Closing the Wage Gap for Indigenous Women: The Role of the Earned Income Tax Credit

Lauren Bush

In a historic proclamation, President Joe Biden declared October 11 as Indigenous Peoples’ Day, marking the first official recognition of this important celebration. The move reflects a new commitment to honor the resilience, achievements, and contributions of indigenous Americans. But it also sheds light on persistent economic disparities affecting these communities – particularly among indigenous women – and their far-reaching consequences. They have created cycles of generational poverty, poorer health, and limited economic prospects, even more so in the face of the COVID-19 pandemic. But what can we do to address these issues, and how can we empower indigenous women who are essential caregivers and breadwinners for their families?

The Wage Gap’s Toll on Indigenous Women

American Indian and Alaska Native (AIAN) women in the United States face a daunting challenge: a wage gap that forces many of them and their families into poverty. AIAN women working full-time and year-round are paid only 60 cents for every dollar earned by their white, non-Hispanic male counterparts. This staggering 40% pay disparity places prolific limitations on AIAN women’s financial opportunities.

Over the course of a 40-year career, an individual AIAN woman can lose nearly $1 million in wages due to the pay gap. This disparity stems from historically racist government policies that have constrained economic opportunities, leading to high poverty rates (23%) and low labor force participation (less than 60%) in AIAN communities. These missed opportunities resulting from financial disparity are both extensive and impactful. For instance, the $1 million in lost wages could have significantly bolstered the financial stability of AIAN women, affording them the capacity to provide their children with a better education, invest in a home or business, secure their retirement, and elevate their overall quality of life. These foregone earnings represent not just a financial setback but also a constriction on the ability to pursue social mobility.

The Impact on Indigenous Communities

These disparities are not isolated. They have created cycles of generational poverty, poorer health, and limited economic prospects. Child poverty rates in AIAN communities have exceeded 40% for the past 30 years. Indigenous reservations, especially in rural areas, often struggle to provide basic amenities like clean running water, electricity, and job opportunities. Gender-based violence against AIAN women further compounds these issues. Among AIAN families with children, 27% live in poverty, and this rate increases to 32% for families with children under 5 years old.

The COVID-19 pandemic amplified these inequities, disproportionately affecting AIAN communities. According to data from the National Women’s Law Center, as of early 2021, adults identifying as American Indian, Alaska Native, Native Hawaiian, Pacific Islander, or multiracial were over twice as likely as white adults to report insufficient access to food and housing.

Indigenous Women as Essential Caregivers and Breadwinners

Approximately 64% of indigenous mothers take on the role of primary breadwinners for their families. This means their earnings are crucial for covering day-to-day expenses and striving for a more prosperous future. Closing the wage gap would provide much-needed income to the significant contributions of indigenous women.

More than half a million households, which translates to nearly one in five indigenous family households, are headed by women. What’s concerning is that 30% of these households are currently below the national poverty line. By addressing and ultimately closing the wage gap, we can empower indigenous women to better provide for their families and, most importantly, achieve greater economic security.

However, indigenous women face high unemployment rates, are often in low-paying jobs, and lack the support of strong work-family policies, leading to an additional nine months of work per year.

Policy Solutions and the Role of Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) emerges as a poverty alleviation strategy with the potential to make a significant impact. Indigenous families can benefit from EITC refunds in several ways, such as supplementing income for living expenses, eliminating debt, or investing in savings and assets.

Expanding the EITC to eligible students can also help reduce financial barriers that lead to students, especially students of color, leaving college prematurely. Many Black, Latinx, and indigenous students face high financial need, and the EITC could provide necessary financial assistance and help more students of color complete their degrees.

Advocating for Change

The economic disparities faced by indigenous women and communities are deeply rooted in history, but they are not insurmountable. Indigenous Peoples’ Day reminds us that change is within our grasp. With the support of policies like the EITC and a commitment to equity, we can make strides in narrowing the wage gap and enhancing the lives of indigenous families.