Wage Gap vs. Earnings Gap

Source: CNN Money

Source: CNN Money

There are multiple pieces online from prominent publications dispelling the “myth” of the wage gap. Articles from Forbes, The Atlantic, and the Wall Street Journal discuss the wage gap as though it’s a dubious statistic and suggest that men and women’s pay are ostensibly equal for equal work.

If they are to be believed, then it’s only taken 53 years since the passing of the Equal Pay Act to reach a point of income parity. But this premise is false, and the true state of affairs is that the wage gap is painfully real. The reality is that women’s median income for full-time positions is $40,742 while full-time jobs for men earn them a median income of $51,212. The wage gap between men and women currently sits at women earning 79.5 cents to every $1.00 earned by men.

The good news is that the wage gap has steadily decreased since 1960. While 79.5 percent is better than 56 percent, any gap at all is still unsatisfactory. But what explains this difference?

Source: AAUW analysis of data from Proctor et al., U.S. Census Bureau, Income and Poverty in the United States: 2015

Source: AAUW analysis of data from Proctor et al., U.S. Census Bureau, Income and Poverty in the United States: 2015

Wage Gap vs. Earnings Gap

The wage gap is a raw statistic that refers to the percentage of women’s earnings relative to men’s. It is the ratio of the median income of women who work full time to the median income of men who work full time. The wage gap does not consider differences such as education, experience, extra hours worked, industry, time away from work, etc.

For our purposes, the wage gap should be thought of as an earnings gap. The earnings gap is not a statistic, but it refers to the overall disparity in income between men and women. It acknowledges the nuances between male and female workers, and takes into consideration the types of jobs that men and women tend to hold and the different salaries that accompany them. The earnings gap is enlightening, but it also suggests that the differences in women’s pay comes down to confounding factors stemming from professional choices.

Source: The Atlantic

Source: The Atlantic

Women dominate the low-paying jobs in industries like retail, office administration, health care, and education. Men hold the lion’s share of the high-paying jobs in finance and tech industries. Of the 30 highest paying professions, men dominate 26 of those job sectors. Of the 30 lowest paying professions, women hold the majority in 23. Women make up 43% of full-time positions and 64% of part-time positions in the work force. On the other hand, men take up a much higher proportion of the highest paying jobs.

Only 23 of CEOs at S&P 500 companies are women, and women hold a pitiful 17.9% of Fortune 500 board seats. Women are notably less present in the high-earning positions.

This may be why some conclude that the disparity in wages is not the result of gender bias, but of the occupational choices women willingly make. Perhaps if women wanted higher-paying jobs, worked more hours, or chose smarter majors in college, then they could have the same earning power as their male counterparts.

But the data shows otherwise. Even controlling for experience, education, time in the workforce, and level of responsibility, women still earn less than men in equivalent positions. When controlling for these factors, making men and women identical employees, women still earn 8% less than men. What we can conclude is that, at minimum, 8% of the gap can be explained by gender-based discrimination.

Many factors push women into lower paying roles.

Beyond the effect discrimination has on the pay women receive, women encounter obstacles when negotiating higher salaries. Some think this is because women are less inclined to ask for raises, but women are generally proactive about trying to increase their salaries. Women ask for raises as often as men do, but are 25% less likely to receive them. Women are sometimes penalized for asking about salary. Male employees are less likely to hire a woman who negotiates her salary as they perceive her as demanding and non-communal, a bane for ambitious women. Women are not earning less because they cannot muster the courage to demand fair compensation. They fight for adequate pay, but get denied more than their male counterparts.

Pay even drops for jobs historically performed by men once those jobs become predominantly female. As soon as more women start performing the same duties, the profession earns less money. Jobs performed initially by men, such as camp counselors and ticket agents, have now shifted to a predominantly female workforce. As the number of women in these roles increased, the pay for those very same jobs men worked steadily declined. Once women saturate an industry, the work itself becomes less valued. The reverse is also true. Computer programming, an initially menial job performed by women, has become a prestigious industry after being dominated by men, and salaries have skyrocketed along with that change.

Social expectations drive the difference in earnings between men and women. A common critique of those who discredit the pay gap is that women are choosing to work easier, less-skilled jobs, and therefore should be payed less; different pay for different work. This is an oversimplification. What this claim doesn’t account for are the societal pressures and cultural norms that dictate the sorts of jobs women pursue. It just doesn’t make sense that women would emphatically choose to earn less money. In reality, women’s options for work and advancement are more limited than men’s.

Even when both spouses hold full-time positions, women have more responsibilities in the home. This restricts the number of hours women can dedicate to their jobs. Gender roles persist, and women still find themselves doing more of the housework. Working women still spend twice as much time on household chores than their working husbands. The number increases even further once children enter the equation. Women also care for elderly parents more often than men, with 66% of family caregivers being female and dedicating 50% more time to providing assistance. These demands on time explain why women are compelled to search for jobs with flexible schedules and less hours. Jobs which happen to pay less.

Children offer the severest disadvantage for women’s earnings. After having a child, women’s pay takes a hit referred to as the “motherhood penalty.” Women lose nearly 4% in lifetime earnings per child. The wage gap reflects this imbalance—as women enter their 30s and 40s, the wage gap widens further. Men and women in entry level positions at the beginning of their career earn about the same amount, but the gap grows as careers advance. Even more, 43% of women take a pause from their careers after having a child. This might be due to that fact that mothers become responsible for their children’s social schedules and more often care for sick children. Of the women that do finally return, they earn significantly less than those who took minimal time off.

Source: Harvard Business School

Source: Harvard Business School

The personality of a woman can often be the focus of critical reviews. While men are commonly advised to develop specific skills, women are told to be less abrasive, less judgmental, and to share the spotlight. When demonstrating authority or competitiveness, women are considered harsh and unapproachable. Women are often described as bossy and strident, while the harshest word used to describe men is “aggressive.” Women encounter certain penalties for exhibiting the very behaviors that lead to success. The tragic side to this issue is that female supervisors are just as guilty of providing these unforgiving, gendered reviews as male supervisors.

How can we mend the gap?

We should strive for transparency in salaries and encourage the discussion of compensation amongst coworkers. How can a woman know if she’s being paid less than her male counterpart if she is unaware of his salary? Furthermore, many men do not believe women are disadvantaged by their gender in the workforce.This taboo seems like a tough one to break, given the reluctance of people to discuss income.

The minimum wage should also be raised. As women comprise the majority of workers in low-wage positions, an increase in the wage floor would mean an increase for women’s earnings. Women make up a greater share of the retail and service positions that rely on minimum wage, so increasing the wages of those position and narrow the gap.

In the spirit of egalitarianism, parental leave should be expanded and improved. Both men and women should not fear for their livelihoods because of a pregnancy. Parents to newborns and newly adopted children deserve time to recover and bond with their child. Adequate and equal time should be allowed for both parents so that one partner is not disadvantaged over another. Extending parental leave would help mitigate the motherhood penalty that mothers and women of childbearing age face.

Women need more female mentors. Those 23 female CEOs of Fortune 500 should speak out about the challenges they’ve faced and be visible models of success in the working world. If girls do not see women at the top of the totem pole, they have no encouragement to pursue similar levels of success. Seeing is believing, and right now women see a dismal picture. To them, they will only reach the peaks of success if they forego children, select partners who shoulder the burden of housework, reign with an assertive personality, and demand greater pay. It goes without saying that not all women aspire to become c-suite executives, but for the ones that do, we must build a path to success with fewer obstacles.

Caitlyn Graovac is a first year Masters of Public Policy student at Duke University.