Did Women's Lib Movement Increase Income Gap in the U.S.?

Reader Chris Fawcett writes in with an intriguing question: How did the women’s liberation movement affect the income gap in the U.S.?

Income inequality has been on the rise in the U.S. since the 1970s, roughly the same time that women began entering the workforce in large numbers. Considering the amount of attention the widening income gap gets these days as a source of our economic woes, it seemed like something worth posting.

Here’s how Chris sees the issue:

There are a number of ways I believe this has had a big impact (maybe the biggest impact of any single issue): 1. Women’s participation in the workplace has doubled in the past half century.

2. The divorce rate has increased steadily in the past half century.

3. It is more socially acceptable to not have children (through choice or abortion).

4. People are getting married later in life. In relation to the commonly used CBO “household” income numbers, I think these issues may have had a huge effect on the perception of the widening income gap as follows: Women’s lib has created more dual income households among married couples while simultaneously enabling and encouraging women to be in single-earner households. This has a drastic effect on household income levels and it’s in a 2-1 trade off in household numbers. For every household that could be dual-income that either breaks up or never gets together, you replace it with two single-income households at a lower income level. I think women’s lib was generally a good thing for society, but this seems like in unobserved consequence that most people do not understand.

For evidence, Chris points to the following data points:

1. Stats at the U.S. dept of labor show a doubling of women laborers in the last 50 years. 2. This chart showing the number of earners in the various income ranges 3. The number of divorced people quadrupled between 1970 and 1996, from 4.3 million to 18.3 million.

The most important bit from the chart is the info on how households and income correlate. For obvious reasons, married couples are disproportionately represented in the upper income brackets, whereas both single male and female earners are concentrated toward the bottom. Chris’s point is that the rise in households headed by single working women over the last three decades has artificially widened the income gap by reducing the number of dual-earning married households, and increasing the number of low-earning single households. After dividing out the major quintiles to adjust for the number of earners per household, Chris comes up with the following breakdown:

Household Income Individual income

Q1 12,500 22,894

Q2 37,500 30,562

Q3 62,500 36,960

Q4 87,500 44,014

100k-250k 175,000 87,500 When you adjust to show individual incomes, the income gap is only $65k, not $160k.

Interesting exercise, but is it right?