Women vs. the State

It's time to liberate ladies from unequal and unjust government policies.


March is Women's History Month. As schoolteachers across America lecture students about how women fought for the right to own property, vote, and control their own bodies, another important lesson will be neglected: Women are still suffering from overly intrusive government. Improving the lot of American women means lowering marginal tax rates, abolishing many workplace regulations, increasing the number of low-skilled immigrants, and ending the drug war.

In the past, women suffered because the state treated them differently than men, out of either a misplaced sense of chivalry or outright misogyny. An assault wasn't necessarily an assault if it was a man beating or raping his wife, for instance. That's one reason the women's movement pushed for equal treatment under the law.

Yet many government policies, including some advocated by today's feminists, continue to treat the choices of women differently than those of men. The old discriminatory policies usually announced themselves as such—like the ban on women in combat. Nowadays such policies tend to be superficially gender-neutral but have a disproportionate effect on women.

Take tax policy. If a woman makes less than her spouse (which is the case 72 percent of the time) and the couple files a joint tax return, the tax system often penalizes her decision to work rather than stay home. That's because the government taxes the first dollar the wife earns at her husband's highest marginal rate rather than the rate the wife's salary warrants. This "marriage penalty" creates a disincentive for women to work, unless they are going to make as much as or more than their husbands. The higher the marginal tax rate, the bigger the penalty.

According to a 1995 paper by economists Nada O. Eissa of Georgetown University and Austin Nichols of the Urban Institute, the data show that married women increased their employment substantially in response to reductions in marginal tax rates following the 1986 tax reform. Similar changes in the 1990s again boosted female labor force participation.

The lingering tax penalty could partially explain why, despite the fact that almost 80 percent of working mothers say they would prefer to work part time, almost two-thirds work full-time instead. Taxes on the money they earn are often too high to make part-time work financially viable.

High marginal rates and joint taxation are not the only elements of the tax code that give married women disincentives to work. After Clinton–era welfare reforms cut back on state cash assistance, the government implemented a tremendous expansion in assistance for low-income families through the tax system. In particular, the move was intended to increase single mothers' participation in the labor force by expanding the earned income tax credit (EITC), which is targeted at people who work and have low wages. Empirical evidence consistent with economic theory shows that the tax credit has indeed encouraged many eligible single women to work. According to a 2005 paper by Eissa and Nichols, the labor force participation rate of single mothers increased by 14 percent between 1992 and 2002, a period of substantial expansion of the EITC. That same period saw a slower rate of growth in labor force participation by married women, who are much less likely to benefit from the credit. 

Underlying the push to move single mothers into the work force is the belief that they contribute more to society by working outside the home. But productivity takes many forms. Economists Alexander Gelber and Joshua Mitchell of the National Bureau of Economic Research have found that for women who rejoin the labor force, the time spent on the job has come largely at the expense of time spent on housework, including child care. Whether that shift has been beneficial for the women, their families, or society is unclear.

It is clear, however, that working moms who have to cut back on their housework would benefit a great deal from the ability to hire low-skilled workers to help them. According to economists Patricia Cortes of the University of Chicago and José Tessada of the Brookings Institution, an increase in the supply of low-skilled immigrants would allow women to work longer hours and make more money. It also would allow them to spend less of their free time doing household work and more time interacting with their kids.

Lowering marginal income tax rates would help women too. Women in 2008–09 owned 40 percent of all privately held firms, most of which had fewer than nine workers in 2007. According to the National Federation of Independent Business, high income tax rates disproportionately penalize women because more of them report their business income on their personal returns. High tax rates mean lower business and personal income and less ability to hire help at home or at work.

Workplace regulations can make women's lives harder as well. Because women exit and re-enter the labor market (for maternity leave or to take care of their children) more frequently than men, they suffer disproportionately from labor laws that restrict workplace mobility. 

Even regulations meant to protect women produce bad outcomes. Government mandates that force employers to approve lengthy maternity leaves make hiring women of childbearing age less appealing. As a result, women are more likely to be unemployed or to see their compensation reduced, whether they want to have children or not. Massachusetts Institute of Technology economist Jonathan Gruber has shown that real wages for women in the 1990s in states that require comprehensive maternity expenses fell, compared to states that don't.

One government policy may be more devastating for women than any other: the war on drugs. Because of mandatory minimum sentences, prosecution of low-level drug offenses, increased conviction and imprisonment of those with relationships to drug dealers, and the treatment of drug addicts as criminals, the number of incarcerated women has skyrocketed since 1980. Although the incarceration rate for women continues to be far lower than the rate for men (201 per 100,000 women versus 2,096 per 100,000 men, according to Bureau of Justice Statistics numbers for 2009) the proportion of women imprisoned for drug offenses is much higher than male drug imprisonment. According to the American Civil Liberties Union (ACLU), between 1986 and 1999 the number of women in state facilities for drug-related offenses octupled, surpassing the rate of growth in the number of men imprisoned for similar crimes. 

When these women leave prison, they face many barriers to obtaining housing, employment, and education. As Harvard University sociologist Bruce Western and University of Washington sociologist Becky Pettit showed in a 2010 study published by the Pew Research Center, incarceration has a lasting impact on inmates' earnings. Taking age, education, school enrollment, and geography into account, they found that past incarceration reduced subsequent wages by 11 percent, cut annual employment by nine weeks, and reduced yearly earnings by 40 percent. Incarceration also has consequences for families. According to "Caught in the Net," a 2005 report from the ACLU, two-thirds of female state prisoners are the mothers of minor children—kids who become indirect victims of an unfair policy.

Women have come a long way. They have fought hard to win independence from their husbands and fathers. They have struggled against millennia of unequal treatment under the law. But their freedom is still constricted by misguided government policies. There are battles yet to be won. 

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.