineers. However, there are no hard facts on how many, or indeed, how many would ‘choose’ otherwise in a world of complete information and nondiscriminatory employment.  For example, in a world where half of engineers were women and half of social workers were men, men and women might ‘choose’ very differently than they do now. We do know that young women and men generally express the same range of desires regarding their future careers in terms of such values as making money and having some flexibility and autonomy at work, as well as time to spend with family members.

5) There are legal cases, as well as social science research studies, that show that, just by the mere fact of being a mother, women’s advancement opportunities shrink, and just by being a father, men’s grow. Yet, there is no proof that being a mother makes a woman less productive on the job.  And why should women who may be decades past the phase of active childrearing still be suffering a wage penalty?  While it is true that women typically take more time away from work for child rearing than do men, that decision often makes economic sense when a wife’s wages are lower than her husband’s—equal pay would likely lead to more equitable sharing of child rearing and to women and men working in the labor market about the same amount over their lifetimes.  Research shows subsidizing the cost of child care and providing paid parental leaves of up to six months would help women and men return to work sooner. While Kessler has said the goal of his Fact Checker column is to provide needed context to what political leaders say, this is a part of the needed context he omitted entirely.

6) It is true, as Kessler notes, that when factors such as occupation and parental or marital status are used as control variables in statistical models aiming to explain what ’causes’ the wage gap, the size of that gap will be reduced, and what is left unexplained is generally thought to possibly be the result of discrimination. But it is just as likely that discrimination affects these ‘control’ variables as well as the size of the remaining gap. Unfortunately, Kessler cites only the literature that ignores the possibility of discrimination affecting the control variables.  He cites economist June O’Neill, well-known in the field for her opposition to government intervention to reduce the size of the wage gap. He also cites a study commissioned by the George W. Bush administration and done by a conservative research firm, CONSAD, which Kessler “camouflages” by saying the St. Louis Federal Reserve Bank cited it.  Kessler fails to cite peer reviewed literature surveys published in mainstream economics journals, including papers by Francine Blau and former Acting Secretary of Commerce Rebecca Blank and co-author Joseph G. Altonji. These latter studies estimate that 25-40 percent of the gross wage gap remains unexplained when factors reasonably thought to affect productivity are included as control variables in the models.

The 77 percent figure covers everyone working full-time, year round and does not reflect only women and men doing exactly the same job in the same firm; however, it does reflect women and men working full-time, year round not earning the same. The wage gap figure reflects a number of different factors: discrimination, lower earnings in occupations mainly done by women, and also the fact that women still tend to be the ones to take more time off work when families have children.  Just because the explanation of the gender wage gap is multi-faceted does not make it a lie.

We should note that on occasion, many politicians—including U.S. presidents—journalists, and others present the 77 percent figure as comparing men and women who do the same jobs, and this unfortunate tendency has led to great confusion.  But President Obama was careful in both his recent State of the Union speech and his Equal Pay Day speech to use the figure without that inaccurate qualifier. In his 2008 campaign, his literature often used the phrase ‘unequal pay for an equal day’s work’—that phrase is an accurate way to refer to men and women who both work full-time earning different pay.

Heidi Hartmann, Ph.D., is a MacArthur Fellow and the president and founder of the Institute for Women’s Policy Research.

Barbara Gault, Ph.D., is the vice president and executive director of the Institute for Women’s Policy Research.

Ariane Hegewisch is a study director at the Institute for Women’s Policy Research.

Jump Starting Real Wage Growth for Women: Increasing the Minimum Wage and Improving Overtime Laws

By Heidi Hartmann

In the context of a lost decade of wage growth for women, two recent proposals—to increase the federal minimum wage to $10.10 per hour (including increasing the separate minimum wage for tipped workers), and to increase the threshold salary for overtime pay to $50,000 annually—can provide much needed relief to women.  

Increasing the minimum wage requires that the U.S. Congress pass a law. The current minimum wage of $7.25 was set in 2007and went into effect in 2009, but President Obama has already acted by executive order to require firms that hold contracts with the federal government to pay their workers a minimum of $10.10 per hour.  In contrast, increasing the salary threshold for receiving overtime pay, does not require congressional action, but does require action by the Secretary of Labor. President Obama has recently directed Secretary Perez to consider what can be done to ensure that workers are paid fairly for their overtime hours. The Fair Labor Standards Act sets the overtime pay premium at 50 percent more than the regular wage or salary, also known as “time and a half.” Currently the threshold annual salary is set at about $23,000 ($455 per week).  A worker classified as executive, administrative, or professional, who earns more than that annual salary does not currently need to be paid overtime.

Because women earn less than men on average, it is not surprising that women are the majority—64 percent—of those who earn the minimum wage and would thus benefit disproportionately from an increase in the minimum wage.  Economists expect that employers will also increase the pay of workers earning somewhat above the minimum, in keeping with past experience of minimum wage increases.  An EPI analysis shows that 15.3 million women—9.6 million directly and 5.7 million through the spillover effect— would receive a pay increase were the minimum wage to be raised to $10.10 per hour.  EPI also finds that nearly one-third of all working single mothers—or 2.3 million women—would receive a direct or indirect pay increase. Overall 55 percent of workers who would benefit from the increase are women.

A new report from the White House released earlier this morning points out that an even larger proportion of those affected by the tipped minimum wage—which has been stuck at $2.13 per hour since 1991—are women:  72 percent of tipped workers are women in occupations such as hair stylists, restaurant servers, and bartenders.  Employers need pay such workers only $2.13 per hour on the assumption that tips will raise their pay to the required $7.25 per hour.  According the White House report, about 10 percent of workers in these jobs say that does not happen.  The average wages of tipped workers are very low and their likelihood of being in poverty is high.  The White House analysis finds that about half of workers in tipped occupations would benefit from the proposal to increase the tipped minimum wage to $4.90 per hour by 2016. Of those whose wages would increase, 74 percent are women.

Likewise, women are the majority (54 percent) of all supervisory, managerial, and professional workers earning less than the proposed new overtime threshold of $984 per week, meaning that 5.3 million women would be newly covered by a requirement to be paid overtime when they work more than 40 hours per week. Currently, about 1 million of these women typically work more than 40 hours per week and would have to be paid 50 percent more for those additional hours beyond 40.   Furthermore, of all those high-level workers who earn above the new threshold and would not be required to be paid overtime, only 37 percent are women.  (Findings reference an unpublished analysis by EPI’s Heidi Shierholz.)

These two changes—the first by law, the second by regulation, and both administered by the Wages and Hour Division of the U.S. Department of Labor—would help ensure that real wages rise for millions of women, not to mention many men, in the coming decade.  In its new report the White House estimates that the minimum wage change alone would close the wage gap between women and men by more than one percentage point.

Heidi Hartmann, PhD, is the founder and president of the Institute for Women’s Policy Research.

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