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Persistence of gender wage gap

By Vijay K. Mathur - | Nov 15, 2018

“#Me Too” movement has drawn attention to the mistreatment, harassment, and sexual assault of women in general and in the workplace. However, it has also rekindled the controversy of wage earnings discrimination against women in the workplace, even though the gap has narrowed since 1955.

In the U.S. for full-time work (35 hours or more), women annually earned 60 percent in 1955, 79 percent in 2010 and 83 percent in 2014 as compared to men, according to Francine Blau and Lawrence Kahn, J of Economic Literature, in September 2017. This gap has remained almost unchanged in 2018. It is narrower between black women and black men as opposed to white women and white men. In Utah the gap is worse (ranking 49th in the nation). What explains the persistence of wage earnings gap and its slow down since the 1980s?

Wage earnings gap will arise if women have skills associated with low-wage occupations. For example, a Utah Women and Leadership Project study from December 2016 finds that more than 40 percent of Utah women work in two occupational groups with income gaps ranging from 14 percent to 59 percent from the average for all professions in the state ($31,446). Women in Utah have lower participation rates in higher paid occupations, such as construction and extractive industry, installation, maintenance and repair, and architecture and engineering.

As compared to other countries, the U.S. has a higher wage gap between lower and higher skills. Thus it creates a greater wage gap in the U.S. since women are concentrated in lower-skilled occupations. The paradox is that in Utah men and women have almost the same levels of education, at the associate and the bachelor’s degree levels, but still have one of the worst earnings gap. Studies show that even though women have made much progress in entering higher paid occupations, they still lag behind men in occupations requiring skills in math, science, engineering and finance.

What about the earnings gap within the same occupations, with the same education and experience? It could be due to attributes, such as experience, turnover, absenteeism and part-time work. As the study by Blau and Kahn shows, even though experience in general has narrowed nationally between men and women, the above characteristics could lead to less specific training and experience in particular occupations, lower productivity and hence lower wages. Such factors matter more for women who face the problem of balancing work and family (more so in Utah due to large family size).

The report, Workplace Gender Gap in the Oct. 23, 2018 Wall Street Journal, finds that aside from experiencing harassment in technical and senior management positions, the share of women decreases at every step of the management ladder. Their share in industries, such as health care systems, retail, banking and consumer finance, tech and software, and engineering, declines at each level of senior positions as compared to their share at the entry level.

“#Me Too” movement has made business executives aware of the discrimination against women in the workplace. This movement has also made women realize their self-worth and made them more assertive in demanding equal treatment in the workplace. However, as WSJ reports, women CEO-founders of companies with less than $15 million of investor financing pay themselves less compensation than men, mainly due to the shortage of financial support by venture capitalists.

Evidence cannot discount discrimination against women in hiring, pay, promotion, and lack of mentoring and other support structure in the labor market. According to McKinsey study for US News and World Report, 2018, Utah ranks second from the top in the economy’s performance and third from the top in education, but ranks 35th from the top in opportunity. Hopefully, senior executives in businesses and institutions will realize the loss of economic wealth to the nation if women’s potential is not fully recognized and utilized.

According to philosopher John Rawls’ concept of justice, in the meritocratic system of the free market, the distribution of income and wealth is just, “only if everyone has the same opportunity to develop his or her own talents. Only if everyone begins at the same starting line … the winners of the race deserve their rewards.”


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