The Wage Gap: A Brief Review of the Economic Causes

(plus some STEM)

Presented at the Equal Pay Taskforce MeetingButte, MontanaApril 10, 2015

Presented by Barbara Wagner, Chief Economist

MT Dept. of Labor and Industry

The Raw Wage Gap

Nationally,Women earn 70.6% of

men.

In Montana,Women earn 67.5% of

men.

Raw Gap=

Source: 2013 American Community Survey, 3-Year Estimates 2

The Full-Time, Year-Round Wage Gap

Women are more likely to work part-time than men.

• Including only people that work full-time, year-round,– Women earn 78% of men nationally,– Women earn 75% of men in Montana.

3

𝑚𝑒𝑑𝑖𝑎𝑛𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠𝑜𝑓 𝑤𝑜𝑚𝑒𝑛 h𝑤 𝑜𝑤𝑜𝑟𝑘𝑦𝑒𝑎𝑟 −𝑟𝑜𝑢𝑛𝑑𝑎𝑛𝑑 𝑓𝑢𝑙𝑙−𝑡𝑖𝑚𝑒

𝑚𝑒𝑑𝑖𝑎𝑛𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠𝑜𝑓 𝑚𝑒𝑛 h𝑤 𝑜𝑤𝑜𝑟𝑘𝑦𝑒𝑎𝑟 −𝑟𝑜𝑢𝑛𝑑𝑎𝑛𝑑 𝑓𝑢𝑙𝑙−𝑡𝑖𝑚𝑒

Source: 2013 American Community Survey, 3-Year Estimates

U.S. Median Earnings by Education Category(25 Years and Older with Earnings)

Less

than HS

HS Grad or GED

Some College, 2

-Year Degre

e

Bachelor's

Higher than Bach

elor's$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

Thou

sand

s of

Dol

lars

67.0%$7,400

Source: 2013 American Community Survey 3-Year estimates, U.S. Census Bureau

68.3%$10,250

68.0%$13,050

67.8%$19,550

Women

Men

67.1%$27,150

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U.S. Median Earnings by Race and Gender(Full-time, Year-Round Workers)

Asian White Black Native American Hispanic0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Med

ian

Earn

ings

5Source: ACS 2013 3-year estimates, U.S. Census Bureau

WomenMen

90%$3,100

86%$5,050

90%$3,950

78%$11,200

80%$11,200

U.S. Median Wage by Gender and Class of Worker

Private

NonProfit

Local Gov

State Gov

Federal Gov

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

85.4%$9,000

Source: ACS 2011, 3-year estimates

WomenMen

6

80.2%$9,250

76.2%$11,500

81.2%7,700

68.5%11,850

Source: American Community Survey, 2012. Map prepared by Forbes.com. Casserly, Meghan, “The Geography of the Gender Pay Gap: Women’s Earnings by State” http://www.forbes.com/sites/meghancasserly/2013/09/19/the-geography-of-the-gender-pay-gap-womens-earnings-by-state .

7

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Take Away Points

• Gender Wage Gap exists across– Most occupations (there are a few where pay is equal)– All industries– Private, public, and nonprofit– All education groups– All age groups– All states, with Montana on the bottom half

• Gap has improved over time, but improvement is slow.

9

10

What Causes the Wage Gap?

• It’s not just discrimination– Occupation choice– Industry choice– Education– Experience – Part-time work/ flexible scheduling– Time out of workforce for family care– Union status

• Other factors that influence the size of the wage gap– Race -- Other factors– Age -- Behavior (i.e. asking for raises)

11

Some of these factors may be influenced by

discrimination.

U.S. Occupations where Women Work

12Source: ACS, 2013 3-Year Estimates. Some small occupations removed for simplicity.

Food preparation and serving

Personal care

Building and grounds cleaning

Healthcare support

Sales and related

Office and admin support

Production and transport

Arts, entertainment, and media

Community services

Education and library

Healthcare practitioner

Life and social science

Business and financial

Management

Computer and math

Legal

0 2 4 6 8 10 12 14 16

Millions of U.S. Working Women

More Money

Less Money

U.S. Industries Where Women Work

13Source: ACS, 2013 3-Year Estimates. Some small industries removed for simplicity.

Leisure Activities

Retail

Other services

Admin support

Ag and forestry

Health care

Construction

Education

Wholesale trade

Manufacturing

Transportation

Financial Activities

Public administration

Professional and technical services

Mining

0 2 4 6 8 10 12 14 16 18

Millions of U.S. Women Workers

More Money

Less Money

Construction and extraction

Installation and repair

Protective service

Computer and math

Management

Building cleaning and maintenance

Arts and media

Sales and related

Legal

Food preparation and serving

Business and financial

Community services

Office and admin

Education and library

Healthcare practitioner

Personal care

Healthcare support

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Occupation ChoiceWomen choose to work in low-paying occupations

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Pay Gap Ratio

Percent Female

Source: ACS, 2013 3-Year Estimates. Some small industries removed for simplicity.

Occupation and Industry ChoiceChoices are Good

• Choice and aptitudes.

• Women may prefer benefits, flexibility, or time off instead of high wages.– Men are slightly more likely to have access to paid leave.– Men and women roughly equally likely to have access

to flexible scheduling

• Taking leave– Women more likely to take paid leave (among those that have it).– Some studies suggest men more likely to have flexible scheduling approved.

• Women more likely to work multiple jobs.

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Source: Access to and use of paid leave from American Time Use Survey, Bureau of Labor Statistics (BLS), 2011 annual. Access to flexible scheduling from McMenamin, Terence. Monthly Labor Review, BLS, Dec. 2007. For studies on approval of flexible scheduling, see Brescoll, Glass, and Sedlovskaya, Journal of Social Issues, June 2013.

Occupation and Industry Explains Part of the Wage Gap, But There are Caveats

• Even within each industry / occupation, there is a wage gap.

• Men are more likely to be promoted to management positions.– Only 39% of U.S. managers are female.– Only 26% of U.S. chief executives are female.

• Men are more likely to be hired than women, with the bias towards men increasing in higher-paid jobs.– For a low-wage job, females are 9% less likely to get the job. – At the top of the wage distribution, females are 50% less likely to get the

job.16

Source: 2013 ACS 3-Year estimates, Census. 2014 Current Population Data, BLS . Gobillon, Meurs, Roux in Journal of Labor Economics, V33, n2, April 2015 and other studies.

State Pay Audit

• Found that occupations are the primary reason for pay discrepancies.– Very few women in blue collar (high pay) jobs.

• Women tend to be under-employed in lower band levels.– We don’t know if by choice or by system.– Fewer women than men in supervisor positions at nearly all band levels.

• Women tend to have slightly less experience in their current position.– No way to know if experience overall or if differences in skills.

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Occupational Choice: STEM

1993 2010 Trend 2012 Mean

Earnings

All Science and Engineering Jobs 22.9% 27.5%

Social Scientists 50.7% 58.1% $67,660

Biology/ Ag / Environment 34.0% 48.2% $69,980

Physical scientists 21.3% 30.0% $74,880

Computer/ math 30.8% 25.1% $76,170

Engineers 8.6% 12.7% $86,50018

1993 2010

Source: National Science Foundation, STEM Education Data and Trends 2014.

Recent Studies on Women in STEM Occupations

Women Leaving Engineering

Women exit science and engineering jobs more than

any other type of job.

– Not due to family constraints.– Dissatisfaction with pay and

promotion opportunities.– More likely to report sexual

harassment.

Women and Patents• 7.5% of all patents• 5.5% of commercialized

patents• Discrepancy attributed to

fewer women in R&D positions

• Eliminating the gender gap in patenting would increase GDP per capita by 2.7%

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Hunt et al, Natural Bureau of Economic Research, WP 17888, 2012.

Hunt, Natural Bureau of Economic Research, WP 15853, 2010

Factors Influencing Pay and the Gender Gap

• Occupation choice

• Industry choice

• Education

• Experience

• Part-time work/ flexible scheduling

• Time out of workforce for family care

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What do studies show?

• Women have more education and slightly higher grades than men– Do women stay in school longer because they perform well?

• Different college majors plays a role– Even among students with the same major and equal school

performance, men out-earn women– Significant attention to recruiting women into STEM degrees

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U.S. Median Earnings by Education Category(25 Years and Older with Earnings)

Less

than HS

HS Grad or GED

Some College, 2

-Year Degre

e

Bachelor's

Higher than Bach

elor's$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

Thou

sand

s of

Dol

lars

67.0%$7,400

23Source: 2013 American Community Survey 3-Year estimates, U.S. Census Bureau

68.3%$10,250

68.0%$13,050

67.8%$19,550

Women

Men

67.1%$27,150

Specific to STEM Education

• In high school, performance differences manifest, with females are less likely to take AP exams in STEM.

• Some research has suggested that STEM teachers give male students more praise and opportunities. Other research disagrees.

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• In elementary, males and females have equal performance in math and science.

• In 8th grade, white males slightly outperform females on math and science exams. For blacks, the opposite is true, suggesting cultural factors play a role.

Specific to STEM Education

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• Women earn 57% of all bachelor’s degrees.– Roughly half of science and engineering degrees.– Men hold majority in engineering, computer

science, and physics– Share of women in computer science has fallen

from 28% in 2000 to 18% in 2011.

• Women earn 47% of all doctorates.– Less than 1/3 in physical science, math, computer science,

and engineering.

Source: National Science Foundation Education Data 2014.

Factors Influencing Pay and the Gender Gap

• Occupation choice

• Industry choice

• Education

• Experience

• Part-time work/ flexible scheduling

• Time out of workforce for family care

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Did not Work 35 Hours or More 15 to 34 Hours 1 to 14 Hours0%

10%

20%

30%

40%

50%

60%

70%

80%

Male

Female

Usual Hours Worked

Experience: Part-Time Status

27Source: 2013 ACS 3-year Estimates

Experience and Part-Time Work

Women are more likely to care for children and family.• Time out of workforce for childbearing.

• Choose part-time work or relaxed occupations to allow for work and family.

• Economic theory suggests that the lower-paid partner will take on more home responsibilities.

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Pay Gap over Time by Age Group

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Because of Part-Time Work and Motherhood, Women have Less Experience.

Is this problematic?

• Why it might not be:– Women may choose to work part-time or take longer parental

leave time for family care.

• Why it might be:– Discrimination causes men to earn higher wages, so families

decide women should stay home. – What about dads?– Cultural pressure to work at home or fulfill motherly duties– Discrimination in hiring practices– Expectation of motherhood and early “leaning out”

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Union Representation Narrows GapMedian Weekly Earnings by Union Status and Gender

Represented by Unions Non-Union$0

$200

$400

$600

$800

$1,000

$1,200

$1,015

$840 $899

$687

Males

Females 81.7%

31Source: Bureau of Labor Statistics, 2014 Current Population Survey.

88.5%

Factors Influencing Pay and the Gender Gap

• Occupation choice

• Industry choice

• Education

• Experience

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Montana Gap = $0.33

14₵ 9₵ 7₵

Conclusions

• Much of the wage gap can be explained by human capital factors and productivity.

• There remains a gap.

• Research suggests cultural stereotypes of greater detriment than overt sexism.

• Culture changing more slowly than human capital factors.

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What can we do?

• Economics traits that seem to help– Knowledge jobs over muscle jobs– Centralized pay decisions– Wage compression– Changing cultural norms

• Paid family leave increases women’s labor force participation and increases experience levels.

• Increased pay transparency provides greater ability to negotiate pay.– Both male and female managers can show bias in performance

evaluations and discounting women’s experience.– Women often given office duties that can detract from achievements. 34

DATA AND PRESENTATIONS AVAILABLE AT

WWW.EQUALPAY.MT.GOV

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A special thank you for research assistance to Isabel HuffSmith College