The Wage Gap Debate Continues

The Wage Gap does exist.

The problem of pay inequality between the sexes persists. Full time women workers average $30,724 in annual earnings compared to men’s $40,668, or about 75.5 cents on the male dollar. Not all women and men work full time. Among all working-age adults, the gap is considerably wider-women’s income is less than half men’s.

The cumulative effect of the gender wage gap may surprise you. One study shows that a woman in her late 20s who works full time would lose about half a million dollars in income by the time she was in her mid 40s, compared to a similarly qualified man.

How you feel about the pay gap between women and men depends on whether you see it as the result of women’s choices or of discrimination.

One view is that women choose to enter “female” occupations that are lower paid and require less skill and time commitment in order to care for children. Since gender inequality is the result of “choice,” why worry about pay inequality?

Others say the wide sex gap in pay is due to policies and social institutions-labor markets, family, religion-which confine women to jobs characterized by low wages, little mobility, and limited prestige. Added to this, employers and male employees are seen as actively discriminating against women, who are denied promotion and training opportunities that men have.

What does the evidence tell us about the merits of these two positions? It tells unambiguously that a large part of the wage gap is discriminatory, and only a part is due to differences in male and female occupations and women’s greater time off to care for children and the elderly.

How this happens is quite complex. Sometimes employers pay lower wages to women than men in the same work place, but usually the process is subtler. A common phenomenon is that women and men are segregated in different jobs, making wage discrimination less obvious.

Sex segregation of jobs is a dominant feature of our economy. This is easily observed. The next time you go for a dental visit, check out the gender of the office: dental hygienists and staff tend to be female, and dentists male. Pilots, clergy, engineers, firefighters are almost entirely male. Bank tellers, childcare workers, nurses, elementary teachers are mostly female.

Less noticeable is that even if jobs don’t seem segregated, most top jobs are given to men. Some people find this hard to believe.

They think these times are behind us. But two recent legal cases, involving Wal-Mart and Home Depot, remind us that employers actively work to maintain gender hierarchies in the work place.

A class action suit was recently brought against Wal-Mart, the nation’s largest employer, covering 1.6 million current and former female Wal-Mart employees.

Statistical analysis shows that Wal-Mart pays female workers less and gives them fewer promotions than men. Although women make up more than 70% of Wal-Mart’s hourly workforce, they are less than one-third of its store management. Even in the same job category, pay gaps exist at Wal-Mart, and the salary gap widens over time even for men and women hired into the same jobs at the same time.

At Home Depot, the story is similar. New hires are assigned either to sales jobs or to jobs as cashiers. Those in sales jobs have opportunities to move into positions as department supervisors and assistant store managers, while promotion is unlikely for cashiers. The legal case against Home Depot provided evidence that about 77% of newly hired men were given sales jobs, but only 20 percent of women.

Women were kept out of entry-level jobs that could lead to promotion. Take the case of Patty Nichols, hired as a cashier in a Houston Home Depot in 1988. She began to make inquiries about an assistant manager job after 8 years with Home Depot, a bachelor’s degree in management, and a good work record. She was interviewed for the job 4 times in the next 2 years but was passed over each time for a less experienced and less knowledgeable man.

She had been given good management reviews until she filed a complaint about her treatment to the EEOC. Then her performance evaluations turned sour.

This short story tells us about the barriers many women face in moving up the job ladder, and the reprisals they face if they challenge the gender hierarchy that keeps them at the bottom. Many women ultimately accept the status quo, but one cannot call that “choice”- acquiescence would be a better description.

These two cases indicate that at least part of the earnings gap between men and women is due to discrimination-the perpetuation of gender norms that suggest women belong at the bottom of the hierarchy.

But can employer discrimination persist in competitive markets? After all, firms that discriminate pay for it in higher labor costs.

At least in theory, pay inequality should eventually disappear because the discriminating firms will be competed out of business. This might be true if markets were competitive, but they are not.

Certainly, Wal-Mart and Home Depot cannot be considered your run-of-the-mill small businesses that compete with local businesses on equal footing. Large companies can afford to discriminate especially if they find that putting women in supervisory positions causes men to become disruptive on the job, lowering productivity. The evidence that pay gaps persist undermines the competition argument.

Some believe women’s wages are lower because they prefer jobs that give them a flexible work schedule to be home with the kids part of the time.

But UVM’s Professor Elaine McCrate finds no evidence for this explanation. She recently published a study that finds that it is men, mainly white men in upper echelon positions, whose jobs are the most flexible and the most highly paid.

Wage gaps are the result of gender hierarchies that play out at various levels of society, and are so embedded, we are often blind to the processes that lead to this inequality.

Blaming women’s childcare responsibilities for their low wages suggests women are “victims of choice.” But the fact is women often take care of the kids because men frequently don’t. That may be a rational choice for some families. Women’s lower wages make it less costly for the individual family to forgo the income of the adult with the lowest wages.

We are lucky women are willing to do this unpaid work. Society would be much worse off if our children were not well cared for.

But it is a mistake to believe that this is an optimal outcome. Our society has failed to develop policies so that women can attain economic equality and independence.

Gender pay gaps are a problem-they are a problem for fairness in a society that considers itself a meritocracy. They are a problem for the many women whose life choices are limited and who find it difficult to exit painful relationships because of inadequate income.

They are a problem in lost efficiency, because many qualified women fail to get jobs they deserve that instead go to unqualified men.

And gender pay inequality is a problem for children.

The stark fact is that gender relations are undergoing a tumultuous change, and stable relationships are no longer the norm. Many single-headed households have women at the helm. Discriminatory pay gaps leave women in precarious financial straits and contribute to children’s poverty.

Rather than try to justify inequality, we would be better served by taking measures to rectify the problem.