New gender pay inequality report details causes, potential solutions

For immediate release

Washington, D.C. — While it is well known that women in the workplace are paid on average considerably less than men, a new report issued by the Washington Center for Equitable Growth details the economic and other consequences of this pervasive gender pay inequality, quantifies its many causes, and suggests policy solutions to reduce the problem.

“Gender wage inequality: What we know and how we can fix it,” authored by Sarah Jane Glynn, a senior fellow at the National Academy of Social Insurance, details the reasons why gender pay inequality persists and proposes policy solutions for government at the federal, state, and local levels.

According to the report, released a day ahead of Equal Pay Day, the average earnings of all women who work full time, year round are 80.5 percent of men who work full time, year round. The total annual difference in income, for these workers alone, amounts to $799 billion annually.

The economic and other impacts of the wage differential are substantial. Women’s income is essential to economic security for dual-earner families. It has been especially important to middle- and lower-income families during a time when family income growth has been stalled. Moreover, if women had not increased their work hours over the past 30 years, economic growth would be considerably slower. In 2012, Gross Domestic Product would have been 11 percent—and $1.7 trillion—lower.

“The research this paper pulls together makes a strong, cogent case that gender pay inequality is a serious problem for our economy and our society,” said Heather Boushey, Equitable Growth’s executive director and chief economist. “But the paper also points to policy changes that can help address this problem.”

The report breaks down the causes of gender income inequality as follows:

• Half of gender pay inequality—50.5 percent—is explained by gender differences in the industries (17.6 percent) and occupations (32.9 percent) where men and women work. Wages tend to be lower in occupations that are women-dominated compared to occupations dominated by men, even when education and skill requirements are similar. In fact, evidence suggests that an influx of women into a given occupation lowers overall wages.

• Differences in average work experience—often a result of women working less due to family and other outside obligations—are responsible for 14 percent of the variance.

• Racial wage inequality is responsible for another 4.3 percent of the overall wage differential between men and women. The effect of race persists even when controlling for education, work experience, and occupation. Indeed, the paper reports that black women working full time year round earn 61.9 percent of what white men earn; the comparable figure for Latina women is 57.1 percent.

• Regional variations account for 0.3 percent of the wage difference.

• While the above factors are measurable, there remains 38 percent of the wage differential that is not as easily explained. Most researchers, the report says, ascribe much of this portion of the difference to discrimination against women and to gender stereotyping and norms such as when women are seen as “suitable” for different kinds of jobs from men. These factors also contribute to the measurable causes of gender pay inequality.

The report cites two factors that mitigate pay inequality. Women in the full-time, year-round workforce are better educated on average than men, and this narrows the difference by 5.9 percent. The other factor is union membership. Women are more likely than men to be union members, and because union members tend to be more highly paid, this diminishes gender inequality by 1.3 percent.

Finally, the report points to anti-discrimination policies that could help reduce gender pay inequity, and it lists several others that could have the effect of raising wages or make it easier for women to balance work and family life.

Regarding wages, the most important direct action would be to raise the minimum wage because women make up a larger share of minimum-wage workers. Protecting the rights of workers to form unions and collectively bargain also can boost wages, as unions raise wage floors and create more equitable earnings for all workers, including change in pay rate norms for nonunionized workers. In addition, policy should protect workers who discuss their pay and ensure that enforcement agencies and researchers have access to appropriate pay data in order to track pay inequality and ensure that policies are adequately addressing this issue.

Policies to address work-family life balance to permit women to gain more experience and work in higher-paying fields include mandatory paid family and medical leave, public support for universal childcare, and providing access to more accommodating and stable work schedules. The report also notes other solutions for addressing the shortage of women in high-wage jobs, such as those in the science, technology, engineering, and mathematics fields.

“While this report presents an enormous amount of evidence about pay inequality,” Boushey said, “it is also abundantly clear that more research is needed to help quantify how discrimination and gender stereotyping help keep pay down for women in the workforce, and on policy ideas for addressing all the factors that contribute to pay inequality.”

A fact sheet on the new report can be found here.