Welcome to the Gender Cost Gap: What’s Driving Rising Prices for Low-Income Women?
You’ve heard of the gender wage gap – welcome to the gender cost gap.
We already know that women on average only make 82 cents to the average man’s dollar. For women of color it’s even worse. For every dollar paid to white, non-Hispanic men, Black women make 62 cents, Latinx women make 54 cents, Native women make 58 cents, and Native Hawaiian and Pacific Islander women are paid 62 cents.
But there are two sides to a family’s budget: the income that comes in and the expenses they pay out. And new research is finding that in addition to the wage gap, there is rising inequality on how quickly the prices are rising for families struggling the most in our economy.
This concept – known as inflation inequality – means that the kinds of products disproportionately consumed by richer households — think organic produce and name-brand drugs – rose in price at a slower rate than the kinds of products consumed by low- and moderate-income households – think non-organic produce and generic drugs.
Back to the gender and racial pay gap. Guess who’s more likely to be in those families living paycheck to paycheck, purchasing the non-organic apples and the generic medicines? You got it: households headed by women and people of color. And when you look at the rising cost of rent, medication, and other basics that are non-negotiable for most low-income families and the fact that they have experienced little to no wage growth, you begin to get a sense of the double squeeze that low-income families are facing.
Just-released research by Columbia University begins to quantify these impacts by updating poverty rates for an adjusted inflation index that accounts for inflation inequality. The research finds that with this methodology, 3.2 million more people would be considered poor, and that real household income for bottom fifth of households declined by more than 7 percent since 2004. These trends are especially acute for children in women-headed households, which are more likely to be economically insecure. All in all, if you take inflation inequality into account, 1.2 million more people in women-headed households would be newly counted as poor last year.
You could look at these trends and throw your hands up in the air, but it’s important to remember: it is not just random forces that are squeezing the budgets of low-income women and their families. On the income side, we’ve already identified solutions to the gender pay gap – supports like paid family and medical leave and child care, protections like the Paycheck Fairness Act, and labor standards like raising the minimum wage would all help to ensure that women achieve equal pay.
On the cost side of the ledger, new research is pointing the way to the drivers of inflation inequality and potential solutions. A new paper by economist Xavier Jaravel shows that one of the forces driving inflation inequality is the competition to innovate on products disproportionately consumed by the rich. This innovation is itself a product of inequality. With a larger share of the pie going to the tippy top, the markets for high-end products are growing and that competition is driving prices down for the already privileged few. Conversely, a senior on a fixed income, a single mom with two kids, or a young worker with student debt don’t have entrepreneurs tripping over themselves to compete for their limited dollars – their ability to substitute one good for another in a meaningful way is much more limited.
So what does this research mean for the gender justice movement? It means we must be more cognizant of the spending side of the family ledger and the larger structural forces that are making it even harder for women and their families to make ends meet. President Trump has taken us in the opposite direction, unilaterally taking steps to make public benefits such as nutrition assistance and Medicaid even LESS valuable by eroding the poverty threshold to which eligibility for these programs are tied. As noted above, the research released this week shows that the appropriate course of action would be to peg the federal poverty threshold to a higher rate of inflation given how many more people would be considered in poverty when looking at the expense side of the ledger. We need to demand a more generous and accurate measure of inflation for the poverty threshold so that the rising costs facing low- and moderate-income families are met by rising investment in public supports like Medicaid and nutrition assistance. And we need to address the root inequality that is at the heart of so many of the challenges facing women and families – and so much at the heart of the gender justice movement.