How Obama Can Help, Not Hurt, Women In Today's Economy
With the publication of a new White House report titled The Impact of Raising the Minimum Wage on Women , President Obama is trying get women to support raising the hourly minimum wage from $7.25 to $10.10. Women should not fall for a proposal that would hurt their job opportunities. Instead, they should demand measures that will increase job creation in the economy.
The White House is getting ready for the annual Equal Pay Day , to be held this year on April 8. According to the National Committee on Pay Equity, "this date symbolizes how far into 2013 women must work to earn what men earned in 2012." The mantra, repeated by the White House report, is that women earn 77 cents on a man’s dollar and need government help.
No matter that, according to the White House report, "women account for 30% or less of employees in some high-wage sectors, such as computer and mathematical science and architecture and engineering occupations." No one is stopping women from going into math and engineering. But they choose different majors in college from men, different occupations when they enter the workforce, and, on average, a shorter work day when they work full time. Plus, 24% work part-time. With such gender preferences, there is no reason that average wages should be equal.
Even in the White House in 2013, female staffers earned 88% of what men made, according to published data.
But women, and men, deserve better. The unemployment rate for adult women was 5.9% in February, below that of adult men, which was 6.4%.
About 1.2 million adult women earned minimum wage or tipped minimum wage jobs in 2012, or less than 2% of employed adult women. As I wrote last month, "raising the minimum wage, or the tipped minimum wage, discriminates against low-skill and young workers." These workers, male or female, will not be able to find other opportunities if their skills are worth less than $11 an hour — the proposed minimum wage plus Social Security, workers compensation, and unemployment insurance payments. This amount does not include the new $2,000 Obamacare penalty, effective 2015 or 2016, for companies with 50 or more employees that do not offer the right kind of health insurance.
Although the federal tipped wage is $2.13 an hour, in many cases, these jobs pay well above minimum wage and are highly sought after by low-skilled workers. The average annual wage for bartenders is $21,630, for waiters and waitresses, $20,710; and for hairdressers, $26,790. The 10th percentiles of annual earnings for these occupations are between $16,000 and $17,000. However, there are significant opportunities for upward wage mobility within these occupations. The 90th percentile of annual earnings for hairdressers is over $42,000.
Women, and men, are not doing well in America, and President Obama needs to propose broader solutions and work with Congress to pass them into law. The adult-female labor-force participation rate — the percentage of women ages 25 to 54 who say they are employed or looking for work — declined by 3 percentage points from 77% in 2000 to 74% in 2013, according to the Bureau of Labor Statistics. The men’s labor force participation rate declined by 4 percentage points over the same period, from 92% to 88%.
Rather than raising the minimum wage, which will prevent low-skilled workers and teens from working, here are three suggestions to spur economic growth, creating more jobs for men and women.
Tax reform
With Americans spending hours preparing tax returns for the April 15 deadline, how about meaningful tax reform that lowers and simplifies individual and corporate taxes? Lowering individual income-tax rates and removing deductions would make tax-filing season easier and increase incentives to work and invest.
Reducing corporate taxes would bring in more investment from abroad, resulting in more economic activity and more jobs. The Senate Permanent Subcommittee on Investigations has estimated that American multinationals hold around $1.7 trillion of earnings offshore from foreign operations. Some of this would be repatriated with a lower U.S. tax rate.
America’s state and federal average corporate tax rate, at 39%, is far above the Organization for Economic Cooperation and Development average of 25%. Canada’s rate is 26%, and the U.K.’s rate is 23%.
Expand legal immigration
As America seeks to increase economic growth, immigration reform should be part of the growth agenda. This week, Dartmouth University professor Matthew Slaughter, in an op ed column published in the Wall Street Journal, estimated that America is losing 2,000 jobs a day, or a job every 43 seconds, by capping H-1B visas to skilled immigrants at 85,000. He calculates that 100,000 jobs are lost directly from unfiled H-1B visa applications, and 400,000 jobs are lost indirectly because they are not generated by the innovators.
According to Slaughter, "One quarter of U.S. high-technology firms established since 1995 have had at least one foreign-born founder. These new companies today employ 450,000 people and generate more than $50 billion in sales. Immigrants or their children founded 40% of today’s Fortune 500 companies, including firms behind seven of the 10 most valuable global brands."
Encourage more energy development
Everyone knows where the jobs are — North Dakota, with a 2.6%t unemployment rate. And everyone knows why — the New American Energy Revolution is bringing new oil and natural gas out of the ground with a new technology, hydrofracturing. This is attracting energy-intensive manufacturing firms to America.
But rather than encourage the oil and gas industry, the administration is bringing out new regulations on hydrofracturing that could stem the New American Energy Revolution. President Obama has refused to approve Keystone XL, the pipeline that would bring oil from Canada to refineries near the Gulf.
In a study issued last month , my Manhattan Institute colleague Mark Mills concluded that the energy revolution has been America’s biggest creator of jobs, in occupations ranging from construction to services to information technology. Almost one million Americans across the United States are employed directly in the oil and gas industry, and 10 million jobs are linked to oil and gas.
Christina Hoff Sommers, a scholar at the American Enterprise Institute, told me in a telephone conversation that women will be helped by policies based on reality, not those driven by gender politics.
Raising the minimum wage will only hurt the low-skilled workers and prevent them from entering the labor force. Women should be pounding at the White House door demanding serious job-creation proposals to help them and their husbands, partners, sons and fathers. Job creation is not a gender issue, and millions of unemployed men need help too.
This piece originally appeared in WSJ's Marketwatch
This piece originally appeared in WSJ's MarketWatch