A Memo for Mother's Day

by Kay Bailey Hutchison

The Washington Post

As the nation prepares to celebrate Mother's Day, we should stop and ponder two striking facts about American families.

First, the most significant economic and sociological change in the past half-century has been the movement of women into the labor market, including mothers with children. In 1950, less than 12 percent of mothers with children under the age of 6 were in the labor force. Today more than 60 percent of them are working for wages.

Second, our most important public policies have not kept pace with this change. In fact, they are hopelessly outdated. Our income tax law, our Social Security system, our employee benefit and labor laws, our pension and IRA laws -- all were designed with one family structure in mind: a full-time worker husband and a homemaker wife. Our most important institutions were designed from top to bottom on the belief that women would never leave the home.

Take the income tax law. If the husband works and the wife remains at home, the couple probably benefits from a marriage bonus -- paying less in taxes than if they were unmarried. But once the wife enters the labor market, things are very different. Even if she earns only the minimum wage, the wife will be in her husband's federal income tax bracket. Add in payroll (FICA) taxes and state and local income taxes, and the wife of a middle-income husband will lose almost half of what she earns to taxes.

To add insult to injury, the couple probably will have to shell out extra money to replace some of the homemaker services the wife had been providing. According to the National Center for Policy Analysis, when all costs are netted out, the wife will be lucky if she gets to keep 35 cents out of every dollar she earns.

There are a number of ways to solve this problem, including allowing couples to file separate returns. It's vital that any assistance for the working wife in no way harms women who are able to stay at home. Owing to the possibility of death or other tragedy, every stay-at-home wife is a potential job seeker. Fairness to women who work for wages is in the interest of all women.

Our Social Security system also works reasonably well for the couple with a stay-at-home wife. When both spouses reach retirement age, the wife is entitled to a benefit equal to one-half her husband's, and she gets 100 percent of his benefit after he dies. All this is hers even though she never paid a dime in payroll taxes.

But for the wife who goes back and forth between home and work, or who works full time, the system is surprisingly harsh. Retirees can collect benefits based on their own contributions or as a dependent spouse, but not both. As a result, many working wives find that they get very little on top of what they were entitled to anyway. After paying thousands of dollars in payroll taxes over the course of a career, the second-earner spouse almost always gets a negative return.

The last century's labor laws are also out of step with the way modern families want to live their lives. Many two-earner couples, especially those with children, want flexible alternatives to a 40-hour work week. But labor law, tax law and employee benefits law stand in the way.

In a free labor market, we would expect to see many different working arrangements designed to meet the varied needs of a diverse labor supply. Part-time workers who need health insurance, for example, would be able to take less in pay in order to be covered by the company health plan. Those who had coverage through a spouse would opt for a higher wage instead. Yet these options are ruled out by a one-size-fits-all approach to employee benefits that is virtually required by federal policies.

In many respects, federal law is actually anti-family. Take a full-time worker husband with a stay-at-home spouse. As children become older, the wife could work part time. But she will get no perks, and her payroll taxes will do nothing to increase the couple's Social Security benefits. By contrast, by working overtime at night or on weekends, the husband can earn time-and-a-half pay and boost the couple's retirement benefits as well. In this way the system encourages maximum separation of the two spouses.

In these and in many other ways modern couples are having to cope with outdated institutions. We have made minor changes, especially in IRAs, to give equal opportunity to save for all who work -- inside or outside the home. But that is not enough. It's time for a wholesale review of federal policies to bring them into the 21st century.

The writer is a Republican senator from Texas .

Copyright 2004 The Washington Post
The Washington Post