Equal Pay Day and EITC

Now that spring is in the air, 2016 seems like a long time ago. But it took until today – April 4th – for women to finally earn as much money as a man did in 2016. With such a significant pay disparity between men and women, women have to work three months longer into the next year to make the same amount that men make in a single year.

In Montana, women still are paid only about 67 cents for every dollar a man earns in spite of the fact that more women than ever are the primary breadwinner. In about 40 percent of U.S. households with children under age 18, mothers are the sole or primary breadwinner. For female-headed households, it hurts a lot more when women aren’t paid fairly.

The good news is that a state Earned Income Tax Credit (EITC) could help boost the pay of thousands of low income women. The legislature is considering HB391, which would create a state version of the federal EITC, a tax credit paid to working adults. The Center on Budget and Policy Priorities estimates that 22,000 single mothers in Montana would benefit from receiving the EITC.*

But the EITC does far more than just provide a little extra cash for families. Studies show that the EITC has encouraged large numbers of single mothers to increase the amount of hours they work, and reduce their reliance on social safety net programs. In turn, this increase in hours worked leads to higher wage growth down the road, as well as greater Social Security retirement benefits. The EITC’s impact on employment actually doubles the anti-poverty effect of the EITC for families.

Furthermore, the benefits of the EITC for women aren’t purely financial. Research has also shown that it reduces the rate of low-weight and premature births and improves the health indicators of the mothers. In these studies, women who have received increases in their EITC were more likely to receive prenatal care.

For thousands of workers in Montana, a state EITC could have significant impacts for parents and children alike. In total, 80,000 low- and moderate-income families in Montana stand to benefit from this credit. But for 22,000 single mothers, the EITC can provide additional important benefits that will help improve the stability and health of the entire family.

All hard-working Montana families should get the pay they deserve. While we may have a long way to go in order to minimize the disparity in pay between men and women, a state EITC can be a positive step to reduce the harm this gap causes. Our state legislators should enact a state EITC and improve the lives of thousands of working mothers and their children.

 

* CBPP estimates based on data from IRS, unpublished data from the Brookings Metropolitan Policy Program, and CBPP analysis of the Census Bureau’s March 2010-March 2014 Current Population Survey

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