The U.S. Women’s Soccer Team shows us just how much is at stake in the gender wage gap
Looking ahead to Equal Pay Day later this month, five top female U.S. soccer players made headlines for filing a case against U.S. Soccer for wage discrimination. Even while they have received far higher honors in soccer fame than the men’s national team, the players contend that they earn as little as 40 percent of their male counterparts. For example, the players claim that a men’s U.S. soccer player can earn as much as $8,166 extra for a win at an exhibition game—a women’s player, meanwhile, receives as little as $1,350 extra for winning a similar match.
While this case is high profile, the fact is that the gender pay gap exists across occupations and throughout the economy and that gaps between men’s and women’s pay can add up to a substantial amount over time. Equal Pay Day is April 12 this year because it marks how far into 2016 women would have to work to earn the same amount that men earned in the 2015. Depending on factors like occupation, race, and education level, though, this date could stretch far beyond April 12 for many women.
In 2015, the typical woman’s hourly pay was only 83.3 percent of the typical men’s hourly pay. That means that the median woman earns about 83 cents on the man’s dollar. At the bottom of the wage distribution, pay is relatively more equal, as the minimum wage, though low by historical standards, still provides a wage floor that ensures working people earning it are paid at the same rate. The gap at the top of the wage distribution, meanwhile, is much larger because men disproportionately hold jobs in higher paying occupations, which tend to reward excessive work hours (though longer work hours do not necessarily translate to higher per hour productivity). Additionally, women are more likely to be perceived as less dedicated to their careers, regardless of whether they work the same hours as their male counterparts, (i.e. gender discrimination), which can lead to huge losses in earnings over the course of their careers in the form of forgone promotions and pay raises.
The gender wage gap is largest among top earners: Women’s hourly wages as a share of men’s at various wage percentiles, 1979–2015
| 10th percentile | 50th percentile | 95th percentile | |
|---|---|---|---|
| 1979-01-01 | 86.7% | 62.7% | 62.9% |
| 1980-01-01 | 83.2% | 63.4% | 64.8% |
| 1981-01-01 | 88.7% | 64.2% | 63.6% |
| 1982-01-01 | 88.9% | 64.8% | 64.8% |
| 1983-01-01 | 89.3% | 66.5% | 62.9% |
| 1984-01-01 | 87.2% | 67.4% | 64.1% |
| 1985-01-01 | 85.8% | 67.1% | 63.2% |
| 1986-01-01 | 84.7% | 66.9% | 66.2% |
| 1987-01-01 | 83.5% | 69.1% | 65.8% |
| 1988-01-01 | 81.5% | 71.1% | 68.0% |
| 1989-01-01 | 81.3% | 73.1% | 71.9% |
| 1990-01-01 | 83.4% | 74.4% | 72.7% |
| 1991-01-01 | 86.8% | 74.9% | 72.8% |
| 1992-01-01 | 89.7% | 76.2% | 73.9% |
| 1993-01-01 | 90.9% | 77.6% | 74.4% |
| 1994-01-01 | 90.8% | 78.4% | 76.3% |
| 1995-01-01 | 88.2% | 76.7% | 76.6% |
| 1996-01-01 | 87.2% | 77.6% | 77.0% |
| 1997-01-01 | 87.0% | 79.0% | 75.2% |
| 1998-01-01 | 89.4% | 78.2% | 76.7% |
| 1999-01-01 | 87.6% | 76.9% | 77.0% |
| 2000-01-01 | 87.3% | 78.0% | 75.6% |
| 2001-01-01 | 87.3% | 78.5% | 75.7% |
| 2002-01-01 | 89.6% | 80.1% | 76.2% |
| 2003-01-01 | 89.4% | 81.0% | 76.8% |
| 2004-01-01 | 89.3% | 81.8% | 75.3% |
| 2005-01-01 | 88.3% | 82.0% | 77.2% |
| 2006-01-01 | 88.8% | 82.2% | 77.9% |
| 2007-01-01 | 89.9% | 81.5% | 77.2% |
| 2008-01-01 | 90.3% | 82.6% | 77.0% |
| 2009-01-01 | 92.3% | 81.7% | 74.6% |
| 2010-01-01 | 92.9% | 83.3% | 76.8% |
| 2011-01-01 | 93.4% | 84.0% | 77.9% |
| 2012-01-01 | 91.7% | 82.8% | 74.5% |
| 2013-01-01 | 91.8% | 83.4% | 76.1% |
| 2014-01-01 | 90.9% | 82.9% | 78.6% |
| 2015-01-01 | 92.2% | 83.3% | 73.0% |
Note: The xth-percentile wage is the wage at which x% of wage earners earn less and (100-x)% earn more.
Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata
Gender wage gaps also exist across all levels of education. Even among the most educated workers—those with an advanced degree—large wage-gaps persist, with women making only 73.4 percent of men’s hourly wages. Among those with a college degree, women make 75.2 percent of male earnings. For those with a high school degree, women make 78.3 cents on the high-school-educated man’s dollar.
What to Watch on Jobs Day: Signs of more workers returning to the economy and increases in their wages
I’ll be looking at two particular trends tomorrow when the March Employment Situation report comes out. First, I’ll look at what’s happening with the labor force participation rate, along with the accompanying employment-to-population ratio and the unemployment rate. Second, I’ll continue to look at nominal wage growth, to measure the strength of the recovery’s impact on workers.
The first indicator to watch, which has showed signs of a turnaround, is labor force participation. Both the overall and the prime-age labor force participation rates appear to have bottomed out in mid-2015 and have been slowly rising the last few months, but the labor force is still down by about 2.4 million “missing workers.” These workers aren’t counted among the unemployed, because they haven’t actively looked for work in the last four weeks, but they are likely to return to the labor force as the economy recovers. Last month, we saw some signs of that return, as the number of missing workers fell and the overall and prime-age employment-to-population ratios rose slightly. There is still far to go before we reach full employment, but this is certainly an encouraging sign that we are moving in the right direction.
While the unemployment rate has been holding steady, a slight rise in coming months could actually be a positive move—if driven rising labor force participation, which would mean that potential workers see hope for themselves in the labor market and have started to look for jobs. As more potential workers get pulled back into the labor market and more unemployed workers get jobs, we should see this labor market tightness translate into stronger wage growth.
Are employee contributions essential to unemployment insurance?
A new report by Andrew Stettner, senior fellow at The Century Foundation, brings needed attention to the nation’s troubled unemployment insurance (UI) programs. The report concentrates on crucial financing questions, noting that the lack of UI state reserves prior to the Great Recession led to significant cuts in state programs in recent years, with benefit recipiency rates reaching historically low levels in 2014 and 2015. In particular, Stettner notes that six out of every seven unemployed individuals in the most restrictive Southern states go without benefits, a level that calls into question whether those states still provide meaningful social insurance. At the same time, low reserves continue to threaten a majority of states while we head inevitably toward the next recession. According to the report, only 18 states currently meet recommended trust fund levels.
Stettner recounts the main facts in his overview of recent UI developments, including recent state UI benefit cuts and financing changes. Despite these benefit cuts and financing changes, he reports that state reserves are less than 60 percent of the trust fund reserves found prior to the recent recession. Worryingly, many of the states adopting benefit cuts will remain at low solvency levels when the next recession arrives.
Wayne Vroman, a long-time expert on UI financing at the Urban Institute, has reinforced some of Stettner’s observations on UI financing in a recent report. Vroman has written about UI financing since the 1980s, and this report shows a troubling pattern he has called attention to in recent years. Our 13 biggest states—where about two-thirds of benefits are paid and UI taxes collected—do a remarkably poor job of UI financing. Vroman finds that “program revenue responded more slowly in the 13 big states and their benefits were reduced more when compared with the other states in the state UI system.” Vroman’s more technical approach presents a number of regressions trying to better understand why big states fail to adequately finance their state UI trust funds. While his paper can’t fully explain the big states’ failures, Vroman does identify factors that make UI financing stronger, most notably the indexation of the taxable wage base.
The long-awaited silica rule is a step forward for workers
The Department of Labor has taken another significant action to protect American workers from harm by issuing a final rule to control employee exposure to silica dust, which destroys lung tissue and causes cancer, disabling thousands of workers every year and killing hundreds more. Secretary of Labor Tom Perez and OSHA Administrator David Michaels have persevered against a political hailstorm to finish this rule, which was first conceived more than 35 years ago.
Some employers will complain that it’s too expensive to protect their employees from lung disease, but it’s not. Thousands of businesses, in construction, mining, brick-making, and other industries already meet the standard. A dent in the profits of the businesses that haven’t cared enough in the past to do what was needed is no reason to back away now from safer workplaces and better lives for millions of Americans.
Ultimately, the decision to issue this rule rests with President Obama, who deserves credit for putting people first.
What second graders can teach us about inequality
This post originally appeared on TalkPoverty.org.
Two of the most widely cited statistics on inequities within the American labor market are that the average woman earns just 79 cents for every dollar earned by a man, and that the black unemployment rate is typically double that of whites. While these statistics are partly accounted for by differences in occupation or education, gender pay inequities persist even among men and women in the same job, and the two-to-one unemployment disparity exists even for blacks and whites with the same level of education. What this means is that even among otherwise socioeconomically similar individuals, we can still observe differences in pay or employment that arise from discrimination.
Although the explicitly discriminatory policies and practices that created these disparities are now illegal—thanks in part to Title VII of the Civil Rights Act of 1964, which outlawed employment and pay discrimination on the basis of race, color, religion, sex or national origin—the inequities persist. That’s because many of the channels through which opportunity is passed, like social networks, are shaped by biases based on race and gender. Regardless of whether these biases are conscious or subconscious, patterns of old-fashioned segregation stand in the way of eradicating them.
Recently, I gained some profound insight into this phenomenon from a most unlikely place: a second-grade music class.
House Republicans cling to false promise of austerity in their budget resolution
This week, the House Budget Committee reported out, on a party-line vote, their fiscal year 2017 budget resolution. Infighting between House Republicans, centered on the idea that proposed spending cuts should be even more drastic, suggests that this year’s budget resolution is unlikely to pass. However, with all the media attention focused on the House Republican’s inability to come to an agreement, we shouldn’t lose sight of just how austere their budget resolution already is, and how much damage the cuts it calls for would do to the economy over both the short and long run.
For example, the cuts over the first two years would impose a significantly larger fiscal drag on economic recovery than previous Republican budgets. It’s true that the economy is healthier than it’s been in previous years, and the Federal Reserve may have more scope to neutralize fiscal drag than in years past, so it’s possible (if not likely) that job growth may be able to absorb some of this fiscal drag beyond 2017. Because of this possibility, we have departed from previous years’ practice in specifying a point estimate on how much this budget will affect economic growth and job creation in years beyond 2017. However, the evidence is still overwhelming that rapid spending cuts would be deeply damaging to a still-weak economy, and we can be pretty concrete about this over the next year.
GOP House budget resolutions for the past several years have been obsessed with eliminating the budget deficit by the end of the ten year budget window. This was already a quixotic and damaging goal, and it has become even more so thanks to changes in the CBO’s baseline. And while deficits are created from revenue minus spending, congressional Republicans’ outright refusal to raise any taxes means that spending cuts—and thereby low- and middle- income people—must bear the entire brunt of the budget resolution’s burden. They bear this burden to the tune of $6.5 trillion in spending cuts to vital programs over ten years—programs that overwhelmingly serve those most in need. The cuts would take away affordable health insurance coverage from the millions that have gained it under the Affordable Care Act and then further erode the safety net with cuts to Medicaid, unemployment benefits, and nutrition assistance. Besides making the economic lives of vulnerable populations harder, focusing cuts on this group imposes a large fiscal drag, since these are households that tend to spend (not save) additional dollars of resources back into the economy.
The president could create 100,000 jobs for young Americans by ending J-1 Summer Work Travel
As part of his fiscal year 2017 budget, President Obama has proposed to spend “nearly $6 billion in new funding to help more than 1 million young people gain the work experience, skills, and networks that come from having a first job.” There’s no question that this is a good idea and Congress should fund it. The New York Times editorial board said essentially the same, calling on the Republicans in Congress who oppose it to “consider the desperation that young unemployed people are facing in this country and the civic costs of standing idly by and doing nothing to help them.” If you’re feeling déjà vu, it’s because last year President Obama also asked Congress for appropriations to fund youth employment programs, to the tune of $3 billion. But Congress didn’t fund the president’s proposal last year, and they’re unlikely to fund it this year either. In consideration of this political reality, President Obama should do what he can through executive action. To start with, he could open up 100,000 jobs for young Americans today for free by simply eliminating the State Department’s J-1 visa Summer Work Travel (SWT) program.
SWT is one of many “cultural exchange” programs in State’s larger overall J-1 visa Exchange Visitor Program, which brings over 300,000 foreign researchers, students, and workers into the country every year through a variety of programs, along with 30,000 to 40,000 of their spouses and children who can come with J-2 visas. In the J-1 SWT program alone, approximately 100,000 foreign college students from around the world come to the United States to work for four months in hotels, beach resorts, restaurants, ice cream shops, and various other seasonal businesses, in a variety of low-paying, lesser-skill jobs. Reports like EPI’s Guestworker Diplomacy and the Southern Poverty Law Center’s Culture Shock have explained in detail how SWT is a temporary foreign worker program disguised as an exchange program, and is administered by an agency with zero expertise in enforcing labor and employment laws. Numerous worker abuses and even human trafficking have been facilitated by this temporary work visa program, and the basic structure of the program, which allows such abuses to occur, has not changed.
The legal authority for SWT originally came from the Fulbright-Hays Act of 1961, which created the overarching Exchange Visitor Program to facilitate educational and cultural exchanges with persons from abroad by allowing them to visit the United States temporarily. But most of the individual programs were created entirely by the executive branch, and their regulatory frameworks are outlined mainly in State Department regulations. This is in fact the case with SWT, which operated for decades without any specific congressional authorization, despite the fact that it arguably contains no educational or cultural component. In 1998, Congress did weigh in on SWT, by including one sentence in an omnibus appropriations bill that authorizes the State Department to “administer summer travel and work programs without regard to preplacement requirements.” This authorizing language, however, does not require the State Department to continue to run the SWT program, it simply permits it.
Some good news and some bad news in today’s JOLTS report
This morning’s Job Openings and Labor Turnover Survey (JOLTS) report has both some optimistic news about the economy and some rather disappointing news (and revisions to the entire historical series). I’m optimistic because job openings increased in January, rising from 5.3 million to 5.5 million between December 2015 and January 2016. And, the rate of job openings—the number of job openings as a share of total employment and job openings—increased from 3.6 to 3.7. Over the last year the rate of job openings has risen from 3.4 to 3.7—a sign of an economy that continues to recover.
But, what we need is for those job openings to translate into hires. Unfortunately, in January, the hires rate dipped, falling from 3.8 to 3.5 in one month. I wouldn’t put much stock in any one month’s fluctuations as the series are quite volatile, however, such a substantial drop in the hires rate is not an indication of positive movement in the labor market. While there has been clear progress in terms of growing job openings, it is also important to remember that a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” a company can put behind a job opening. If a firm is trying hard to fill an opening, it may increase the compensation package and/or scale back the required qualifications. On the other hand, if it is not trying very hard, it might hike up the required qualifications and/or offer a meager compensation package. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical—it tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled and the labor market is far from full employment, as it is today, companies may very well be holding out for an overly-qualified candidate at a cheap price.
New legislation could help end wage theft epidemic
Senators Patty Murray and Sherrod Brown, together with Rep. Rosa DeLauro, are tackling one of the most important employment issues of the 21st century—wage theft, the failure of employers to pay employees what they are legally owed. This is a serious social and economic problem, which I have estimated could amount to more than $20 billion a year in stolen or underpaid wages, including non-payment of overtime pay, failure to pay the federal, state or local minimum wage, failure to pay statutorily required prevailing wages, forcing employees to work “off-the-clock,” taking illegal deductions from the paychecks of drivers misclassified as independent contractors, and even failure to pay anything at all. A study by the U.S. Department of Labor suggests that minimum wage violations alone range from $8 billion to $14 billion a year.
The consequences of these losses are serious: increased poverty, hardship for the near-poor, lost tax revenues for governments, including lost Social Security and Medicare contributions, and increasing inequality. When the employers who commit wage theft go unpunished it undermines their law-abiding competitors and generally diminishes respect for and faith in the rule of law.
Just as raising the minimum wage could save hundreds of million dollars in safety net program expenditures, failing to pay the current minimum wage causes safety net spending to increase considerably. As DOL found in its recent study of minimum wage violations, “Minimum wage violations led to $5.5 million in additional breakfast benefits in California and $3 million in New York, in FY2011. The school lunch program spent an additional $10.1 million in California and $4.8 million in New York in FY2011 due to minimum wage violations.”
Fed should keep rates steady to keep targets from turning into ceilings
All eyes will be on the Federal Open Market Committee (FOMC) today as they decide whether or not to follow up December’s interest rate hike (the first since 2006) with another. A consensus seems to be firming that they will hold pat in March and instead are likely to raise in June. Holding still and not raising rates is likely the right decision for two reasons: it will help reverse past damage left over from the Great Recession and will also make the job of future FOMCs easier because it will build credibility.
Both of these benefits stem from the Fed’s inability to keep wage and price inflation from running consistently below healthy targets in recent years. The Fed’s dual mandate is to maximize job-growth and push down unemployment while maintaining stability in inflation. The Fed has adopted an inflation target of 2 percent for “core” prices (ie, excluding food and energy) in the personal consumption expenditures (PCE) deflator. Yet the PCE core deflator has seen annualized growth of less than 2 percent for years now, and there’s no sign yet in the data that it is even moving durably closer to this target.