Minnesota women hit hard by slowing economy and subprime crisis

When it was reported a few years ago that women were falling out of the workforce in record numbers, the media and stay-at-home advocates swarmed around the false idea that it was proof of a new movement, a neo-family campaign that had more women “choosing” to stay home and raise families just like the good ol’ days. In that throng, it was believed that somehow, in the midst of the 2001 recession and after the country has spent more than three decades living in a two-income trap, a windfall was suddenly dropped into the laps of hundreds of thousands of families and women decided en masse to shed the jobs that were once a necessity to instead stay at home like “good moms” should.

Of course, economists tried to debunk the myth that women were leaving their jobs by choice, but a crusade to believe was already underway. However, new reports released this month reveal that women weren’t deciding to leave the work force at all. Instead, the decreasing number of women in the workforce is the direct result of numerous job losses and a poor economy. And women and families everywhere are being hit hard by the loss of income.

According to a report released Tuesday by the majority staff of the Joint Economic Committee, women lost more jobs in the 2001 recession than they had in all previous recessions. In fact, during the 2001 recession, the percent of jobs lost by women often exceeded that of men in the industries hardest hit by the downturn. Since the economy has struggled to recover since then, women’s employment rates have never returned to their pre-recession peak.

Minnesota women aren’t immune to the slowing economy, pay inequity, and dwindling workforce. According to a report released last week by the Minnesota Office on the Economic Status of Women, women who worked at least 35 hours per week in 2006 earned a median wage of $33,204, or 79 percent of the $41,858 that similar male workers earned. And while Minnesota has the highest workforce participation rate among women in the country, and women in Minnesota are entering all levels of higher education at a higher rate than Minnesota’s men, approximately one in four women age 16 and over in Minnesota is low-income, living below 200 percent of the federal poverty level.

The news about increasing poverty levels and workforce freezes is especially troubling for single women. Not only are they the fastest-growing group of home buyers; they’re also the group hardest hit by predatory lending. According to a study by the Consumer Federation of America, women were 32 percent more likely to receive subprime loans than men with similar incomes, despite the fact that women have roughly the same credit scores as men.

The National Association of Realtors says single women accounted for almost 40 percent of home sales in 2006, and nearly half of those were subprime mortgages, according to the National Community Reinvestment Coalition. That same year, the Wall Street Journal released a report that found that 61 percent of borrowers who received subprime mortgages had credit scores high enough to qualify them for prime loans. In Minnesota, the average credit score for subprime borrowers was 623, a FICO score considered “good” or “fair” at the time.

Currently in Minnesota, there are still 21.6 homes per 1,000 housing units that have subprime loans, according to a June report by the New York Federal Reserve. Sixty percent of those have had a late payment in the 12 months, and 32 of Minnesota’s subprime loans will have rates that reset in the next 12 months. And with U.S. jobless claims soaring to 406,000 for the week ending July 19, a weekly increase of 34,000, the number of Minnesota women and their children struggling to survive or, worse, living in poverty is expected to continue to grow.