clock menu more-arrow no yes mobile

Filed under:

How Obama wants to soften the sting of expensive child care

President Obama signs the Lilly Ledbetter Fair Pay Act into law, the first bill he signed as president
President Obama signs the Lilly Ledbetter Fair Pay Act into law, the first bill he signed as president
Getty Images

For all the attention that politicians and interest groups heap on it, the gender wage gap has shown slow improvement. In the last decade, progress on closing that gap has slowed dramatically, and at times has gone backwards.

The Obama administration has been vocal about wanting to close the gap and has signed both laws and executive orders aimed at improving women's compensation. Vox spoke with Betsey Stevenson, a member of the White House's Council of Economic Advisors, about the White House's efforts to shrink the wage gap between men and women.

DK: Why is the White House pushing some of these policies in particular as wage gap policies? The EITC and minimum wage, for example, are policies that benefit everyone, regardless of gender. Are there more women-specific policies the White House might be considering?

BS: Let's start with those specific policies. The minimum wage is an everybody issue. But why does it disproportionately affect women? Well, women are more likely than men to be working at the minimum wage, substantially more likely to be at the minimum wage, and somewhat more likely to be just above it. And so if you look overall at who would benefit from a rise to $10.10, it's about 55 percent women. So it does disproportionately benefit women. And if you stop and think about it, and you relate it to how women tend to make less than men, it's not surprising that there's more of them at the very bottom.

Additionally, women are less likely to be promoted or get raises than men, which again is something that contributes to them being more likely to be at the bottom. So one simple thing to do is to make sure that the lowest wage is a fairer wage.

And it's obviously not just for women that you'd raise the minimum wage, but equally it's important to recognize that it does disproportionately affect women and to help people realize that the minimum wage is not an issue that's about teenagers working after-school jobs. It's mostly about adults trying to get by on their earnings, and that's who's earning the minimum wage.

Similarly, if you look at the EITC, the EITC has been an enormously important program for lifting women out of poverty. And again, it is focused at the bottom, but it has been extremely important for women. Now obviously, the EITC, the way it's designed, the benefits are biggest for people who have a dependent child that they live with, so they're custodial parents, which means that it is disproportionately going to benefit women.

There are obviously issues that are more specifically around gender, and the president has called on Congress to pass the Pregnant Workers' Fairness Act, and he also continues to advocate for the passage of the Paycheck Fairness Act. And you know, the first bill the president signed into law was the Lilly Ledbetter Fair Pay Act.

[The Paycheck Fairness Act] is about making sure that people can't be fired for sharing the kind of information that's necessary for us to enforce the kind of legislation that's on the books, which is that it's illegal to pay someone less for doing the exact same work simply because they're a woman.

Just increasing the transparency in the workplace — that's not mandating that people share their pay, but just telling them they're not going to be fired if they do. And one of the actions the president took with federal contractors was to issue an executive order prohibiting federal contractors from retaliating against employees who choose to discuss their compensation.

One of the other things in that vein that he did at the same time was sign a presidential memorandum to instruct the Secretary of Labor to issue new regulations requiring federal contractors to submit data on the compensation they pay to their employees — not person-by-person, but summary data, breaking it down by gender and race. So you could actually take a look as a company submitting this data and say, "Gee, the average salary I'm paying women is 75 percent of the average salary of what I pay men."

I think there's a lot of companies that don't know, and I've had managers say to me, "I've taken a look at salary data, and i think i'm paying women less, but how do I figure that out?"

I think there's a lot of people who really who want to be doing the right thing, but we're still in a place where it takes people being a bit vigilant.

Of course, equal pay is a much bigger concept than pay discrimination, so I think that creates both some of the controversy in which people think about it, but also is what creates the scope for there being so much room for public policy to think about the various issues.

Pay gaps come about as women go into different professions. We lined up all the occupations by pay, and it's just unbelievable the extent to which women are disproportionately in the bottom-paying occupations and less so in the top-paying occupations.

Policies like increasing women's access to STEM occupations are important because we want to send talented women into STEM and make sure there are no barriers to them going into certain fields, and it will also will end up leading to greater equality both in the workforce and pay.

So there's a bunch of policies about equal opportunity in the labor force that I think about as being related to equal opportunities for earnings.

DK: And that's something I think about a lot: some of the issues that contribute to the pay gap — women's career choices, not to mention women not negotiating — seem tough to change via policy. So let's say that tomorrow, the Paycheck Fairness Act and all the other initiatives you mentioned were passed. How big of a dent can government make in such an ingrained, cultural problem?

BS: I think that's a particularly hard question to answer. I think there's multiple roles for government. One is passing legislation that changes what we do. That could be ensuring that every man and woman has access to paid maternity and paternity leave. That could be doing things like passing Paycheck Fairness, passing the Pregnancy Discrimination Act. Those things will make a difference.

But then there's other things that government can do, which is sort of the bully pulpit and talking to businesses and trying to help spread the information that's necessary for society to adapt.

If you look at the [White House's] 11 facts report, one of the things we have to come to terms with as a society is we're an aging society. The baby boomers hit their first retirement age in 2008, and when you look at our younger part of the population, millennials are people in their 20s and 30s today. Women disproportionately have a lot of the skills. They have more education. Women have just as long of a tenure with their current employer. And we're not in a position where we can lose women from the labor force the way that previous generations have, because there's too much human capital there.

So businesses are every day grappling with what happens when women who have been working for your company and have been really important have their second child in their mid-30s, and all of a sudden they're thinking about dropping out.

I think people love to talk about the Google example [in which that company gave women five months of maternity leave], but I think the reason they love to talk about the Google example is I think [Google] really needed to do something about retention, and maternity leave was a way to address retention.

I think you see companies coming out on a regular basis who are discovering this is one important way to address retention and recruitment. So I do think there's a role in making sure people understand these changes.

We talk to a lot of academics, and i'm an academic myself, but my favorite one said, "Well, you know, these changes are going to happen. Companies will start making more accommodations for work-family balance. The question is how much pain do we have to endure until we get there?"

I thought that was really a useful way to think about it. Part of government's role is facilitating that conversation. So government can't bring on social change, but it can facilitate a conversation.

DK: In these recent reports, the White House has highlighted the high costs of childcare. What's driving those up so high, and what can we do to bring childcare costs down?

The cost of childcare is a really important issue. One of the most telling facts is that in 31 states, the average cost of a center-based infant care exceeds the average cost of in-state tuition at college.

And this is a really just an impossible situation for families, because you're barely ready to pay for kids' college by the time they become 18, and very few people are ready to face the cost of the equivalent of college tuition the moment their child is born. Many of them have just come out of college themselves not that long ago and are just trying to pay their student loans.

We have to find a way to make the cost of childcare more manageable at the time you have childcare, which I think is a different goal than saying we necessarily have to bring down the cost of childcare, because there's also the issue of childcare quality. It's not clear to me that the goal is to find cheaper and cheaper ways to care for our children.

The goal is to find a way that families can manage these costs, that government is helping families manage these costs, and that children are able to get the investments that are needed to ensure that they can grow up into successful adults.

Investing in children, in early childhood education, is something that's been shown time and time again to have benefits that exceed the costs. We have lots and lots of studies of preschool programs that show we spend $1 on preschool, and we get more than $1 back.

When you combine the benefits for the kids with the ability for parents, particularly mothers, to continue working, those benefits are even greater.

DK: When you talk about helping families manage the costs as opposed to lowering the costs of childcare, what does that look like?

Obviously we already have childcare tax credits, [and] there's been expansions in assistance for families trying to cover childcare. If you look in the president's budget from last year, you'll see that there was proposed increased support for childcare costs in the form of expanded tax credits for people with the youngest children, because that's where the costs are so great.

The president hears all the time from middle-class families that are struggling to pay for the cost of childcare, despite being a couple with two good jobs. By the time they are paying their mortgage and their student loans and you add childcare on top, it can be a burden.

But I think the general point is you should be struck by the cost families face, and I think that we need to make sure we're helping families afford the cost of these important investments in children when we're young, and not just providing a series of programs for children once they become older and school-age or college-age.

This interview has been edited for length and clarity.

Sign up for the newsletter Today, Explained

Understand the world with a daily explainer plus the most compelling stories of the day.