Equal Pay Act - Part 2

3.  Why the EPA is relevant today

In 2013, the gender pay gap (unadjusted), or “a measure of unequal pay for women compared to men,” is still prevalent and persistent in the U.S. When the EPA was signed in 1963, women earned on average 59% of what men were paid – that is, 59 cents for every dollar men made. Fast forward 50 years: women earn on average 77% of what men are paid, or 77 cents for every dollar men make. That is an increase of less than 4 cents per decade.  A recent analysis by the Institute for Women’s Policy Research on the trajectory of the gender pay gap from 1960-2012 is an excellent illustration of how progress in shrinking the gap has stalled since 2002. While many blatantly sexist discriminatory practices in the workplace might have dissipated or transmutated over the years, unequal pay has not.

The gender pay gap affects all women, though it has never affected all women equally. According to a study that compared cross-racial/ethnic gender pay differentials in 2012, the median weekly earnings of women of all racial/ethnic groups were less than that of their male counterparts: 12% less among Hispanic or Latino/a, 10% less among African Americans, 19% less among Whites, and 27% less among Asian Americans. The median weekly wages of white men are higher than all others, as can be seen in this chart. 

 

 Women’s earnings as a percentage of earnings by men of same race/ethnicityWomen’s earnings as a percentage of white men’s earnings
Hispanic or Latina88%59%
African American90%68%
White81%81%
Asian American73%88%


4.  Measuring the pay gap

There are different methods, but the basic idea is to calculate the difference between men’s and women’s typical earnings and to report the difference in relation to men’s earnings, i.e., the highest earnings.

Median earnings are used to calculate the difference because they represent the middle value of earnings of all workers across the whole economy. 

Pay Gap = (Men’s median earnings – Women’s median earnings) / Men’s median earnings

For example, according to the Census Bureau and the Bureau of Labor Statistics, men’s median annual earnings in 2011 was $48,202 and women’s median annual earnings was $37,118. The 2011 gender pay gap: ($48,202 - $37,118) / $48,202 = 23%.

Earnings ratios can be used to express the same idea. The earnings ratio is calculated by dividing women’s median earnings by men’s median earnings.  

Earnings Ratio = Women’s median earnings / Men’s median earnings


The earnings ratio in 2011: $37,118 / $48,202 = 77%. 
 

Economists use different earnings measurements such as hourly, weekly or annual wages. Some observe long-term patterns, using data from various points in history. Others focus on what they call “adjusted” pay gaps, that is, the pay gap after factoring in and adjusting for individual characteristics such as age, gender, family size, education level, job experience, and industry, among other variables. In the U.S., these adjusted figures tend to narrow the gender pay gap. For example, according to one study, researchers found that after adjusting for those individual characteristics, the gender pay gap was 19%, and when they additionally controlled for industries and occupations, the gap became 9%.       

 

5. Why is there a gap?

What more can be gleaned from looking at the pay gap? One major fact is the highly “gendered” look of our workplace, also known as occupational segregation. Men (approximately 49%) work in industries predominantly occupied by men, and women (41%) work in industries predominantly occupied by women. Male-dominated industries tend to offer more better-paid positions versus more poorly paid positions in female-dominated industries – a phenomenon observed by some as a “jobs gap.”

Regardless of which gender dominates the industry, across almost all occupations men’s earnings are higher than women’s. The following analysis is based on a 2011 study by the Institute for Women’s Policy Research. Women are highly visible in two occupational categories of secretaries and administrative assistants and receptionists and information clerks, occupying 96% and 93% of the workforce, respectively. But a gender pay gap of 9.4% adheres among secretaries and administrative assistants and 3.3% among receptionists and information clerks. Bigger wage gaps occur in occupations that could be stepping stones to better-paid, management positions, such as first-line supervisors/managers of retail sales workers or accountants and auditors. Female first-line supervisors/managers made 74% of what their male peers made, and female accountants/auditors made 75% of what their male peers made.  

Common Occupations
for Women
Percentage of female workers in occupation (%) Women’s earnings as a percentage of white men’s earnings (%)Gender pay gap  (%)
Secretaries and administrative assistants95.7 90.6 9.4
Receptionists and information clerks92.5 96.7 3.3
Registered nurses90.586.513.5 
Nursing, psychiatric and home health aides87.087.512.5
Accountants and auditors59.174.925.1
First-line supervisors/managers of retail sales workers45.573.926.1

 

The biggest gender pay gap appears in high-paying occupations. For example, female personal financial advisors’ median weekly earnings are $962, whereas the same figure for their male counterparts is $1,647, a 41.6% gap. The pay gap for female medical and legal professionals and chief executives hovers between 23% (chief executives) and 29% (physicians/surgeons) despite great inroads in these traditionally male-dominated industries. Among low-paying occupations, the gender pay gap tends to be smaller. Women still make less than men, however, with the sole exception of the combined food preparation and serving workers, including fast food occupational category. 

Highest paying occupations for womenPercentage of female workers in occupation (%)Women’s earning as percentage of men’s (%)Gender pay gap  (%)
Physicians and surgeons31.271.029.0
Chief executives25.672.127.9
Lawyers35.077.122.9
Personal financial advisors32.858.441.6
Combined food preparation and serving workers, including fast food60.3112.1- 12.1

 

Traditionally, economists consider two theories to explain the gender pay gap. The first, human capital theory, puts the emphasis on women’s choices to explain why their pay is less than men’s pay. It hypothesizes that individual characteristics or qualifications – e.g., age, education, training, work experience and history – are responsible for differences in pay between all workers. This theory says that some workers are paid less because, for example, they lack the needed level of education, training or work experience compared to their competitors. The theory further suggests that women’s wages tend to be lower because they choose to work fewer hours due to family and childcare responsibilities, choose occupations and industries that offer lower wages but more flexibility or expect their career paths to be discontinuous. All those choices lead to women accumulating less human capital; as a result, the theory goes, women are paid less than men because they do not achieve the qualifications required to assume positions in true competition with men.

The second theory, called the discrimination theory, hypothesizes that prejudicial and discriminatory practices in the workplace are the main culprits of the pay gap. It suggests that discriminatory practices induce differential treatments, which then may lead to biased assessments and expectations on productivity, performance evaluation, and appraisal towards one group of workers over others. Intentional and unintentional discriminatory practices are common and are often present at the beginning of the employer/employee relationship, as numerous racial bias studies show. High-end restaurants in Philadelphia were less reluctant to offer job interviews and make job offers to female candidates for wait-staff positions over similarly qualified male candidates, one study revealed. In another, researchers found that when female musicians auditioned for symphony orchestras, their chance of being hired went up when they auditioned behind a screen, concealing their identity from their interviewers.   

Scholars’ opinions vary on exactly what proportions of the gender pay gap can be explained by differences in human capital or discrimination in the labor market, but there is a general consensus that data supports both theories. One 2007 study by renown labor economists Francine Blau and Lawrence Kahn explains that about 41% of the gender pay gap (20.3%) was due to “unexplained” sources (e.g., discrimination) and the rest due to individual characteristics (e.g., union status, industry and occupational category, etc.), as the following graph shows.

 

FactorsPay Gap Explained
Labor force experience10.5
Race2.4
Occupational category27.4
Industry experience21.9
Union status3.5
Unexplained41.1
Educational attainment-6.7

 

 

 

 
 

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