Equal Pay Act - Part 3

6. Problem for women: constrained choices in context

The human capital theory is based on the premise of “compensating wage differentials.” That is, people who value and need flexibility in work hours or conditions, etc. will choose occupations that offer workplace flexibility, hence exchanging high-wage/low-flexibility work for low-wage/high-flexibility work. In reality, workers who occupy high-pay positions tend to enjoy more flexibility and benefits embedded in their positions, something to which many low-pay scale workers do not have access. For instance, while there is no overt motherhood penalty, women who take advantage of family-friendly policies – e.g., flexible hours – seem to suffer in the form of slow wage increase and threat of job loss. The notion of low-wage workers being able to negotiate and choose work conditions freely appears to fall short on evidence, especially in the context of an industry-level misallocation of workplace flexibility and employees’ needs.

Furthermore, women tend to reap lower returns on their investments made for college and professional degrees. Even when women pursue high-level education and choose high-earning career paths such as medicine, law and business, women still do not fare well compared to men, especially in the long-run. One study looked at the post-graduation gender pay gap among the University of Michigan Law 1972-75 cohort. Initially, the pay gap was small. After 15 years, women made only about 60% of what their male counterparts made. Holding constant various lifestyle choices these classmates made over the years – e.g., lengths of part-time work, years of practicing law, types of law practiced, family composition, etc. – researchers still found 13% advantage for male cohort members, not attributable to personal characteristics. In a similar study, researchers found a growing trend in pay difference among newly-trained physicians in New York State: in 1999, male physicians made $3,600 more than comparable female physicians, and in 2008, the difference increased to $16,819. In another study, comparing financial costs and benefits of becoming physicians or physician assistants, researchers found that female primary physicians would have been financially better-off if they had chosen to be physician assistants instead. But the same result did not occur for male primary physicians.

The fact that women outclass men when it comes to educational attainment has been well-documented in the U.S. Women are more likely to have a college degree than men (46% vs. 36%) and are highly represented in professional and graduate degree programs. However, these educational investments do not seem to yield the same level of financial return for women, reflecting the impenetrability of the “glass ceiling” felt even among the highly-educated female workforce in the U.S. The fact that women of color experience an even greater pay gap adds another layer of “impenetrability.” For example, African American and Latina women’s mobility into upper-tier positions is more strained than that of white women holding professional and managerial-level positions, as one study showed.    

Looking at the low-wage end of the spectrum, American workers have been struggling with the growing problem of precarious work and job insecurity. Precarious work, defined as “employment that is uncertain, unpredictable, and risky from the point of view of the worker” impacts both men and women workers, particularly of occupy low-wage occupations, and their sense of economic insecurity and precarious employment relations has increased even within an expanding economy.

 

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