Gender pay gap

The gender pay gap is the difference between male and female earnings expressed as a percentage of male earnings, according to the OECD. The European Commission defines it as the average difference between men’s and women’s hourly earnings. It is generally accepted that the majority of the wage gap is not due to explicit discrimination, but rather is due to differences in the choices made by each gender. However there is still debate over whether any of the wage gap is due to explicit discrimination, as well as over the extent to which women and men are forced to make certain choices due to social pressure.

Overview

The most basic way to examine differences in pay between the genders is to look at the median wages of men and women. However, such a comparison is of limited usefulness. Men and women tend to exhibit very different characteristics in the workplace, which can have a significant impact on their overall wages. For example, men tend to enter fields with higher average wages , and tend to work more hours per week . These differences should be controlled for in order to accurately determine what effect discrimination has upon the wages of men and women in the workplace. However, the raw median wages of men and women are often used in misleading ways to inform public policy. (See Woozle Effect) A study commissioned by the United States Department of Labor concluded:

"There are observable differences in the attributes of men and women that account for most of the wage gap. Statistical analysis that includes those variables has produced results that collectively account for between 65.1 and 76.4 percent of a raw gender wage gap of 20.4 percent, and thereby leave an adjusted gender wage gap that is between 4.8 and 7.1 percent."

The study also noted that in theory, more of the wage gap could be explained by the differences observed between men and women. However, the data that would be required to account for possible additional factors was unavailable. While the data resulting from the study generally matches the data found in other research, there is disagreement on what factors explain the remaining wage gap. Some studies assert that this gap is due to discrimination against women, while others, such as the study commissioned by the Department of Labor, have arrived at different conclusions. Many researchers also believe that the differences between the choices which men and women make are actually a result of discrimination or social pressure.

Gender pay gap over time

Women's weekly earnings as a percentage of men's in the U.S. by age, 1979-2005

Looking at the gender pay gap over time, the United States Congress Joint Economic Committee showed that as explained inequities decrease, the unexplained pay gap remains unchanged. Similarly, according to economists Francine D. Blau and Lawrence Kahn and their research into the gender pay gap in the United States, a steady convergence between the wages of women and men is not automatic. They argue that after a considerable rise in women's wages during the 1980s, the gain decreased in the 1990s. The 2000s are characterised by a mixed picture of increase and decline. Thus Blau and Kahn assume:

"With the evidence suggesting that convergence has slowed in recent years, the possibility arises that the narrowing of the gender pay gap will not continue into the future. Moreover, there is evidence that although discrimination against women in the labour market has declined, some discrimination does still continue to exist."

A wide ranging meta-analysis by Doris Weichselbaumer and Rudolf Winter-Ebmer (2005) of more than 260 published adjusted pay gap studies for over 60 countries has found that, from the 1960s to the 1990s, raw wage differentials worldwide have fallen substantially from around 65 to 30%. The bulk of this decline, however, was due to better labor market endowments of women. The 260 published estimates show that the unexplained component of the gap has not declined over time. Using their own specifications, Weichselbaumer and Winter-Ebmer found that the yearly overall decline of the gender pay gap would amount to a slow 0.17 log points, implying a slow level of convergence between the wages of men and women.

According to economist Alan Manning of the London School of Economics, the process of closing the gender pay gap has slowed substantially and women could earn less than men for the next 150 years because of discrimination and ineffective government policies. A 2011 study by the British Chartered Management Institute revealed that if pay growth continues for female executives at current rates, the gap between the earnings of female and male executives would not be closed until 2109. Despite this promising trend, women Chief Financial Officers are still paid 16% lower on average as compared to their male counterparts.

Gender pay gap by country

Gender gap in median earnings of full-time employees according to the OECD 2008.

Save the Children State of the World's Mothers report

Ratio of female to male salaries according to the Save the Children State of the World's Mothers report (2007 data). Each color represents 5% of the average male pay.

The Save the Children State of the World's Mothers Report is an annual report by the International Save the Children Alliance, which compiles statistics on the health of mothers and children.

United States

In the United States, the gender pay gap is measured as the ratio of female to male median yearly earnings among full-time, year-round (FTYR) workers. The female-to-male earnings ratio was 0.77 in 2009, meaning that, in 2009, female FTYR workers earned 77% as much as male FTYR workers. Women's median yearly earnings relative to men's rose rapidly from 1980 to 1990 (from 60.2% to 71.6%), and less rapidly from 1990 to 2000 (from 71.6% to 73.7%) and from 2000 to 2009 (from 73.7% to 77.0%).

The raw wage gap data shows that a woman would earn roughly 73.7% to 77% of what a man would earn over their lifetime. However, when controllable variables are accounted for, such as number of children, and the frequency at which unpaid leave is taken, in addition to other factors, The U.S. Department of Labor found in 2008 that the gap can be brought down from 23% to between 4.8% and 7.1%. Furthermore, The United States Government Accountability Office found in 2009 that when accounting for diminishing differences in variables including chosen occupation, education, and experience, the variable wage gap among federal workers can be brought to roughly 1-2%.

The gender pay gap has been attributed to differences in personal and workplace characteristics between women and men (education, hours worked, occupation etc.) as well as direct and indirect discrimination in the labor market (gender stereotypes, customer and employer bias etc.).

The estimates for the discriminatory component of the gender pay gap include 5%Template:Rp and 7%Template:Rp and in at least one study grow as men and women's careers progress.Template:Rp One economist testified to Congress that hundreds of studies have consistently found unexplained pay differences which potentially include discrimination.Template:Rp Another criticized these studies as insufficiently controlled, and opined that men and women would have equal pay if they made the same choices and had the same experience, education, etc.Template:Rp Other studies have found direct evidence of discrimination. For example, fewer replies to identical resumes with female namesTemplate:Rp and more jobs for women when orchestras moved to blind auditions.

Australia

The gender pay gap in Australia is calculated on the average weekly ordinary time earnings for full-time employees published by the Australian Bureau of Statistics. The gender pay gap excludes part-time, casual earnings and overtime payments.

Australia has a persistent gender pay gap. Between 1990 and 2009, the gender pay gap remained within a narrow range of between 15 and 17%. In August 2010, the Australian gender pay gap was 16.9%.

Ian Watson of Macquarie University examined the gender pay gap among full-time managers in Australia over the period 2001-2008, and found that between 65 and 90% of this earnings differential could not be explained by a large range of demographic and labor market variables. In fact, a "major part of the earnings gap is simply due to women managers being female." Watson also notes that despite the "characteristics of male and female managers being remarkably similar, their earnings are very different, suggesting that discrimination plays an important role in this outcome." A 2009 report to the Department of Families, Housing, Community Services and Indigenous Affairs also found that "simply being a woman is the major contributing factor to the gap in Australia, accounting for 60 per cent of the difference between women’s and men’s earnings, a finding which reflects other Australian research in this area." The second most important factor in explaining the pay gap was industrial segregation.

European Union

Gender gap in average gross hourly earnings according to Eurostat 2008.

At EU level, the gender pay gap is defined as the relative difference in the average gross hourly earnings of women and men within the economy as a whole. Eurostat found a persisting gender pay gap of 17.5% on average in the 27 EU Member States in 2008. There were considerable differences between the Member States, with the pay gap ranging from less than 10% in Italy, Slovenia, Malta, Romania, Belgium, Portugal and Poland to more than 20% in Slovakia, the Netherlands, Czech Republic, Cyprus, Germany, United Kingdom and Greece and more than 25% in Estonia and Austria.

In the U.K., the most significant factors associated with the remaining gender pay gap are part-time work, education, the size of the firm a person is employed in, and occupational segregation (women are under-represented in managerial and high-paying professional occupations.)

Impact

Pensions

The European Commission argues that the gender pay gap has far-reaching effects, especially in regard to pensions. Since women's earnings over a lifetime are on average 17.5% (as of 2008) lower than men's, these lower earnings result in lower pensions. As a result, elderly women are more likely to face poverty: 22% of women aged 65 and over are at risk of poverty compared to 16% of men.

Economy

A 2009 report for the Australian Department of Families, Housing, Community Services and Indigenous Affairs argued that in addition to fairness and equity there are also strong economic imperatives for addressing the gender wage gap. The report found that the gender pay gap has a substantial effect on Australia’s economic performance, measured in terms of GDP per capita, and that the value of reducing the gap is substantial. For example, the researchers estimated that a decrease in the gender wage gap of 1 percentage point from 17% to 16% would increase GDP per capita by approximately $260. This equates to around $5,497 million or 0.5 per cent of total GDP, assuming that the Australian population is held constant. The results also indicate that eliminating the whole gender wage gap from 17% (in February 2009) to zero, could be worth around $93 billion or 8.5% of GDP. The researchers also estimate that removing the negative effects associated with the prime determinant of the gap, that is being a woman, could add around $56 billion or 5.1% to total annual GDP.

An October 2012 study by the American Association of University Women found that over the course of a 35 year career, an American woman with a college degree will make about $1.2 million less than a man with the same education. Therefore, closing the pay gap by raising women's wages would have a stimulus effect that would grow the U.S. economy by at least 3% to 4%. In contrast, the $800 billion economic stimulus bill passed by Congress in 2009 is estimated to have grown the GDP by less than 1.5%. Women who are paid more will likely spend that money to support themselves and their families, because so many women live in poverty. Women currently make up 70 percent of Medicaid recipients and 80 percent of welfare recipients. By increasing women's workplace participation from its present rate of 76% to 84%, as it is in Sweden, the U.S. could add 5.1 million women to the workforce, again, 3% to 4% of the size of the U.S. economy.

Anti-discrimination legislation

According to the 2008 edition of the Employment Outlook report by the OECD, almost all OECD countries have established laws to combat discrimination on grounds of gender. Legal prohibition of discriminatory behavior, however, can only be effective if it is enforced. The OECD points out that

"herein lies a major problem: in all OECD countries, enforcement essentially relies on the victims’ willingness to assert their claims. But many people are not even aware of their legal rights regarding discrimination in the workplace. And even if they are, proving a discrimination claim is intrinsically difficult for the claimant and legal action in courts is a costly process, whose benefits down the road are often small and uncertain. All this discourages victims from lodging complaints."

Moreover, although many OECD countries have put in place specialized anti-discrimination agencies, only in a few of them are these agencies effectively empowered, in the absence of individual complaints, to investigate companies, take actions against employers suspected of operating discriminatory practices, and sanction them when they find evidence of discrimination.

In 2003, the U.S. Government Accountability Office (GAO) found that women in the United States, on average, earned 80% of what men earned in 2000 and workplace discrimination may be one contributing factor. In light of these findings, GAO examined the enforcement of anti-discrimination laws in the private and public sectors. In a 2008 report, GAO focused on the enforcement and outreach efforts of the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (Labor). GAO found that EEOC does not fully monitor gender pay enforcement efforts and that Labor does not monitor enforcement trends and performance outcomes regarding gender pay or other specific areas of discrimination. GAO came to the conclusion that "federal agencies should better monitor their performance in enforcing anti-discrimination laws."

See also

• Glass Ceiling
• Discrimination
• Economic Inequality
• Gender Gap
• Gender inequality
• Global Gender Gap Report
• Motherhood Penalty
• Income Inequality Metrics
• International Inequality
• Lowell Mill Girls

Further reading

• Chase, Max (2 February 2013). Female CFOs May Be Best Remedy Against Discrimination. CFO Insight

External links

• Gender pay gap statistics by Eurostat of the European Commission
• Visualization of the gender pay gap in the UK across different occupations.
• UK gender pay gap study by My Salary Calculator
• Research covering 33 countries