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Discussing the Wage Gap in the United States

July 16, 2013

The existence of a wage gap–that is, a disparity in wages for equivalent positions of equivalent experience or skill level–between various groups in the United States is both well-documented and highly disputed.  Many studies have quantified the exact disparity between such demographics as majority and minority race, men and women, and educational levels, and at least as many critics have arisen to disparage the statistics, some reflexively and others accurately.  But while the final dollar amounts may vary from interpretation to interpretation the final result has always been that, however large or small, there is a persistent difference and discrimination in the country.  

Legislation to correct the disparity of wage has been passed, then whittled down, then reinforced, then trimmed again over the decades.  Studies provide solid evidence of discrimination but then long rhetoric wears the solutions down.  It becomes increasingly difficult to shore up old legislation like the Equal Pay Act and Civil Rights Act when their foundations are constantly eroded out from under them with unanalyzed criticisms.  This paper’s purpose is to examine both some studies and their criticisms, and look at the bottom line of the wage gap for the US.  

The difference in wages between white employees and minorities has been extensively examined by labor economists. The wage gap narrowed significantly during the 1960s and 1970s, but since then the differences in wages has remained relatively constant. The convergence in wages that occurred during the 1960s and 1970s has been attributed to improvements in the levels and quality of schools attended by blacks as well as the enactment of anti-discrimination legislation.  The slowdown in convergence during the 1980s and 1990s has been attributed to racial differences in the levels and returns to observed and unobserved skill.  Years of schooling and years of labor market experience are often used as proxies for labor market skill.  However recent changes in gathering statistics have proven competent at controlling for these factors.  Campbell and Kaufman (2006) found that controlling for various facets of wage reduced certain disparities, such as education and age, but even these distinctions left notable gaps in average income, especially between blacks and whites.

Common criticisms of wage gap studies are differences in education, immigration status (often quoted as language barrier), and labor experience.  Lower education or different educational standards for international immigrants are proposed as a flaw in the wage gap discussion, as higher education is positively correlated with higher wage.  Communication issues are also held to be logical barriers to achieving both employment and subsequent promotion, interfering with day-to-day workability.  These critiques are not poorly founded, though they fail to address what institutions within society might lead to their outcome.  It is unconstructive to assume that an entire race, on average, chooses to forgo higher education, after all.  Or that there is some inherent lack of language training in immigrants immersed in an English-speaking majority.

But Campbell’s progressive modeling in her study shows the alarming trend that, even when these factors are controlled for, when age, educational and duration of employment are at parity, significant discrepancies still exist.  Her results showed that these socio-economic indicators have stronger benefits for Whites than for minorities.  She argued in her introduction for the potential importance of immigration in the wage gap when analyzing groups with sizeable immigrant sub-populations. Immigrant characteristics were in fact differentially influential across groups, having no effects for blacks (unsurprising, considering the vast majority of black families in the US are many generations old), only indirect effects for Mexican-Americans and Other Hispanics (mediated by household income), but having direct effects for Whites and especially for Asian-Americans. Similarly, from her analysis was found that even when groups were equivalently situated, the “processes of generating wealth still differ by race and ethnicity.”  Those of Asian descent, commonly excluded from blanket wage-gap assumptions, showed an actual decrease in returns from higher education.

 

These findings follow studies that look at a more small scale approach.  In 2003, Bertrand and Mullainathan teamed up to submit 1300 resumes to local (Chicago and Boston, respectively) positions.  The resumes were controlled for quality based on style, education and experience listed at different tiers, but were then given “white” names and “black” names as their prime differences.  The authors find that applicants with white-sounding names are 50 percent more likely to get called for an initial interview than applicants with African-American-sounding names. Applicants with white names received more callbacks-per-resumes-sent and, in addition, white job applicants with higher-quality resumes received 30 percent more callbacks than whites with lower-quality resumes. Having a higher-quality resume had a much smaller impact on black applicants, who experienced only 9 percent more callbacks for the same improvement in their credentials. This disparity suggests that in the current state of the labor market, black professionals may not have strong individual incentives to build better resumes.  Statistically, discrimination levels were consistent across all the occupations and industries covered in the experiment.  Even federal contractors (for whom affirmative action is better enforced) and companies that explicitly state that they are an “Equal Opportunity Employer” did not discriminate less.

The racial wage gap has significant implications for families, children and the state’s greater prosperity. As the differences in wages earned persist, so do differences in household income and poverty levels by race.  But race is not the only source of wage disparity in the country.  Much ado has been made recently of the difference in common wage between men and women, as well.  Recent federal legislation discussions over the, perceived or otherwise, significant difference in women’s wages in the US have brought up several studies and much ridicule, but not many answers.

An all-too-common response to workers and advocates concerned about the gender wage gap for full-time year-round workers across occupations is that it is just a byproduct of the choices women make.  Choices to work fewer hours, take on lower-paying jobs, or opt out of the workforce for longer periods of time than men are framed as inevitabilities much like education and language are with race. When framed in this way, it’s easy to dismiss equal-pay policies or legislation as superfluous.  Unfortunately, decades of evidence have revealed a far more complicated story, and it is clear that the gender wage gap is about more than just personal choice. It is a real and persistent problem, and it is a problem that calls for immediate and nimble policy solutions.

Among men and women employed full time, 60 percent of the wage gap can be attributed to known factors such as work experience at 10 percent, union status at 4 percent, and the aforementioned choice of occupation at 27 percent, among other measurable differences.  A woman’s work experience is abbreviated if she needs to take maternity leave or take time off from a job to care for a child, which she is more likely to do than her male counterpart. Another quarter of the wage gap is attributable to the differences in wages paid by industries that employ mostly men or mostly women. These include blue-collar industries such as mining, manufacturing, and construction, which generally employ men, and service-sector or clerical jobs, which generally pay less and employ more women.

These are all functional and measurable differences in the work force.  But it still leaves 40 percent of the entire wage gap–more than 10 cents on the dollar–completely unexplained.  This leaves only possible explanations that range from overt sexism to unintentional gender-based discrimination to reluctance among women to negotiate for higher pay.  The American Association of University Women tackled the pay gap question by looking at workers of the same educational attainment—same kind of college, same grades—holding the same kinds of jobs, and having made the same choices about marriage and number of kids. They found that college-educated women earn 5 percent less the first year out of school than their male peers. Ten years later, even if they keep working on par with those men, the women earn 12 percent less.And these results are only exacerbated when combined with the racial disparities mentioned earlier.

 

A study done in 2006 by Renzulli, Grant and Kathuria examined this intersection of race and gender by looking exclusively at college and university faculty positions.  White men made an average annual salary of $61,950 to black men’s $53,640, to white women’s $48,200 to black women’s $46,870.  These gaps held study from department to department and across tenure tracks.  Elsewhere in the labor market, the numbers are more grim: black men making 74.5, latinos 65.9, white women 80.5, black women 69.6 and latinas 59.8 percent of a white man’s salary.

Whether a person is making less money because of the color of their skin or because they’ve been unable–or actively discouraged–to pursue education or better opportunities, these trends are alarming and, currently, getting worse.  And these are not the only bases for discrimination.  Unfortunately, many gay and transgender workers also receive unequal pay for equal work in the United States today. What’s worse, these same workers lack the necessary legal protections currently afforded to other categories of individuals that would help combat and correct pay inequities that exist on the basis of sexual orientation and gender identity.

Although sexual orientation and gender identity have no relationship to workplace performance, during the past four decades a large body of research using a variety of methodologies has consistently documented high levels of discrimination against lesbians, gay men, bisexuals and transgender (LGBT) people at work. Evidence of discrimination has been reviewed and summarized in two recent reports by the Williams Institute at UCLA School of Law: a 2009 report focused on discrimination in the public sector and a 2007 report focused on employment discrimination in the private sector.  These very recent studies have found a series of hard data where previous ones were only able to speculate.

Gay and bisexual men earned 10 percent to 32 percent lessthan similarly qualified heterosexual men, in a meta-analysis of 12 studies examining earnings and sexual orientation in the United States. This was true even when controlling for education, race, occupation, and years of work experience, with similar numbers for both the private and public sector.  For women it was a little less clear, in that some out lesbians reported slightly lower wages while others reported significantly higher wages.

A different study found that earnings for male-to-female transgender workers fell by nearly one-third after their gender transitions, but earnings for female-to-male transgender workers increased slightly.  Between this and the findings for lesbians, it is reasonable to assume some connection between the perception of masculinity and the wage discrepancy, especially when combined with the findings on gender gap above.  The intersection of sexuality with race and gender also drives the gap wider.

The trends in wage disparity can be closely tied to contemporary politics, but that makes the need for clear legislature very obvious.  Passage of legislation like affirmative action bring the ire of certain conservative rhetoric, but it is clear that their purpose of creating a level playing field for all citizens has not yet been reached.  Lawmakers in Congress should also consider targeted legislation aimed specifically at eliminating the wage gap for gay and transgender workers. Prior to the passage of the Civil Rights Act, which provided women with a large range of workplace protections, Congress enacted the Equal Pay Act of 1963 aimed at abolishing the gender wage gap. Congress can follow this pattern for gay and transgender workers.  There is currently the Employment Non-Discrimination Act on the table that seeks to include protection not just for race and gender but sexuality, as well.  Even without passing ENDA, Congress can pass legislation aimed at eliminating wage disparities based on sexual orientation and gender identity in a manner similar to the Equal Pay Act.

As a country we must also consider ourselves personally accountable for the propagation of these trends as well.  Every person finding themselves in the position to hire somebody into a company needs to consider what their own reactions are to a face, a name, or a marital status is.  Everybody confronted with the opportunity to push back against the current trend of discriminatory hiring and promoting needs to take that stand.  And then we all need to go and vote to make sure those who are representing us stand behind that decision.

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M.V. Lee Badgett, Brad Sears, Holning Lau, & Deborah Ho, Bias in the Workplace: Consistent Evidence of Sexual Orientation and Gender Identity Discrimination 1998-2008, 84CHI.-KENT L.REV. 559 (2009).

Lori Ann Campbell, Robert L. Kaufman, Racial differences in household wealth: Beyond Black and White. Research in Social Stratification and Mobility, Volume 24, Issue 2, 2nd Quarter 2006, Pages 131–152 http://dx.doi.org/10.1016/j.rssm.2005.06.001

Race, Gender, and the Wage Gap: Comparing Faculty Salaries in Predominately White and Historically Black Colleges and Universities

Linda A. Renzulli, Linda Grant and Sheetija Kathuria, Gender and Society , Vol. 20, No. 4 (Aug., 2006), pp. 491-510 Published by: Sage Publications, Inc.

Article Stable URL: http://0-www.jstor.org.opac.sfsu.edu/stable/27640906

Christianne Corbett, Catherine Hill, Graduating to a Pay Gap: The Earnings of Women and Men One Year after College Graduation  October 2012 http://www.aauw.org/files/2013/02/graduating-to-a-pay-gap-the-earnings-of-women-and-men-one-year-after-college-graduation.pdf

 

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