South-Western College Publishing - Economics  

Policy Debate: Does a gender wage gap still exist?


 

Issues and Background

The average wage gap is not proof of widespread discrimination, but of women making choices about their educational and professional careers in a society where the law has granted them equality of opportunity to do so. Comparable worth promotes a dependence for women, and a reliance on government for protection. Given women’s achievements, such dependence is unnecessary. American women enjoy historically unparalleled success and freedom, and the progress they have made in the past half century will continue.
~Diana Furchtgott-Roth, April 12, 1999 testimony before the Equal Employment Opportunity Commission
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Equal pay has been the law since 1963. But today, 37 years later, women are still paid less than men—even when we have similar education, skills and experience.

In 1999, women were paid 72 cents for every dollar men received. That's $28 less to spend on groceries, housing, child care and other expenses for every $100 worth of work we do. Nationwide, working families lose $200 billion of income annually to the wage gap.

It's not like we get charged less for rent or food or utilities. In fact, we pay more for things like haircuts and dry cleaning.
~AFL-CIO

 

The average wage rate for female workers has been below that for male workers for as long as statistics have been recorded. In recent years, female wages have been approximately equal to 3/4 of the level of male wages. At first glance, statistics such as this may suggest that females are the subject of substantial discrimination in the labor market. There is, however, a fair amount of disagreement among economists concerning the cause of this wage differential.

No one seriously disputes the existence of a gender wage differential. The disagreement primarily focuses on the cause of the wage differential. Is it the result of gender discrimination? Or is it the result of differences in other characteristics that are correlated with gender? A study by Jacob Mincer and Solomon Polachek indicates that much of the gender wage difference is the result of differences in educational attainment and work experience. Erica Groshen and others have found that most of the remaining gender wage differential can be explained by differences in occupational choice.

Thus, the empirical evidence indicates that most (or all) of the male-female wage differential is due to gender-related differences in occupational choice, educational attainment, and prior work experience. Those who argue that the male-female wage differential is not a symptom of discrimination suggest that this difference is the result of voluntary decisions on the part of individuals in selecting their careers, educational attainment, and the level and timing of labor force participation. Those who believe that the gender wage differential is due to discrimination argue that discrimination affects women's choice of careers, educational attainment, and labor supply decisions.

One of the main reasons for the male-female wage differential is that those occupations that are disproportionately filled by women tend to be relatively low-paying occupations while male-dominated occupations tend to offer high wages. Most secretaries, nurses, and elementary school teachers are women while most engineers, surgeons, computer programmers, and chemists are men. The "crowding" hypothesis suggests that the low wages received by women in these occupations is due to a relatively large supply of labor in these female-dominated occupations. If women voluntarily select these low-paid occupations then the lower wage is the result of voluntary choice, not discrimination. This part of the wage differential is the result of discrimination, though, if women are crowded into these occupations as a result of barriers to their entry into higher-paying male-dominated professions. It is expected, however, that as the proportion of women in male-dominated occupations continues to increase, the wage differential is likely to narrow.

While there are substantially more women than males in college today, this is a relatively recent historical phenomena. Until the past 20 years, the proportion of women attending college was substantially less than the proportion of males attending college. While the educational attainment of young male and female workers is quite similar today, older women in the labor force have lower levels of educational attainment than older males. Part of the wage differential is due to the lower average level of educational attainment for women. It is expected that this portion of the wage differential will narrow over time as more highly educated women enter the labor market and older women retire.

Until the 1980s, most women withdrew from the labor force for a few years after the commencement of childbearing. Today, most women with young children remain in the labor force. A typical woman in the labor force, though, still has fewer years of prior work experience than a typical male. Since earnings are strongly related to prior work experience, differences in work experience explain part of the gender wage gap. It is expected that this part of the wage differential will decline over time due to declining fertility rates over the past few decades and the more continuous labor force attachment of younger female workers.

Those who argue that the wage differential is the result of discrimination argue that women are more likely to withdraw from the labor force because they have less to lose by leaving. Lower wages and reduced chances of promotion lower the incentives of women to remain in the labor force. This argument suggests that the causality between work experience and wages is bidirectional. While lower female wages may be partly due to lower levels of work experience, these lower levels of work experience are also partly caused by lower female wages.

Those who believe that the male-female wage differential is the result of labor market discrimination sometimes suggest that a "comparable worth" pay structure be introduced to eliminate the gender wage gap. Under a comparable worth pay system, jobs are rated according using a number of criteria such as: educational requirements, manual dexterity requirements, job stress, risk of injuries, etc. Jobs that have similar ratings are assigned the same pay. Advocates of such a system suggest that this system results in equal pay for equivalent work. Some studies, for example, have suggested that secretaries and truck drivers are "comparable" jobs. Both involve long periods of sitting, similar amounts of training, and repetitive tasks. Therefore, it is argued, the pay of secretaries (a female-dominated occupation) should be equal to the pay of truck drivers (a male-dominated occupation).

Opponents of comparable worth pay structures argue that the lower wage rate for secretaries is the result of "crowding" in this labor market. Higher pay rates would encourage more people to enter an occupation in which wages were initially low because there were already too many workers in this labor market. A reduction in the pay rate for truck drivers would cause fewer people to enter an occupation in which pay is initially high because there are relatively few people willing to work in this occupation. Those who oppose comparable worth pay structures argue that they would result in economic inefficiency by causing surpluses in labor markets in which pay is raised and shortages in those labor markets in which pay is lowered.

While there are several reasons to believe that the gender wage gap will be reduced in the future, this wage gap remains relatively large. As long as this gap remains, this issue is likely to provide a major source of debate among economists, policymakers, and the general public.

 

Primary Resources and Data

  • Equal Pay Act of 1963
    http://www.eeoc.gov/laws/epa.html
    The Equal Pay Act of 1963 was designed to eliminate gender discrimination in wages. This Act prohibits sex discrimination in wages for male and female workers in a given firm. It allows pay differentials based upon length of job tenure, merit, and productivity differentials.

  • Title VII of the Civil Rights Act of 1964
    http://www.eeoc.gov/laws/vii.html
    Title VII of the Civil Rights Act of 1964 explicitly banned gender discrimination in hiring or in establishing wage rates.

  • U.S. Council of Economic Advisers, "Explaining Trends in the Gender Wage Gap"
    http://clinton4.nara.gov/WH/EOP/CEA/html/gendergap.html
    This June 1998 report examines the reasons for the existence of the gender wage gap. It is noted that a substantial portion of the wage gap may be explained by differences in education, work experience, hours of work, and occupational choice. The difficulties in separating the effects of discrimination from the effects of preferences and choice are also discussed.

  • U.S. Equal Employment Opportunity Commission (EEOC)
    http://www.eeoc.gov/
    The U.S. Equal Employment Opportunity Commission (EEOC) web site contains information on employment law related to gender discrimination. Methods of remedying discrimination are also discussed.

  • U.S. Equal Employment Opportunity Commission, "Job Patterns For Minorities And Women In Private Industry"
    http://www.eeoc.gov/stats/jobpat/jobpat.html
    This web site, provided by the U.S. Equal Employment Opportunity Commission, shows the proportion of women employed in an extensive set of occupations. Data is sorted by 3-digit SIC code and by job category within the industry.

  • National Organization for Women
    http://www.now.org/
    The web site of the National Organization for Women contains arguments suggesting that gender discrimination is a significant factor in explaining the male-female wage differential. The Economic Equity and Affirmative Action pages on this site are of particular relevance.

  • National Committee on Pay Equity
    http://www.feminist.com/fairpay/
    The National Committee on Pay Equity argues for the elimination of the gender wage gap. They provide statistics on the magnitude of the male-female wage gap over time, and a table listing earnings by education (this does not take into account, however, the effect of occupation and work experience). This group argues for legislation that attempts to eliminate the gender wage gap.

  • U.S. Department of Labor Women's Bureau
    http://www.dol.gov/wb/welcome.html
    The Women's Bureau of the U.S. Department of Labor posts an extensive collection of information related to female labor force activity.

  • U.S. Bureau of the Census, "Money Income in the United States, 2001"
    http://www.census.gov/prod/2002pubs/p60-218.pdf
    This Census Bureau document contains detailed statistics on the distribution of income and earnings in the United States. It documents the magnitude of the male-female earnings differential. Income statistics are available by gender, educational attainment, and ethnicity. The Adobe acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.

  • Bureau of Labor Statistics, "Highlights of Women's Earnings in 2001"
    http://www.bls.gov/cps/cpswom2001.pdf
    This report summarizes data on the male-female wage gap in 2001. It finds that average weekly earnings of full-time women workers was 77% of the level of full-time male workers. This study also notes that the wage gap is larger for older workers than for younger workers. Evidence of a decline in the wage gap over time is also discussed in this report. The Adobe acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.

  • U.S. Department of Labor Women's Bureau, "Median Annual Earnings in Current and 1999 Dollars for Year-Round Full-Time Workers by Sex, 1951-99"
    http://www.dol.gov/wb/wb_pubs/achart.htm
    This web page contains statistics on nominal and real median earnings for full-time male and female workers during the years 1951 through 1999. A small narrowing of the gender wage gap during this period is apparent.

  • Monthly Labor Review, "Women's earnings growth higher than men's at all education levels, 1979-2000"
    http://www.bls.gov/opub/ted/2001/Aug/wk2/art04.htm
    The table appearing on this page shows the growth rate of earnings between 1979 and 2000 for men and women by level of educational attainment. As the title suggests, for all categories of educational attainment, the growth rate of female earnings exceeded the growth rate of male earnings.

  • Philip L. Rones, Randy E. Ilg, and Jennifer E. Gardner, "Trends in Hours of Work since the mid-1970s"
    http://stats.bls.gov/opub/mlr/1997/04/art1full.pdf
    Philip L. Rones, Randy E. Ilg, and Jennifer E. Gardner find that women are exhibiting more continuous labor force participation in this April 1997 Monthly Labor Review article. The Adobe acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.

  • U.S. Department of Labor, "Nontraditional Occupations for Women in 2001"
    http://www.dol.gov/wb/wb_pubs/nontrad2001.htm
    The U.S. Department of Labor provides this list of occupations in which relatively few women are employed. Statistics are provided on the number of women employed in each occupation, the average weekly wage, the gender wage gap, and the proportion of women in each occupation.

  • U.S. Department of Labor, "20 Leading Occupations of Employed Women, 2001 annual averages"
    http://www.dol.gov/wb/wb_pubs/20lead2001.htm
    This page, provided by the U.S. Department of Labor, contains information on the 20 occupations that employ the largest number of women. Statistics are provided on the number of women employed in each occupation and the proportion of women in each occupation.

  • U.S. Department of Labor, "Occupational Outlook Handbook"
    http://www.bls.gov/oco/
    The Occupational Outlook Handbook contains detailed descriptions of job duties and employment prospects in a wide variety of occupations.

  • Christopher Snowbeck, "Study Uncovers Gender Gap in Physician Pay"
    http://shns.scripps.com/shns/story.cfm?pk=WOMENDOCTORS-07-18-00&cat=AH
    This July 18, 2000 news article discusses a University of Pittsburgh study that finds that female physicians earn significantly less than male physicians. In particular, this study finds that the hourly wage of female physicians is 14% below the wage of male physicians.

  • Cornell University, "Cornell Couples and Careers Study"
    http://www.lifecourse.cornell.edu/cci/current.html
    This web site contains information about the Couples and Careers Study conducted by Cornell University. This study collected information on dual-earner households using "focus groups, in-depth interviews, surveys, and organizational records." This study finds that workers feel constrained by career considerations to work more than their desired number of hours. Evidence is also presented that indicates that men still spend more time in paid market labor than their working wives.

 

Different Perspectives in the Debate
  • Anita U. Hattiangadi, "'Where's My 26 Cents?': Choices Explain Gender Wage Gap"
    http://www.epf.org/ff/ff4-6.htm
    Anita U. Hattiangadi, in this Employment Policy Foundation article, discusses the magnitude and causes of the gender wage gap. She notes that most of the observed differences in male and female wages can be explained by differences in average hours, work experience, educational attainment, and career choice.

  • Diana Furchtgott-Roth, "Still Hyping The Phony Pay Gap"
    http://www.aei.org/news/newsID.11344,filter./news_detail.asp
    Diana Furchtgott-Roth argues that the observed gender wage gap is due to educational, career, and family choices on the part of women in this January 31, 2000 online article. She suggests that a comparison of the average wages of male and female full-time workers is meaningless since it does not control for gender differences in average hours, educational attainment, occupation, and other factors that affect wages.

  • Women Employed Institute and the Office for Social Policy Research at Northern Illinois University, "Two Sides of the Coin: A Study of the Wage Gap Between Men and Women in the Chicago Metropolitan Area"
    http://www.ssri.niu.edu/wei.html
    This October 1994 study found that the gender wage gap in Chicago was larger than that measured at the national level. They found that differences in educational attainment could not account for the observed wage gap. A mix of corporate and government policies were recommended to reduce this gap.

  • Howard J. Wall, "The Gender Wage Gap and Wage Discrimination: Illusion or Reality?"
    http://www.stls.frb.org/publications/re/2000/d/pages/economic-backgnd.html
    Howard J. Wall discusses the gender wage gap in this October 2000 article appearing in The Regional Economist, a publication of the St. Louis Federal Reserve District Bank. He argues that the evidence indicates that at most 25% of the gap is due to discrimination; the remaining 75% or more of the wage gap is due to differences in hours worked, educational attainment, work experience, and occupation. Wall cites a study by Blau and Kahn that indicates that 6.2 cents of the gender wage gap is due to unexplained factors. This unexplained component may be the result of discrimination, or unobservable differences in human capital investment. Wall notes that it is difficult to determine whether occupational segregation is the result of voluntary choice or of labor market discrimination that limits employment choice for women.

  • Claudia Goldin, "The Rising (and then Declining) Significance of Gender"
    http://www.economics.harvard.edu/~goldin/papers/risingsign.pdf
    In this online May 10, 2002 working paper, Claudia Goldin provides a detailed discussion of changes in the labor force participation of women. She argues that discrimination against women in the labor force grew substantially in the first several decades of the 20th century, but has declined during the past few decades. The Adobe acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.

  • Deborah Walker, "Value and Opportunity: The Issue of Comparable Pay for Comparable Worth"
    http://www.cato.org/pubs/pas/pa038es.html
    Deborah Walker examines the economic arguments concerning comparable worth legislation in this May 31, 1984 Policy Analysis article. She argues that wage differentials across occupations reflect differences in society's evaluation of the services provided by workers in these occupations. Market determined wages encourages the flow of labor to those markets in which the labor services are most highly valued. Walker argues that a comparable worth pay system disrupts this process and encourages labor to shift from high-valued to low-valued uses.

  • AFL-CIO, "Working Women"
    http://www.aflcio.org/yourjobeconomy/women/
    This web site contains links to a variety of pages discussing the AFL-CIO's position on the gender wage gap. Numerous statistics are presented supporting the existence of a gender wage gap.

  • AFL-CIO, "How Much Will the Pay Gap Cost You?"
    http://www.aflcio.org/yourjobeconomy/women/equalpay/calculate.cfm
    This page, provided by the AFL-CIO provides an online calculator that measures the impact of the wage gap on women's lifetime earnings. (The assumptions and underlying model used to compute these results do not appear to be specified on this page.)

  • Borgna Brunner, "The Wage Gap: A History of Pay Inequity and the Equal Pay Act"
    http://www.infoplease.com/spot/equalpayact1.phtml
    Borgna Brunner provides a brief history of the gender wage gap and the Equal Pay Act in this article. She notes that, until the early 1960s, jobs were listed separately for men and women with different pay rates, even for identical jobs. Brunner observes that a substantial gender wage gap still exists nearly 30 years after the passage of the Equal Pay Act.

  • Patricia Hausman, "I Am Woman, Hear Me Whine"
    http://www.dadi.org/wom_whin.htm
    Patricia Hausman argues, in this April 3, 2001 online article, that the gender wage gap is very small. She suggests that many activists ignore studies that indicate that most of the male-female wage differential is the result of differences in hours worked, previous work experience, educational choice, and occupational choice.

  • Naomi Lopez, "Free Markets, Free Choices II: Smashing the Wage Gap and Glass Ceiling Myths"
    http://www.pacificresearch.org/pub/sab/health/ceiling/0499ceiling.html
    Naomi Lopez argues, in this online article, that the wage gap does not exist when fields of study, educational attainment, and work experience are held constant. She suggests that unequal outcomes are the primarily the result of individual preferences and decisions, not discrimination.

  • Tony Dobbins, "Gender Wage Gap Examined"
    http://www.eiro.eurofound.ie/2000/11/features/ie0011160f.html
    In this November 2000 article appearing on Eironline, Tony Dobbins discusses trends in the gender wage gap in Ireland. He notes that the gender wage gap had fallen from 20% in 1987 to slightly over 15% in 1997. Dobbins cites studies that suggest that approximately three-fourths of the wage gap can be explained in terms of differences in labor force participation and other factors. The remaining one-fourth of the wage gap may be the result of discrimination. He argues that "high-quality, affordable childcare, particularly for low-income families and single mothers, is crucial" if the gender wage gap is to be reduced.

  • U.S. Department of Education, "The Condition of Education 1995: Educational Progress of Women"
    http://www.ed.gov/pubs/CondOfEd_95/ovw3.html
    This 1995 report describes the increase in female educational attainment that has been occurring for the past several decades. It notes that women tend to start school earlier and are less likely to repeat a grade. It is observed that females tend to receive higher verbal scores on standardized tests, but lower science and math scores. This report also notes that women are much more likely to major in education, English, foreign languages, communications, psychology and health-care fields. Women are less likely to declare college majors in math, engineering, computer science, or the physical sciences.

  • National Center for Educational Statistics, "Women in Mathematics and Science"
    http://nces.ed.gov/pubs97/97982.html
    This July 1997 report examines trends in women's education in mathematics and science. It is observed that males and females have similar performance levels in math and science until age 13. While there gender difference in math scores appears to be declining, the gender difference in science scores has remained relatively large. While similar proportions of males and females complete advanced math and science classes in high school, their performance tends to be lower. This report indicates that women are much less likely to select math or science related majors in college. It is also observed that female science majors tend to receive lower salaries than their male counterparts in their first job after college.

  • Alicia C. Dowd, "Collegiate Grading Practices and the Gender Pay Gap"
    http://epaa.asu.edu/epaa/v8n10.html
    Alicia C. Dowd examines the effect of grading policies by academic departments on the gender pay gap in this January 27, 2000 article appearing in Education Policy Analysis Archives. She observes that math related majors (such as mathematics, economics, chemistry, engineering, and physics) assign lower average grades to students than do departments in which verbal skills are more important (such as English, history, and education). Dowd cites studies that indicate that women are more likely than males to avoid majors in which they experience relatively low grades. This, combined with the fact that college-age females tend to have higher verbal and lower math skills, encourages females to major in those disciplines in which verbal skills are highly valued. Males are more likely to major in disciplines that rely on high levels of mathematical skills. Because math-oriented majors are more highly valued in the labor market, males receive higher wages. Dowd suggests that grading policies should be standardized across academic departments to allow grades to be a better signal of relative performance.

  • Brown University, "Achieving Gender Equity in Science Classrooms: A Guide for Faculty"
    http://www.brown.edu/Administration/Dean_of_the_College/homepginfo/equity/Equity_handbook.html
    This online document examined methods of retaining more women in math and science related majors. Several studies are cited that examine why women are less likely to major in such disciplines. It is argued that the gender gap in science related fields could be reduced if teaching styles are modified to accommodate a wider variety of learning styles.

  • Minnesota Department of Employee Relations, "Pay Equity / Comparable Worth"
    http://www.doer.state.mn.us/lr-peqty/lr-peqty.htm
    The Minnesota Department of Employee Relations web site contains detailed information about the implementation of their comparable worth pay system. This site even includes downloadable pay equity analysis software that may be used to assist in the implementation of a comparable worth pay system.

  • Steven E. Rhoads, "Would Decentralized Comparable Worth Work? The Case of the United Kingdom"
    http://www.cato.org/pubs/regulation/reg16n3e.html
    In this in this Cato Regulation article, Steven Rhoads examines the "equal value" pay system used in England. This system is essentially a decentralized form of a comparable worth pay structure in which firms can use any nondiscriminatory pay system. Disputes are resolved in industry tribunals consisting of three people, one of whom is a lawyer. Independent experts render opinions on the merits of these cases. Rhoads notes that the lack of uniform standards result in the use of a wide variety of standards by these experts in evaluating discrimination cases. He finds that the U.K. system provides arbitrary results. Rhoads believes that concerns over this arbitrary process will eventually result in the adoption of centralized standards. He suggests that such a centralized system will still result in arbitrary and inefficient outcomes.

  • Ann Crittenden, "Mothers Pay Price for Nurturing Human Capital"
    http://www.womensenews.org/article.cfm?aid=456
    In this February 21, 2001 article, Ann Crittenden argues that society generally undervalues the role that women play in creating human capital. She notes that women play the largest share in creating human capital through childbearing and childrearing. Yet, these activities tend to be unrecognized because no salary is attached to these tasks. GDP undercounts the value of women's contribution because it does not measure the value of unpaid activities. Crittenden argues that divorce laws in many states also do not fully take into account the value of the household services provided by women. She suggests that this results in a dependency that is harmful to women.

  • Infoplease.com, "The Wage Gap in Pro Sports"
    http://ln.infoplease.com/spot/sptwagegap1.phtml
    This online article describes gender differences in wages in professional sports as well as gender differences in access to sports scholarship funds.

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