The gap between earnings of male and female
workers has declined significantly over the past 30 years. The Bureau of Labor
Statistics reports that in 1979 median weekly earnings of full-time female
workers were 63.5 percent of male workers' earnings, implying a gap of 36.5
percent. The earnings gap dropped to 30 percent in 1989 and to 23.7 percent in
1999. In the second quarter of 2011, the gap reached a low of 16.5 percent.
Despite the accuracy of these numbers, many researchers
believe that the mere comparison of median weekly earnings of male and female
workers presents an incomplete picture. First, women are likely to work fewer
hours than men, which would make a gap in weekly earnings between the two
groups substantial even if their hourly wages are the same.
For this reason,
most economic studies of a gender gap, including all of the studies reviewed in
this article, use hourly wages instead of weekly earnings as a measure. Second,
many other factors (such as education and labor force attachment) could affect
wages. Research suggests that the actual gender wage gap (when female workers
are compared with male workers who have similar characteristics) is much lower
than the raw wage gap.
Many studies point out that differences in
educational attainment, work experience and occupational choice contribute to
the gender wage gap. Economists Francine Blau and Lawrence Kahn found that
women's gains in education and work experience together accounted for one-third
of the decline in the gap in the 1980s and 1990s.1 As women become more educated, they have more employment
opportunities in occupations that require higher skills and pay higher wages.
Such occupational "upgrades" helped to
narrow the wage gap. However, there are still significantly fewer women in
highly paid occupations. Men are more likely to be lawyers, doctors and
business executives, while women are more likely to be teachers, nurses and
office clerks. This gender occupational segregation might be a primary factor
behind the wage gap.
Another important reason for the gender gap is
the difference in labor force attachment between men and women. Women are
likely to leave their careers temporarily for childbirth and raising children.
Such leaves may be associated with a decrease in human capital and with temporary
delays in training and promotion, which consequently lead to lower wages. In
addition, women are more likely to work part time and less likely to work
overtime than men because of family responsibilities.
One study found that, because women have weaker
labor force attachment than men, women tend to be assigned to positions where
turnover is less costly.2 As a result, women are employed in positions that have a shorter
duration of on-the-job training and that use less capital. The study concludes
that these differences in on-the-job training and capital in positions filled
by men and women, along with an implied lower value placed on women's prior
labor market experience, account for a substantial part of the gap in wages
between males and females.
A recent report prepared for the U.S. Department
of Labor analyzed the gender wage gap using Current Population Survey (CPS)
data for 2007.3 The report takes into account differences between men and women in
educational attainment, work experience, occupation, career interruptions,
part-time status and overtime worked. The result is striking—these factors
explain approximately three-fourths of the 2007 raw gender hourly wage gap of
20.4 percent. The adjusted 2007 gender hourly wage gap is roughly 5 percent.4
To better match women and men with similar characteristics
relevant in a job market, another study used the very detailed National Survey
of College Graduates 1993 (NSCG), which provides information not only on the
highest degree attained, but also on major field of study and labor force
experience.5To explore racial differences in the gender wage gap, the study compared
women of various ethnicities with white men who had similar education, work
experience and academic major and who spoke English at home. The study reports
a wage gap of 9 percent for white women, 13 percent for black women, 2 percent
for Asian women and 0.4 percent for Hispanic women. When the analysis was
restricted to unmarried, childless women only, the wage gap shrunk to 7 percent
for white women, 9 percent for black women and to virtually zero for Asian and
Hispanic women.
Some researchers believe that it is not enough
to compare wages of similar men and women. They argue that total compensation
(wages together with benefits) must be compared. Women of child-bearing age may
prefer jobs with a lower wage but with employer-paid parental leave, sick leave
and child care to jobs with a higher wage but without such benefits. A study
that used National Longitudinal Survey of Youth 1979 (NLSY79) found that female
workers were indeed more likely to receive family-friendly fringe benefits.6 Some economists believe that female workers "pay" for the
benefits they prefer by accepting a lower wage. If that is the case, excluding
fringe benefits would exaggerate the actual gender wage disparity.
Economists Eric Solberg and Teresa Laughlin
applied an index of total compensation, which accounts for both wages and
benefits, to analyze how these benefits would affect the gender gap.7 They found a gender gap in wages of approximately 13 percent. But
when they considered total compensation, the gender gap dropped to 3.6 percent.
Despite the difficulty in measuring the gender
gap in earnings, the topic attracts much attention of policymakers and
pay-equity advocates. Hopefully, continued economic research on the subject
will add to a meaningful discussion and will guide effective public policy.
Endnotes
- See Blau and Khan. [back to text]
- See Barron et al. [back to text]
- CONSAD Research Corp. [back to text]
- It is reasonable to believe, therefore, that the actual gender earnings disparity in the second quarter of 2011 is closer to 4 to 5 percent rather than 16.5 percent as presented in the graph. Put differently, the current gender gap in average weekly earnings is about $35. [back to text]
- See Black et al. [back to text]
- See Lowen and Sicilian. [back to text]
- See Solberg and Laughlin. [back to text]
- In our estimation, the gap is 18.4 percent. [back to text]
References
Barron, John M.; Black, Dan A.; Loewenstein, Mark A. "Gender Differences in Training, Capital, and Wages." Journal of Human Resources, 1993, Vol. 28, No. 2, pp. 343-64.
Black, Dan A.; Haviland, Amelia M.; Sanders, Seth G.; and Taylor, Lowell J. "Gender Wage Disparities among the Highly Educated." Journal of Human Resources, 2008, Vol. 43, No. 3, pp. 630-59.
Blau, Francine D.; and Kahn, Lawrence M. "The U.S. Gender Pay Gap in the 1990s: Slowing Convergence." Industrial and Labor Relations Review, 2006, Vol. 60, No. 1, pp. 45-66.
Bureau of Labor Statistics. "Usual Weekly Earnings of Wage and Salary Workers—Second Quarter 2011." July 19, 2011. See http://www.bls.gov/news.release/pdf/wkyeng.pdf
CONSAD Research Corp. "An Analysis of Reasons for the Disparity in Wages between Men and Women." January 2009. Seewww.consad.com/content/reports/Gender%20Wage%20Gap%20Final%20Report.pdf
Lowen, Aaron; and Sicilian, Paul. " 'Family-Friendly' Fringe Benefits and the Gender Wage Gap." Journal of Labor Research, 2009, Vol. 30, No. 2, pp. 101-19.
National Bureau of Economic Research. "CPS Merged Outgoing Rotation Groups, 2010." Seewww.nber.org/data/morg.html
Solberg, Eric; and Laughlin, Teresa. "The Gender Pay Gap, Fringe Benefits, and Occupational Crowding."Industrial and Labor Relations Review, 1995, Vol. 48, No. 4, pp. 692-708.
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