Pay Equity: Fairness and Economic Recovery

Nova Newcomer

"It's an injustice that wage disparity exists for such a huge proportion of our work force." - Senator Merkley

85%. Women are responsible for making 85% of all consumer purchases, but still make only $.78 for every dollar a man makes. Make that $.68 for African-American women and $.58 for Latinas for every dollar. And the disparity hits single women with children hardest -- they average up to 44% less pay. The "Paycheck Fairness Act" supported by President Obama's Administration aims to close that ever-present gap.

I spoke with Senator Merkley on Tuesday about the Administration's support for pay equity following his attendance at Vice President Joe Biden's Middle Class Task Force event. Vice President Biden emphasized that with two-thirds of families being run by working parents, the "Paycheck Fairness Act" would be creating a change to reflect the reality of today's families.

Senator Merkley added, "The average income of working families has been flat since 1974. Since then, the economy has generated a tremendous amount of wealth (even with the current Great Recession) and we have seen a growing disparity." And the continuing wage gap for women only exacerbates the disparity.

On its face, the fight for pay equity is simply about a principle of fairness: equal pay for equal work. A popular graphic from pay equity advocates is a coupon (see below) for 23% off services for women since they make that much less. But no such coupon exists for women. And working women with children, in particular, face a double whammy. Not only will they fall prey to the across-the-board wage disparity that women experience, but they also can face wage depression in the form of "mommy tracking" where mothers are put on a different career development path for various reasons.

23% off coupon

When you combine all of that with a lurching economy, pay equity takes on a brighter sheen. With women overwhelmingly responsible for the majority of consumer purchases, depressed wages for women have a ripple effect in the economy. In moderate income families, bringing in more money often results in spending more money to raise the family's standard of living. Perhaps it's new clothes for school, a much-needed appliance, or other purchases that get delayed due to lack of resources. Getting a fair and full wage into the hands of working women encourages spending and pumps up the GDP.

I don't know about you, but I vote for doubling down on fairness and bolstering our economic recovery.

So what does the "Paycheck Fairness Act" do primarily to close the wage gap:

In addition, the Obama Administration wants to close the 11% gender-wage gap found by the General Accounting Office in the federal workforce and is working on improving collection of data on salaries that will be open and accessible to the public. (Read the entire equal pay task force document.)

Vice President Biden summed it up nicely at his event on Tuesday. "Closing the gender pay gap, helping parents keep their jobs while balancing family responsibilities, and increasing workplace flexibility – these are not only women’s issues, they are issues of middle class economic security.”

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    Yes, let's pass the bill, but then realize that in the longer run it may help men more than women.

    For example, the July/August issue of the Atlantic Magazine has an article "The End of Men" (here) that opens:

    "Earlier this year, women became the majority of the workforce for the first time in U.S. history. Most managers are now women too. And for every two men who get a college degree this year, three women will do the same. For years, women’s progress has been cast as a struggle for equality. But what if equality isn’t the end point? What if modern, postindustrial society is simply better suited to women? A report on the unprecedented role reversal now under way— and its vast cultural consequences"

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    Equal pay for equal work is pay equity. Trying to make sure women "on average" make the same as men is different. We all know that the act of having children likely decreases a person's ability to continue on a full-time track to advancement in their job. That's true for both men and women, although I would expect it to hit women more, as women tend to take more time off when having a child, than men.

    To put it a different way, if I've got 5 years' less experience than a woman in the same job, I would hope and expect that my pay is commensurately less than hers. By the same token if a man or a woman takes significant leave to raise children, it's only fair that when they return, their pay reflects that absence from the work force.

    It might be just semantics, but I think a more appropriate phrase than "equal pay for equal work" is that similarly situated people should be paid a similar wage, regardless of age, gender, race, etc.

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    Thanks for this post, Nova.

    One element that seems to be under-examined is the role of compensation negotiation.

    I can't seem to find the source now, but I recall learning that men tend to be more aggressive about negotiating for better compensation, while women are more likely to accept the initial offer.

    While the difference may only be 5-10% in a single case, that sort of salary disparity will compound over the course of a career.

    How do we address that part of the problem?

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      In the full task force report, there is detail about several strategies the Administration wants to employ to combat salary negotiation.

      There was mention of funding for grants to train women and girls on salary negotiation (in what form and through what venue is not yet clear).

      And Senator Merkley did stress in our interview that the access to data was a critical element to improving salary negotiation outcomes for women. While this hits women hardest when looking at the numbers, access to better data on salaries can put all employees, regardless of gender, on a better footing to negotiate better pay.

      And you are right about the disparity compounding. Most salaries are negotiated from the salary of the most recent job and inside of companies, on the total salary trajectory over the employee's career.

      Where women get hit hardest is when they move up the ladder from an entry level position, such as an Administrative Assistant. Promotions to non-admin positions can result in depressed wages in those roles based on a reluctance to increase wages by too high of a percentage, even though the role might warrant it.

      In my post, I mention that when a woman fails to negotiate for her first job, it can cost her up to a half a million dollars in pay over her career.

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        Nova, quite clearly I missed that bullet point in your original post. Glad to see that negotiation is part of this legislation. Thanks!

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    Can you please site where you are getting your pay disparity statistics? Your numbers appear to be based on US Census data which compares the median male and median female income for full time year round workers. These statistics do not take differences in experience, skill, occupation, or hours worked into consideration.

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      You are right, the $.78 is an average, however, this Wall Street Journal article quotes a Census Bureau statistic across different professions, where in some fields the disparity is even more pronounced (scroll down in article for graphic).

      While this is a largely skeptical article on the issue of pay equity, their own graphic disputes the overall tenor of the article. Of the 10 professions reviewed in the graphic, only 3 of them improve on the $.78.

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    Good thinking that's just what we need ...another feel good law when what we really need right now are jobs for the people who are going into year two doing artwork for the state (drawing unemployment)

    If there is an income disparity between men and women which cannot be explained by any of the zillion other variables other than sex, has anyone ever considered the possibility that the reason men are in more than women may be because they deserve to. Contrary to feminist conventional wisdom, men work longer hours at more dangerous and disagreeable jobs. They more readily accept night shifts, hardship postings to Alaska and entrepreneurial risks. Men get in-demand degrees in engineering, while women get degrees in French literature. Female librarians earn less than garbagemen, not because of discrimination, but because so many applicants compete for the safe, clean, comfortable, convenient, fulfilling jobs women prefer. What statistics really show is back women and men with equal experience and qualifications, doing the same job, for the same hours, under the same conditions-get paid the same. The last thing in the world we need is more federal laws fixing a problem that does not exist. However it would be better than the 2700 pages of new healthcare laws that were jammed down our throats that didn't even address the very real problem of rapidly rising health care costs making it just a whole bunch of new laws that don't fix a problem that does exist.

    This is another perfect example of unnecessary unwanted government intrusions into areas they have no business going. For every study that says there is a wage disparity between men and women there are just as many who say they don't. The difference is trying to eliminate all the other non-sex oriented reasons one person to pay more or less than the other. The bottom line is if you don't think you're being paid what you deserve then you should find a better paying job somewhere else.

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      Robert, you are an idiot.

      Quite obviously, the many researchers who have studied this issue over the years have the basic statistical competence to determine whether these salary effects are based on gender, or some other data point.

      The whole point of pay equity research and pay equity legislation is equal pay for equal work. Garbage workers and librarians do not do equal work under equal conditions - and no one is suggesting that their compensation should be tied together in any way.

      Finally, you've made a statement of fact - and I'm going to ask you to provide a source:

      What statistics really show is back women and men with equal experience and qualifications, doing the same job, for the same hours, under the same conditions-get paid the same.

      Please post a link to a study that makes that statistical claim.

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