A popular explanation for the decline is the “opt out” revolution among high-income mothers. It’s true that, over the past two decades, participation rates among highly educated married women with children under age 6 have been falling. However, labor force participation has also been dropping among single women and women without children, recent research by Diane Macunovich of the University of Redlands has shown. “What seems to have passed under the radar has been the significant change that has occurred among women without children under 18, especially those who are single,” Macunovich writes. “For women without children younger than 18, declines have been occurring since the early 1990s or even the late 1980s.”
Which brings us back to the proposed secondary-earner deduction. The broad declines in female employment suggest that concerns about labor force trends may extend beyond the low- and moderate-income married women with children who would benefit from the Kearney-Turner proposal. To keep the cost in check, they phase out their tax break as income rises above $110,000. Yet even higher-income secondary earners, the ones who are the embodiment of the opt-out phenomenon, can face relatively high marginal rates.
To be sure, no proposal is perfect; reforms don’t need to solve all problems to attenuate some. So the relevant question is whether the Kearney-Turner proposal addresses a real problem with a cost-effective solution. And the answer is yes.
The secondary-earner deduction would bolster the incentives for many secondary earners to find employment. And just maybe, as Congress approaches the end-of-year budget negotiations, liberals who want to help low- and moderate-income families and conservatives who worry about the deleterious effects of high marginal tax rates will find common ground in the Kearney-Turner proposal.