Gendered poverty is currently determined14 by assessing the relative poverty of households where a man controls the resources (male-headed household) versus households where a woman controls the resources (female-headed household).15 There are two assumptions being made here. First, that household resources are shared equally between household members, with all household members enjoying the same standard of living. And second, that there is no difference between the sexes when it comes to how they allocate resources within their households. Both assumptions are shaky to say the least.
Let’s start with the assumption that all members of a household enjoy an equal standard of living. Measuring poverty by household means that we lack individual level data, but in the late 1970s, the UK government inadvertently created a handy natural experiment that allowed researchers to test the assumption using a proxy measure.16 Until 1977, child benefit in Britain was mainly credited to the father in the form of a tax reduction on his salary. After 1977 this tax deduction was replaced by a cash payment to the mother, representing a substantial redistribution of income from men to women. If money were shared equally within households, this transfer of income ‘from wallet to purse’ should have had no impact on how the money was spent. But it did. Using the proxy measure of how much Britain was spending on clothes, the researchers found that following the policy change the country saw ‘a substantial increase in spending on women’s and children’s clothing, relative to men’s clothing’.
Of course, 1977 was a long time ago, and you’d be forgiven for hoping things might have changed since then. Unfortunately, however, this is the most recent sex-disaggregated data we have for the UK, so it’s impossible to say. But we do have more recent data from other countries (including Ireland, Brazil, the US, France, Bangladesh and the Philippines) and it is not encouraging. Money continues not to be shared equally between couples, and money controlled by women continues to be more likely to be spent on children (a gender-neutral word which itself hides a wealth of inequalities17) than money controlled by men.18 So unless the UK is a secret feminist paradise (I can confirm that it is not), it’s safe to say that very little has changed.
This being the case, the British government’s decision to introduce a new benefit called universal credit (UC) is unfortunate. UC merges several benefits and tax credits (including child tax credit) and, unlike the benefits it replaces, it is paid by default into the account of the main earner in each household.19 Given the gender pay gap, this is almost universally the man in heterosexual couples – and ‘almost universally’ is as exact as we’re going to get on this, because the UK’s Department for Work and Pensions isn’t collecting sex-disaggregated data on who the money is going to. So, in the UK at least, the data gap on gendered poverty is about to get even bigger.
Now we’ve established that men and women have different spending priorities, it should be clear that there is a big question mark over the second assumption, that living in a male-headed versus a female-headed household has no implications for your standard of living. And this is indeed what the data we have shows. In Rwanda and Malawi, children from female-headed households were healthier than children from male-headed households – even when the male-headed households had higher incomes.20
An analysis of the 2010 Karnataka Household Asset Survey in India was even more damning.21 When merely comparing female-headed to male-headed households, there was not much gender difference found in poverty levels. However, when poverty was assessed on an individual level, the difference was dramatic, with, wait for it, 71% of those living in poverty being women. And within those living in poverty it was women who experienced the greatest level of deprivation. Perhaps most damning for the validity of using household wealth to measure gendered poverty, the majority of poor women belonged to ‘non-poor’ households.
It’s time for us to kill off the zombie assumptions that poverty can be determined at a household level, or that ‘female-headed’ has the same implications for male poverty that ‘male-headed’ has for female poverty. They are based on faulty data and non-gender-sensitive analysis. More than this, they add to and perpetuate the gender data gap. And they have led to some policy decisions that are disastrous for women.
In the US, nearly all married couples file a joint tax return. They don’t have to: they have the choice of filing either individually or as a couple. But the system incentivises them so strongly – through lower taxes and access to certain tax credits – to file jointly that 96% of married couples do.22 And the result, in practice, is that most married women in the US get over-taxed on their income.
The US tax system is progressive, which means there are several tax bands. The first $10,000 or so that you earn gets taxed at a lower rate than the next $10,000 you earn, and so on. So, let’s say you earn $20,000 and your friend earns $60,000. For the first $20,000 of her income, you and your friend will pay the same amount of tax. But she will pay a higher rate of tax on the income she earns above that. That is, unless you happen to be married to that person and you file a joint tax return with her. In that case, you and your partner are treated as a single economic unit, with an income of $80,000, and how your tax is calculated changes.
In a married couple’s joint tax return, the couple must ‘stack’ their wages. The higher earner (given the gender pay gap this is usually the man) is designated the ‘primary earner’, and their income occupies the lower tax bracket. The lower earner (usually the woman) becomes the ‘secondary earner’, and their income occupies the higher tax bracket. To return to our couple earning $60,000 and $20,000, the person earning $20,000 will be taxed on that income as if it is the final $20,000 of an $80,000 salary, rather than all she earns. That is, she will pay a much higher rate of tax on that income than if she filed independently of her higher-earning husband.
Defenders of the married-couple tax return will point out that overall the couple is paying less tax by filing together. And this is true. But because, as we’ve seen, the assumption that household resources are shared equally is flawed to say the least, a couple paying less tax doesn’t necessarily translate into more money in the secondary earner’s pocket than if she’d filed individually. And this is before we even address any issues of how financial abuse may be making the joint filing system even worse for women. In short, the current US tax system for married couples in effect penalises women in paid employment, and in fact several studies have shown that joint filing disincentives married women from paid work altogether (which, as we have also seen, is bad for GDP).23
The US is not alone in having a tax system that, by failing to account for gender, ends up discriminating against women. A recent paper expressed bafflement at how ‘many OECD countries’ were passing legislation in an attempt to reduce the gender pay gap while at the same time effectively increasing it through their family tax and transfer systems.24 Two such countries are the UK and Australia where, although married couples file separate income tax returns, most benefits and tax credits still breach the principle of independent taxation.