JOHN
C. GOODMAN
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The
single most important economic and sociological change
in our society in modern times has been the entry of women
into the labor market. Over the last 50 years, the labor
force participation rate of women between 25 and 55 years
of age more than doubled; today, more than 75 percent of
these women are in the labor market. Families with both
spouses in the labor market now constitute almost two-thirds
of all married couples. Despite these remarkable changes,
our tax laws, labor laws and a host of other institutions
are still designed from top-to-bottom for an Ozzie and
Harriet lifestyle.
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Take taxes, for example. The system was designed to accommodate
a full-time worker with a homemaker spouse. Any deviations are
severely punished. Consider what happens when Harriet enters the
labor market: Even if she earns only the minimum wage, she is taxed
at Ozzie’s income tax rate. Further, when all taxes and all
costs are considered (including the cost of child care and the
expense of hiring others to provide services she previously provided
as a homemaker), the second earner in a middle-income family can
expect to keep only about 35 cents out of each dollar she earns.
 Even if Ozzie has maxed out on his Social Security payroll taxes,
Harriet must start all over. Since Harriet is entitled to half
of Ozzie’s Social Security benefit (and gets 100% after his
death) whether she works or not, odds are that she will get little,
if any benefit from the payroll taxes she pays. The designers of
our Social Security system clearly did not have two-earner couples
in mind.
Two-earner couples were also not on anyone’s mind at the
time our employee benefits systems evolved. In contrast to most
other developed countries, the United States encourages employers
to provide such benefits as health insurance, pensions, life insurance,
disability insurance and even day care for children. Not everyone
is treated the same, however. Because they are more likely to work
part-time, women are less likely to qualify for employer-provided
benefits. Because they move from job to job and in and out of the
labor market more frequently than men, women are more likely to
be burdened by employee benefit programs that penalize job switching
(e.g., lack of vesting in a pension plan). And when people acquire
health insurance, save for retirement or purchase day care outside
the workplace, the tax system is far less generous.
The government favors workers over nonworkers, full-time workers
over part-time workers, and long-term employment over job-switching
and intermittent employment. Who is most disadvantaged by these
biases? Any woman whose husband isn’t earning benefits in
his own job. A widow living off of the proceeds of life insurance,
Social Security survivor’s benefits or part-time income.
The wife of a disabled husband living on worker’s compensation
benefits, Social Security disability benefits, private disability
insurance or part-time wages. A divorcee living on alimony, the
proceeds of a divorce settlement or part-time wages. And any single
mother with children who does not have a full-time job.
Our institutions were not only designed for the full-time worker
with a stay-at-home spouse, employers and employees find it difficult
to accommodate any other arrangement. Because of the rigidities
of tax law and employee benefit law, if Ozzie and Harriet both
work full-time, they will likely receive duplicate, unnecessary
sets of benefits. Harriet will be unable to acquire higher wages
in return for foregoing health and pension benefits she acquires
through Ozzie’s employer. Additionally, not every two-earner
couple wants to work 40 hour weeks. Women raising children or caring
for an ailing parent want flexibility in working hours. Again,
our inflexible tax laws make such arrangements almost impossible
for people who need health insurance and retirement benefits in
addition to wage income.
On paper, our elderly entitlement programs treat everyone the
same. But the ages of husbands and wives are often not the same.
At age 65, Ozzie is eligible for Medicare; but Harriet is not eligible
until she also reaches 65. If the couple was relying on Ozzie’s
employer-provided health insurance before his retirement, they
must now find higher-priced, individual insurance for Harriet (and
pay for it with after-tax dollars). At age 62, Harriet can get
early Social Security retirement benefits. But if she works part-time
(say, to help pay her health insurance premiums), the withdrawal
of Social Security benefits and the Social Security benefits tax
can combine with other taxes to take 60¢, 70¢ or 80¢ of
every dollar she earns!
It is time that groups on the right and left realize that most
women exist in the middle. Many women want both a family and a
fulfilling career. For years, they were told they can have it all.
It’s time to finally start living up to that promise and
bring aging institutions into sync with the way people are living
their lives in the 21st century.
John C. Goodman is president of the National Center for Policy
Analysis and coauthored the book Leaving Women Behind: Modern
Families, Outdated Laws published by Rowman and Littlefield.
Contact him at ncpa@ncpa.org.
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