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Here’s One Immediate Way Congress Could Stimulate the Economy

Here’s One Immediate Way Congress Could Stimulate the Economy

Close the wage gap.

Gender-wage gap skeptics often dismiss the reality that men get paid more than their equally-qualified and experienced female peers by insisting the disparity reflects women’s “choices” in coming in and out of the labor market. A new report by the American Association of University Women shows how wrong those skeptics are. Not only that, it makes the clear case for how closing the gender gap would reduce the deficit by growing the economy.

According to the study, a woman who graduates from the same school and in the same major as her male classmate and takes a full-time job in the same occupation as he does earns on average 7 percent less than he does just one year out of school. The longer the woman works the wider that gap becomes. In the course of her lifetime a woman with a college degree will make an average of $1.2 million less than a man with the same level of education.

It is no wonder that economists are calling closing the gender wage gap one of the most significant acts of economic stimulus Washington could enact. According to economist Heidi Hartmann, president of the Institute for Women’s Policy Research, economists estimate that the stimulus effect would grow the U.S. economy by at least three to four percentage points. Put in perspective, the $800 billion economic stimulus package that Congress passed in 2009 to bail banks out of the recession is estimated to have grown the GDP by less than 1.5 percent overall.

Consider also that those estimates do not include any additional women drawn into (or back into) the workplace either as employees thanks to the emergence of competitive wages specifically or as small business-owners thanks to the infusion of capital generally. Nor do they consider the stimulative economic effect the increase in spending power created by those higher wages.

Some Democrats in Congress have been making this argument for the last year as they tried to pass the Paycheck Fairness Act. The Paycheck Fairness Act requires employers who pay women less than men for equivalent work to defend that difference by offering a legitimate and measurable reason other than gender to account for the difference. Other legitimate and measurable reasons could include differences in education, training or experience. The bill would also require employers to disclose salary information– an important requirement since one pervasive barrier to enforcing equal pay laws is the fact that victims of pay discrimination can’t prove directly the claims because employers are under no requirement to disclose compensation.

Republicans successfully blocked the bill in June and Mitt Romney and Paul Ryan both oppose equal pay legislation. With the clear economic benefits closing the gender wage gap, perhaps it’s time we ask them again why.


Related Stories:

Anniversary of Wal-Mart v. Dukes Marked By Push For Anti-Pay Discrimination Law

Republicans Block Paycheck Fairness Act

Women’s Wages Flatten At 39: Another Reason We Need Pay Equity


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Photo from Tax Credits via flickr.

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5:43AM PDT on Nov 1, 2012

romney is a big liar,we can not choose in him a leader,he is a big joke,bote obama 2012

6:14AM PDT on Oct 31, 2012

Yes I am sure Romney and Ryan would not want Women to receive Equal Pay!
With the respect they show for women??

4:46AM PDT on Oct 31, 2012

Good thought. It would put the money in the hands of people who actually spend and there by spur the makers of goods. Personally I would say tax the rich and get this money into the hands of the people who spend that money. Rich people just hoard their money in offshore banks.

8:58AM PDT on Oct 30, 2012

Gender discrimination is so immoral. What do my reproductive organs have to do with my work ethic and ability?

7:53AM PDT on Oct 29, 2012

Both gender can work as equals. That means they should get the same salary, at the very least.

7:01AM PDT on Oct 29, 2012

Bill Clinton on Rumbutt’s tax cuts (short, 2.5 min)

11:15PM PDT on Oct 28, 2012

Mitt Romney and Paul Ryan both oppose equal pay legislation. So what the hell do they support? Wait a minute I don't want to know.

10:41AM PDT on Oct 28, 2012


10:09AM PDT on Oct 28, 2012

Eric I know you think you are making a useful comparison but it falls flat.

9:58AM PDT on Oct 28, 2012

@ Christopher F. ” I know of only one place where there is NO gender pay gap......the military.” Interesting. Do female veterans have the same suicide rate as men ?

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