Equal Pay for All!

equal-pay-day-2.jpg
nownyc.org

By Bill Barclay

We have reached the day of the year when a typical working woman can finally say, “Well, I’ve caught up with what my male colleague made last year.” April 14 is the official date. Of course, assuming that her male colleague didn’t take a three-month unpaid vacation in the interim, she is now, again, more than three months behind him.

We all know there is a gender difference of about 20% in median pay. But what does this mean over the course of a lifetime? And does this percentage difference stay constant across the income hierarchy? 

Let’s go back to our typical woman being paid about 80% of what her male counterpart is paid. Sooner or later she will think about saving for retirement. Suppose our median-pay-level male worker puts aside 5% of his income each month; he will have saved almost $92,000 (in 2014 dollars) between age 25 and 65. Our median-paid working woman, in contrast, will have only a bit over $75,000. So, she can either work 10 years longer to age 75 (well, women do live longer!) or can save at a higher rate, about 6.5% rather than 5% of her income, to get to the same amount in the same number of working years. Of course, everyone believes that more savings is better than less savings but, more savings also means less money for food, housing, vacations, education, etc. 

The situation for our typical female and male worker is interesting, but maybe she has alternatives. Perhaps getting an education, maybe even an advanced degree, will help her overcome this pay gap. After all, we all “know” that more educated people are less likely to practice gender discrimination, right? And, really, what can the government do about this anyway – after all, it’s more than 50 years since President John F. Kennedy signed the “Equal Pay Act.” 

Well, it is true that getting more education usually increases your wage. A woman with an advanced degree earning in the top 10% of all women can expect to make over three times what her median-paid sister gets. But, a man at the same place in the education and incomes hierarchy will make about four times what his median-paid brother gets. The top 10% woman now has to work through June, not just mid-April, before she can say, "OK, I’ve caught up with my male top 10% colleague." In short, the gender pay gap at the upper end of the income hierarchy is greater than at the median level and increases as our male and female workers come closer to the top 1%. 

How does this gap at the top get created? It is often argued that women are more likely to take time off for childbearing and other family needs. There is strong evidence, however, that the gender pay gap, at least in high salary occupations, starts with discrimination in hiring at the beginning of a career. For example, in a study covering a decade of residents completing training in New York State that controlled for specialty choice, practice setting, work hours or other characteristics, women were paid almost $17,000 less than men as a starting salary. Similar results have been found for another high salary profession, lawyers. There is no evidence that female employees are less productive than male employees. Thus, what is happening is good old-fashioned discrimination; in Marxist terminology, the rate of surplus value extracted is higher for female than male employees.

There is a very different story if we look at the other end of the income and education hierarchies. Full-time women workers in the lowest income decile are paid 90% of the rate of full-time male workers at that same income decile. (Each decile is 10% of total wage earners.) That is, at the bottom of the income scale, women make closer to what men make than at the top of the scale. Similarly, women with less than a high school education are paid at a rate of over 86% of their male counterparts.

Why the different outcomes? The answer highlights the ability of universalistic legislation to counter particularistic inequality. The wage of employees in the lowest 10% is largely driven by the level of the minimum wage applicable to their workplace. The fight for $15 is about both class and gender. A $15 minimum wage will both reduce overall inequality and also help to reduce the gender pay gap. This advance will happen both by raising the earnings of the lowest paid workers and also by bumping up the wages of the tier of workers immediately above them as employers seek to maintain a wage hierarchy.

BilBarclayDustin-2.png Bill Barclay is on the Steering Committee of Chicago DSA, is a founding member of the Chicago Political Economy Group and serves as DSA National Member Organizer.

Individually signed posts do not necessarily reflect the views of DSA as an organization or its leadership. Democratic Left blog post submission guidelines can be found here.

 

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