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Gender pay gap

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The gender pay gap (also known as gender wage gap) is the difference between male and female earnings expressed as a percentage of male earnings, according to the OECD.[1] The European Commission defines it as the average difference between men’s and women’s hourly earnings.[2] There is a debate to what extent this is the result of gender differences, implicit discrimination due to lifestyle choices (e.g., number of hours worked, need for maternity leave, expectations from marriage[3] ), or because of explicit discrimination.[4][5][6]

Adjusted and unadjusted gender pay gap

It is important to differentiate between the unadjusted (also known as raw) wage gap and the adjusted (also known as discriminatory or unexplained) wage gap. The unadjusted or raw pay gap does not take into account differences in personal (e.g., age, education, the number of children, job tenure and occupation) and workplace characteristics (e.g., the economic sector and place of employment) between men and women. Parts of the raw pay gap can be attributed to the fact that women, for instance, tend to engage more often in part-time work and tend to work in lower paid industries. The remaining part of the raw wage gap that cannot be explained by variables that are thought to influence pay is then referred to as the adjusted gender pay gap and is interpreted as being discriminatory.

However, a 2010 report by the European Foundation for the Improvement of Living and Working Conditions, for example, pointed out that "interpreting the adjusted gap as being the only discriminatory component falls short of the reality.” The report found that the part of the pay gap which is attributed to observed differences in characteristics (such as age, education, hours worked etc.) may still reflect the outcome of discriminatory social processes. Eurofond found that "the major reasons for this gap are very often related to both horizontal and vertical segregation – or the fact that women tend to choose lower-paid professions, reach a ‘glass ceiling’ in their careers, or have their jobs valued less favourably. The origins of these factors could be judged as being discriminatory in themselves – that is, when they are rooted in gender stereotypes of male and female occupations.”[7]

Statistics

OECD

Gender gap in median earnings of full-time employees according to the OECD 2008.[8]

The 2008 edition of the Employment Outlook report by the Organisation for Economic Co-operation and Development (OECD) found that while female employment rates have expanded considerably and the gender employment and wage gaps have narrowed virtually everywhere, women still have 20% less chance to have a job than men, on average, and they are paid 17% less than their male counterparts.[9] Moreover, the report stated:

"[In] many countries, labour market discrimination – i.e. the unequal treatment of equally productive individuals only because they belong to a specific group – is still a crucial factor inflating disparities in employment and the quality of job opportunities [...] Evidence presented in this edition of the Employment Outlook suggests that about [...] 30% of the variation in gender wage gaps across OECD countries can be explained by discriminatory practices in the labour market."[9][10]

European Union

Gender gap in average gross hourly earnings according to Eurostat 2008.[11]

At EU level, the gender pay gap is defined as the relative difference in the average gross hourly earnings of women and men within the economy as a whole.

Eurostat found a persisting gender pay gap of 17.5 % on average in the 27 EU Member States in 2008. There were considerable differences between the Member States, with the pay gap ranging from less than 10% in Italy, Malta, Poland, Slovenia and Belgium to more than 20% in Slovakia, the Netherlands, Czech Republic, Cyprus, Germany, United Kingdom and Greece and more than 25% in Estonia and Austria.[11]

Gender pay gap over time

Looking at the gender pay gap over time, the United States Congress Joint Economic Committee showed that as explained inequities decrease, the unexplained pay gap remains unchanged.[12] Similarly, according to economists Francine Blau and Lawrence Kahn and their research into the gender pay gap in the United States, a steady convergence between the wages of women and men is not automatic. They argue that after a considerable rise in women's wages during the 1980s, the gain decreased in the 1990s. The 2000s are characterised by a mixed picture of increase and decline. Thus Blau and Kahn assume:

“With the evidence suggesting that convergence has slowed in recent years, the possibility arises that the narrowing of the gender pay gap will not continue into the future. Moreover, there is evidence that although discrimination against women in the labour market has declined, some discrimination does still continue to exist.”[13]

A wide ranging meta-analysis by Doris Weichselbaumer and Rudolf Winter-Ebmer (2005) of more than 260 published adjusted pay gap studies for over 60 countries has found that, from the 1960s to the 1990s, raw wage differentials worldwide have fallen substantially from around 65 to 30%. The bulk of this decline, however, was due to better labor market endowments of women. The 260 published estimates show that the unexplained or discriminatory component of the gap has not declined over time. Using their own specifications, Weichselbaumer and Winter-Ebmer found that the yearly overall decline of the gender pay gap would amount to a slow 0.17 log points, implying a slow level of convergence between the wages of men and women.[14]

According to economist Alan Manning of the London School of Economics, the process of closing the gender pay gap has slowed substantially and women could earn less than men for the next 150 years because of discrimination and ineffective government policies.[15][16] A 2011 study by the British CMI revealed that if pay growth continues for female executives at current rates, the gap between the earnings of female and male executives would not be closed until 2109.[17]

Gender pay gap by country

United States

Main article: Male–female income disparity in the United States
Gender gap in median yearly earnings among full-time, year-round workers, 1980-2009.[18]

In the United States, the gender pay gap is measured as the ratio of female to male median yearly earnings among full-time, year-round (FTYR) workers. The female-to-male earnings ratio was 0.77 in 2009, meaning that, in 2009, female FTYR workers earned 77% as much as male FTYR workers. Women's median yearly earnings relative to men's rose rapidly from 1980 to 1990 (from 60.2% to 71.6%), and less rapidly from 1990 to 2000 (from 71.6% to 73.7%) and from 2000 to 2009 (from 73.7% to 77.0%).[18][19]

The gender pay gap has been attributed to differences in personal and workplace characteristics between women and men (education, hours worked, occupation etc.) as well as direct and indirect discrimination in the labor market (gender stereotypes, customer and employer bias etc.). [4][20][21]

The estimates for the discriminatory component of the gender pay gap include 5%[22]: 2  and 7%[23]: 9  and in at least one study grow as men and women's careers progress.[23]: 93  One economist testified to Congress that hundreds of studies have consistently found unexplained pay differences which potentially include discrimination.[23]: 80  Another criticized these studies as insufficiently controlled, and opined that men and women would have equal pay if they made the same choices and had the same experience, education, etc.[22] Other studies have found direct evidence of discrimination. For example, fewer replies to identical resumes with female names[23]: 10  and more jobs for women when orchestras moved to blind auditions.[22]

Australia

Main article: Gender pay gap in Australia

In Australia, the gender pay gap is calculated on the average weekly ordinary time earnings for full time employees published by the Australian Bureau of Statistics. The gender pay gap excludes part time, casual earnings and overtime payments.[24]

Australia has a persistent gender pay gap. Between 1990 and 2009, the gender pay gap remained within a narrow range of between 15 and 17 %.[25] In August 2010, the Australian gender pay gap was 16.9%.[26]

Ian Watson of Macquarie University examined the gender pay gap among full-time managers in Australia over the period 2001-2008, and found that between 65 and 90 % of this earnings differential could not be explained by a large range of demographic and labor market variables. In fact, a "major part of the earnings gap is simply due to women managers being female." Watson also notes that despite the "characteristics of male and female managers being remarkably similar, their earnings are very different, suggesting that discrimination plays an important role in this outcome."[27] A 2009 report to the Department of Families, Housing, Community Services and Indigenous Affairs also found that "simply being a woman is the major contributing factor to the gap in Australia, accounting for 60 per cent of the difference between women’s and men’s earnings, a finding which reflects other Australian research in this area." The second most important factor in explaining the pay gap was industrial segregation.[25]

Impact

Pensions

The European Commission argues that the gender pay gap has far-reaching effects, especially in regard to pensions. Since women's earnings over a lifetime are on average 17.5% (as of 2008) lower than men's, these lower earnings result in lower pensions. As a result, elderly women are more likely to face poverty: 22% of women aged 65 and over are at risk of poverty compared to 16% of men.[28]

Economy

A 2009 report for the Australian Department of Families, Housing, Community Services and Indigenous Affairs argued that in addition to fairness and equity there are also strong economic imperatives for addressing the gender wage gap. The report found that the gender pay gap has a substantial effect on Australia’s economic performance, measured in terms of GDP per capita, and that the value of reducing the gap is substantial. For example, the researchers estimated that a decrease in the gender wage gap of 1 percentage point from 17 % to 16 % would increase GDP per capita by approximately $260. This equates to around $5,497 million or 0.5 per cent of total GDP, assuming that the Australian population is held constant. The results also indicate that eliminating the whole gender wage gap from 17 % (in February 2009) to zero, could be worth around $93 billion or 8.5 % of GDP. The researchers also estimate that removing the negative effects associated with the prime determinant of the gap, that is being a woman, could add around $56 billion or 5.1 % to total annual GDP.[25]

Anti-discrimination legislation

According to the 2008 edition of the Employment Outlook report by the OECD, almost all OECD countries have established laws to combat discrimination on grounds of gender. Legal prohibition of discriminatory behavior, however, can only be effective if it is enforced. The OECD points out that

"herein lies a major problem: in all OECD countries, enforcement essentially relies on the victims’ willingness to assert their claims. But many people are not even aware of their legal rights regarding discrimination in the workplace. And even if they are, proving a discrimination claim is intrinsically difficult for the claimant and legal action in courts is a costly process, whose benefits down the road are often small and uncertain. All this discourages victims from lodging complaints."[9]

Moreover, although many OECD countries have put in place specialized anti-discrimination agencies, only in a few of them are these agencies effectively empowered, in the absence of individual complaints, to investigate companies, take actions against employers suspected of operating discriminatory practices, and sanction them when they find evidence of discrimination.[9][10]

In 2003, the U.S. Government Accountability Office (GAO) found that women in the United States, on average, earned 80 % of what men earned in 2000 and workplace discrimination may be one contributing factor. In light of these findings, GAO examined the enforcement of anti-discrimination laws in the private and public sectors. In a 2008 report, GAO focused on the enforcement and outreach efforts of the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (Labor). GAO found that EEOC does not fully monitor gender pay enforcement efforts and that Labor does not monitor enforcement trends and performance outcomes regarding gender pay or other specific areas of discrimination. GAO came to the conclusion that "federal agencies should better monitor their performance in enforcing anti-discrimination laws."[29][30]

See also

References

  1. ^ OECD OECD. Retrieved on July 12, 2011.
  2. ^ European Commission. Gender Pay Gap. Retrieved on August 19, 2011.
  3. ^ "The real explanation for the gender pay gap".
  4. ^ a b Kanter, Rosabeth Moss (4 August 2008). Men and Women of the Corporation. PublicAffairs. ISBN 978-0-7867-2384-3. {{cite book}}: |access-date= requires |url= (help)
  5. ^ Office of the White House, Council of Economic Advisors, 1998, IV. Discrimination
  6. ^ Levine, Report for Congress, "The Gender Gap and Pay Equity: Is Comparable Worth the Next Step?", Congressional Research Service, Library of Congress, 2003
  7. ^ European Foundation for the Improvement of Living and Working Conditions (2010). Addressing the gender pay gap: Government and social partner actions, p. 28.
  8. ^ OECD. OECD Employment Outlook 2008 - Statistical Annex. OECD, Paris, 2008, p. 358.
  9. ^ a b c d OECD. OECD Employment Outlook - 2008 Edition Summary in English. OECD, Paris, 2008, p. 3-4.
  10. ^ a b OECD. OECD Employment Outlook. Chapter 3: The Price of Prejudice: Labour Market Discrimination on the Grounds of Gender and Ethnicity. OECD, Paris, 2008.
  11. ^ a b European Commission. The situation in the EU. Retrieved on July 12, 2011.
  12. ^ United States Congress Joint Economic Committee. Graph: Federal Workforce - Gender Pay Gap Unchanged. Retrieved on March 31, 2011.
  13. ^ Francine D. Blau & Lawrence M. Kahn (2007). The gender pay gap: Have women gone as far as they can? Academy of Management Perspectives, Vol. 21, No. 1, pp. 7–23.
  14. ^ Doris Weichselbaumer and Rudolf Winter-Ebmer (2005). A Meta-Analysis on the International Gender Wage Gap. Journal of Economic Surveys, Vol. 19, No. 3, pp. 479–511, doi: 10.1111/j.0950-0804.2005.00256.x.
  15. ^ Manning, Alan (2006). The gender pay gap. Centre for Economic Performance, CentrePiece, Vol. 11, No. 1, pp. 13-16.
  16. ^ Woolcock, Nicola. Women will earn the same as men - if they wait 150 years. The Sunday Times, July 28, 2006.
  17. ^ Goodley, Simon (2011-08-31). "Women executives could wait 98 years for equal pay, says report". The Guardian. London. Retrieved August 31, 2011. While the salaries of female executives are increasing faster than those of their male counterparts, it will take until 2109 to close the gap if pay grows at current rates, the Chartered Management Institute reveals.
  18. ^ a b U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States: 2009. Current Population Reports, P60-238, U.S. Government Printing Office, Washington, DC, 2010, p. 7.
  19. ^ Institute for Women's Policy Research. The Gender Wage Gap: 2009. Retrieved March 31, 2011.
  20. ^ Office of the White House, Council of Economic Advisors, 1998, IV. Discrimination
  21. ^ Levine, Report for Congress, "The Gender Gap and Pay Equity: Is Comparable Worth the Next Step?", Congressional Research Service, Library of Congress, 2003
  22. ^ a b c "Justice Talking: The Women's Equality Amendment / What Does It Mean and Is It Necessary?". 2007-05-28. Retrieved 2012-03-13.
  23. ^ a b c d United States Congress Joint Economic Committee. Invest in Women, Invest in America: A Comprehensive Review of Women in the U.S. Economy. Washington, DC, December 2010.
  24. ^ Department of Commerce. Frequently asked questions about pay equity. Retrieved on May 06, 2011.
  25. ^ a b c National Centre for Social and Economic Modelling. The impact of a sustained gender wage gap on the economy. Report to the Office for Women, Department of Families, Community Services, Housing and Indigenous Affairs, 2009, p. v-vi.
  26. ^ Equal Opportunity for Women in the Workplace Agency. Pay Equity Statistics. Australian Government, 2010.
  27. ^ Ian Watson (2010). Decomposing the Gender Pay Gap in the Australian Managerial Labour Market. Australian Journal of Labour Economics, Vol. 13, No. 1, pp. 49-79.
  28. ^ European Commission. Closing the gender pay gap. March 04, 2011.
  29. ^ U.S. Government Accountability Office. Women's Earnings: Federal Agencies Should Better Monitor Their Performance in Enforcing Anti-Discrimination Laws. Retrieved on April 1, 2011.
  30. ^ U.S. Government Accountability Office. Report Women's Earnings: Federal Agencies Should Better Monitor Their Performance in Enforcing Anti-Discrimination Laws.

Further reading

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