Reversing The Trend Towards Greater Income Inequality In Illinois

Inequality is on the rise. In the first ever historical analysis on the topic for the state, the Illinois Economic Policy Institute found that economic inequality in Illinois has risen to levels last seen in the Great Depression. The widening income disparity has been driven by the redistribution of wealth from labor to capital. In 1980, 63 percent of total state economic output went to Illinois workers, while capital’s share was 31 percent. By 2013, labor compensation declined to 56 percent of Illinois’ GDP and capital increased to 38 percent of the state’s economy. (Manzo, 2016).

Income inequality in Illinois has particularly increased in the past few years. From 2009 to 2012, earnings for the top 1 percent increased by 34.5 percent, while incomes grew by just 0.2 percent for the bottom 99 percent of workers in Illinois. As a result, Illinois has become the 8th-most unequal state in America (Sommeiller & Price, 2015).

Potentially the biggest threat to the economy derived from economic inequality is that poorer Americans spend a larger share of their incomes in the economy. Extreme income inequality can reduce overall consumer demand and limit equality of opportunity, with the poor having fewer resources to spend in the economy or invest in themselves. By making the rich richer and the rest of Americans poorer, the redistribution of wealth to the top has implications on national consumer demand. Meanwhile, inequality has been linked with lower life expectancy and reduced satisfaction. As inequality rises, aggregate wellbeing falls, resulting in lower levels of happiness.

It’s Unacceptable That Women Earn Less Than Men For The Same Work

Despite significant progress, pay discrimination and unequal opportunities continue to be real issues facing too many women in Illinois today. Women still make 79 cents for every dollar earned by men for the same work. This analysis reveals the lack of female representation in stable high-paying industries and the overrepresentation of women in unstable low-wage industries.

These disparities are the byproduct of a history of discrimination and structural barriers to entry. While the Equal Pay Act of 1963 federally prohibits pay discrimination by law, the practice has not been abolished in reality. To achieve true gender pay equality, Illinois must enact policies that strengthen and fill holes in the enforcement of the Equal Pay Act, improve training and education systems to remove access barriers to high-paying jobs, and encourage unionization in lower-paying sectors that disproportionately employ women.

The track record of current Illinois Governor Bruce Rauner is mixed on gender pay equality.  Governor Rauner has  attempted to limit eligibility in child care assistance programs, which reduce employment barriers for many working mothers (Chicago Tribune, 2015). Policies such as childcare and maternity leave that combat the “motherhood penalty” are extremely important in achieving employment equality and must be properly supported by the government.

Illinois must also work to combat the structural causes of inequality. Increasing female access to education and apprenticeship programs would increase the likelihood of women working in stable middle-class sectors. Early education and mentoring on STEM career paths and other traditionally “male” industries is needed. Illinois should also consider legislation similar to the Women’s Economic Security Act in Minnesota to advance child care and maternity rights. These changes would safeguard women in Illinois workplaces from unfair disadvantages.

Women in Illinois should also be encouraged to enter the skilled construction trades. Due in large part to significant unionization, the trades offer stable middle-class employment opportunities – yet women are highly underrepresented in the industry. Through training programs that incentivize larger shares of women and through public education, Illinois can increase the number of women in nontraditional occupations and, in the process, increase female wages dramatically.

Once structural barriers are eliminated and proper support systems are in place, gender equality will start to become a reality in Illinois. When women become better-represented in stable high-paying jobs, the wage gap will continue to close. Illinois should take all necessary steps to become an economy with equal opportunities and fair pay for both men and women.

Analysis from the Illinois Economic Policy Institute. For further reading:

The Rise of Wage Inequality in Illinois: In Two Graphs

The History of Economic Inequality in Illinois: 1850 – 2014

The Status of Female Workers in Illinois: Overrepresented in Unstable, Lower-Paying Sectors

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