Running

Head: Important Economic Reforms the United States Should Undertake

Important Economic Reforms the United States Should Undertake
Martn C. Muoz
Political Science 1100
Professor David Hubert
8/5/16

Important Economic Reforms the United States Should Undertake

The United States has always been referred to as the land of opportunity where if you work hard
enough you can do, be, or purchase whatever your heart desires. Currently, you could say that this hope
or dream is stagnant for a large portion of the countrys population. The United States of America has a
government system that is adaptable, able to make policy changes throughout its history for the better,
and to assist its citizens when they need it. Reforms have come as Executive orders from the President,
or bills passed by Congress and then signed in to law by the President. There are three economic
reforms that could help many individuals earn higher wages and help them to be better able to provide
for their families. These three reforms would benefit women and their families in particular. The three
reforms are to provide paid family or parental leave, to eliminate the gender pay gap, and raise the
minimum wage throughout the U.S.

Each of these reforms is able to also to be tied together in a way that one could affect the other

in a positive way. The common connection with each of the reforms presented here is women.
According to a report from the Council of Economic Advisers, today women account for 47 percent of
the labor force and they hold 49.3 percent of jobs. Womens share of the labor force has been rising for
more than 50 years and is continuing to increase. (The White House, 2015) Even with the
representation women have in the work force, there have been recent declines. In his book, Rewriting
the Rules of the American Economy, author Joseph Stiglitz points out that over the past 15 years,
womens participation in the U.S. labor force has declined from 77 percent to 74 percent for prime-age
workers, while participation in the labor force has increased for women in most other advanced
economy countries. (Stiglitz, 2016) Women would greatly benefit from the three reforms that are
presented here. At a federal level there are no policies that mandate paid family and medical leave.
Women still are largely responsible for care of children in the home. Without policies that allow them to
balance the demands of children and family with the demands of employment they are more likely to be
passed over for promotions and wage increases. Those benefits can be instead given to men who do not
have to take the same amount of time from work to be with their families. (Fisher, 2015)
Minimum Wage

To examine minimum wage in America there has to be an understanding that some may not

consider. There may still be a belief that exists that the majority of those earning minimum wage are
teens that just seek to make extra spending money. This is not true according to the Bureau of Labor
Statistics who indicates that in reality, the median age of those working in the fast-food industry in the
U.S. is 28 and women, who make up two-thirds of those employed by the fast-food industry, have a
median age of 32. (Reich, 2015)

Important Economic Reforms the United States Should Undertake

Low-wage workers are also facing growing income inequality. According to a report from the
Center for American Progress, While inflation adjusted incomes for the top 1 percent increased at a
rate of 275 percent from 1979 to 2007, incomes for the bottom 20 percent of households increased at a
rate of only 18 percent. (2015) Low-wage workers are more often mothers who make up 3.5 times as
many low-wage workers as fathers.(Stiglitz, 2016) If the Federal government would raise the minimum
wage it would benefit women to an even greater extent as women make up a disproportionally large
amount of low-wage workers. The U.S. government calculated if the minimum wage would be raised to
$10.10 per hour, women would account for 56 percent of workers who would benefit from the increase.
(The White House, 2015)

Another benefit of raising the minimum wage is that it would reduce the tax burden on

Americans for public assistance programs such as Medicaid and food stamps as low-wage workers
would require fewer of these benefits to support their families. Additional support for this claim came
from a 2012 report done by Universities of California, Berkeley and Illinois at Urbana-Champaign that
found that, 52 percent of fast food workers were dependent on some form of public assistance, and
state government. The public assistance these employees received equated to $7 billion, which could
be considered a tax subsidy for the fast-food industry. (Reich, 2015)

Despite the claims of economic benefits for low-wage workers and a lowered tax burden on

society, the raising of the minimum wage has opponents. Critics tend to argue that a mandated wage
raise will increase labor costs on employers to the point that they would have to fire employees or be
unable to hire additional workers. However other research has found that state-level minimum wage
increases have no discernible effect on employment levels. (Chu, Odum, & Duke, 2015) The researchers
looked at several counties unemployment rates that were separated by state lines. Each state had
different minimum wages - some had the federal minimum wage and the others would have a higher
minimum wages at the state level. The research found no significant increase in unemployment with
the states that had the higher minimum wage. Their research did find that employee turnover was lower
where the minimum wage is higher. (Reich, 2015) A minimum wage increase would benefit several
workers in the United States by reducing the number of working poor, particularly helping women
earning lower wages and other disadvantaged groups who make up the majority of low-wage earners.
(Stiglitz, 2016)
Family Paid Leave

In President Obamas State Of the Union address in 2015 he presented family paid leave as a

crucial economic matter, Its time we stop treating child care as aside issue or a womens issue, and

Important Economic Reforms the United States Should Undertake

treat it like the national economic priority that it is. (Obama, 2015) The President also said that having
family paid leave could also increase the amount of women in the workforce which would in turn help
middle-income families have more stable incomes. (Miller, 2015) Paid family leave in the United States
is scarce with only 13 percent of U.S. workers having any access to employer-based paid family leave.
Providing paid family leave for women after they give birth can create loyalty among the workforce as
women who work for an employer who offers paid leave after childbirth tend to return to work at the
rate of 87 percent. (Stiglitz, 2016) In the private sector nearly 40 million workers are not even given a
single sick day which makes up 39 percent of all employees in the labor force. (Glynn, Boushey, Berg, &
Corley, 2016) Workers who do not receive paid leave have additional pressures as missing a day of work
means not getting paid for that time. In 2014, approximately 66 percent of workers in the U.S. were
living paycheck to check. (Reich, 2015) Part-time workers are under even greater pressure to go to work
under any circumstance as nearly 95 percent of part-time, low-wage workers have no access to paid
family leave. (Stiglitz, 2016)

In the United States the lower number of women in the workforce could partially be attributed

to the lack of paid family leave. There is no mandate at the federal level in the U.S. to provide paid
family leave, which could contribute to the fact that the percentage of women in the workforce has
remained relatively steady from 1990 to 2013 with 74 percent of women ages 24 54. (Stiglitz, 2016)
Compared to other industrialized nations, the United States has fallen behind in terms of having familyfriendly policies. Some countries provide family leave with many starting at 26 weeks after the birth of a
child, which is provided to both parents. Countries with these types of policies tend to have a higher
percentage of women in the workplace as well. In Canada, United Kingdom, France, Germany, and
Sweden 80 percent of women ages 24-54 participate in the workforce. One could argue that one reason
the percentage is higher in these countries is due to their governments establishing policies that allow
women the opportunity to care for their families and contribute to the economy and not have to choose
between the two. (Stiglitz, 2016)

There are potential benefits to paid family and sick leave other than just the pay. Having the

ability to take time off when they are sick, means that employees do not have to worry about losing
wages and they also do not risk spreading the illness to fellow co-workers and the public. Employers
may also benefit from paid leave as workers with paid sick leave are less likely to quit their jobs. An
employer is able to be more productive with lower rates of turnover and therefore less need to train
new employees. (Glynn et al., 2016)

Important Economic Reforms the United States Should Undertake

In the United States paid leave could be made something that is available to all workers,

regardless of the type of work they do. One plan that researchers have proposed is to have the Social
Security Administration increase payroll taxes by a very small percentage, which would create a fund
available to employees. Each individual employee would be able to take time off due to their own illness
or to care for family members. This method would also allow the coverage be universal. (Stiglitz, 2016)
The Gender Pay Gap

Another economic policy that the U.S. needs to address is the gender pay gap. Raising the

minimum wage would increase wages for all employees, but as women make up a larger percentage of
low-wage workers it would also help close the gap in wages for women compared to their male
counterparts. The gap in pay includes more than just wages as there is a gap in terms of other benefits
such as health insurance, retirement plans, flexible work arrangements, and paid leave. In all of these
areas, women lag behind males in the workforce with the same level of education. (The White House,
2015)

Legislation was passed in the U.S. over 50 years ago to prohibit wage discrimination based on

sex. President Kennedy signed the Equal Pay Act at a time when the wage gap between men and women
saw women earning 59 cents for every dollar men earned. The Act did help make some progress,
however women still earn only 78 cents for every dollar compared to their male counterparts. (Stiglitz,
2016)
The pay gap for women is larger for minority women. African-American womens pay gap is
closer to 64 cents for every dollar a white male earns and for Latinas it is even lower at 56 cents per
dollar. To put the loss in total income amounts, for African-American women the gap means they earn
$19,000 less per year, and for Latinas the amount is $23,279 per year. (Stiglitz, 2016) The larger gap for
minority female workers has been partially because minority women tend to work in lower-wage
occupations and work fewer hours because of significant family caregiving responsibilities. (Milia Fisher,
2015)

When examining the question as to why women earn less than men there may be many answers

to this one question. Some propose it is due to differences in education or experience, discrimination
based on gender, and also due to the choices women make regarding career and educational paths.
Since the 1990s woman began earning the majority of all undergraduate and graduate degrees. The
decline in the wage gap could be attributed to the increase in education. At the same time, there is
evidence that wage gap will actually increase with education. The wage gap for women with

Important Economic Reforms the United States Should Undertake

professional degrees has women earning 67 cents for every dollar a man with a professional degree
earns. (The White House, 2015)

Each new generation of women fares better than the previous generation. In 1980, women

between 18-34 earned 74 cents per dollar compared to men and for the same age group in 2013 the
wage gap is only 87 cents per dollar. This wage increase for this age group could be due in part to
choices women are making about families. The wage gap has narrowed for young women between
1980 and 2013 as the median age of giving birth to the first child rose from 22.6 to 26.0. The median age
for women in that category who have advanced degrees rose to the age of 32 by 2012. The choice to
pursue a career or education and wait to have children has helped the wage gap for women, but they
have to make a choice unlike their male counterparts who are able to start a family and continue in their
career path. This also provides an additional argument for providing paid leave for women who might
not be faced with the same choices if they could take time off to have children and care for families and
have the assurance they could return to their jobs afterward. (The White House, 2015)

Difference in work experience has also been used as to justify the wage gap between women

and men in the business world. Economists Marianne Bertrand, Claudia Goldin, and Lawrence Katz have
studied the salaries of men and women who obtained an MBA from top business schools. In their
research they have found that shortly after graduation the men and women earned comparable
amounts, but after a decade the men in the group were earning approximately 60 percent more than
the women. The three researchers found that the wage gap tends to grow in the this first decade of
work experience due to women taking time from work to have children or tend to other family
responsibilities. (The White House, 2015)

Despite the passage of the Equal Pay Act over 50 years ago there is still much work that is

needed to have equal pay. The Obama administration has worked to make closing the wage gap a
priority, encouraging Congress to pass legislation to narrow the gap. Obama signed an Executive Order
prohibiting employers who have Federal contracts from punishing employees for discussing pay. While
this was a good first step, he wants Congress to pass a law that would provide protection to all
employees who discuss pay. Obama also signed the Lilly Ledbetter Act passed by Congress, which
enables employees to have more time to file a claim of discrimination against their employer and
recover wages lost. (The White House, 2015)

Women in the U.S. continue to face major obstacles to achieving equality in the workforce.

Increasing the minimum wage to $10-$12 per hour would enable workers to better support themselves
and their families contributing more to the economy and relying less on public assistance. Raising the

Important Economic Reforms the United States Should Undertake

minimum wage would benefit women at an even greater rate as women make up the largest share of
low-wage workers. Providing paid leave to all workers regardless of their industry or wage would help
employees take better care of their families, benefit employers by creating more loyal employees, and
potentially keep more women in the workforce. As a country we need to be able to talk openly about
the wage gap and acknowledge that it is a problem and not just one that women should be concerned
about. If there is no conversation about the gender wage gap then needed change will not come.

Important Economic Reforms the United States Should Undertake

Bibliography
Chu, A., Odum, J., & Duke, B. V. (2015). Fight to Raise the Wage Goes Local. Center for American
Progress Action Fund. Retrieved from
https://www.whitehouse.gov/sites/default/files/docs/equal_pay_issue_brief_final.pdf
Glynn, S. J., Boushey, H., Berg, P., & Corley, D. (2016). Fast Facts on Who Has Access to Paid Time Off and
Flexibity. Center for American Progress. Retrieved from
https://www.americanprogress.org/issues/labor/report/2016/04/26/134814/fast-facts-on-whohas-access-to-paid-time-off-and-flexibility/
Milia Fisher. (2015). Women of Color and the Gender Wage Gap. Center for American Progress.
Retrieved from
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Miller, C. C. (2015, January 30). The Economic Benefits of Paid Parental Leave. New York Times. New
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Important Economic Reforms the United States Should Undertake

The White House. (2015). Gender Pay Gap: Recent Trends and Explanations (Council of Economic
Advisers Issue Brief). Washington D.C. Retrieved from
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