April 20, 2010

Despite New Law, Gender Salary Gap Persists

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Despite New Law, Gender Salary Gap Persists

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April 19, 2010

The very first bill that President Obama signed into law dealt with equal pay for women, but activists say it’s done little to close the ongoing difference between what men and women earn.

The law — the Lilly Ledbetter Fair Pay Restoration Act — may have extended the amount of time victims have to file discrimination cases, but it hasn’t changed this fact: Women, on average, earn only 77 cents to a man’s dollar, and the disparity is greater for women of color.

The Pay Gap, By Sex, Race And Ethnicity (Weekly Earnings)

The Pay Gap, By Sex, Race And Ethnicity

Source: Bureau of Labor Statistics (2008 annual averages)

Credit: Alyson Hurt/NPR

New legislation in Congress aims to close the pay equity gap, even as administration officials prepare to step up enforcement of the existing law.

Economists say part of the gap is because women are more likely to take time off work for child care, and an even bigger part is because of “occupational segregation”: Women tend to work disproportionately in lower-paying fields. To be sure, many women’s groups see this as a vestige of discrimination. (Another bill, the Fair Pay Act, seeks to address this, though that legislation is considered less likely to gain congressional passage.)

Lilly Ledbetter at a news conference on equal pay

Enlarge Susan Walsh/APLilly Ledbetter, shown here in 2009, fought to extend the amount of time victims have to file discrimination cases. In 2009, President Obama signed a bill that bears her name to do just that.

Lilly  Ledbetter at a news conference on equal pay

Susan Walsh/APLilly Ledbetter, shown here in 2009, fought to extend the amount of time victims have to file discrimination cases. In 2009, President Obama signed a bill that bears her name to do just that.

But even when you control for occupation and a host of other variables, economists still find an unexplained gender gap of anywhere from around a nickel to a dime or more on the dollar. Ilene Lang with the women’s research group Catalyst recently studied MBA graduates.

“From their very first job after getting their MBA degree, women made less money than men,” Lang says. “On average, they were paid $4,600 less.”

Paycheck Fairness Act Builds On 1963 Law

Catalyst’s findings held even when those studied had no children. For Lang, this says that decades-old stereotypes persist.

“There are assumptions that women don’t care about money, which is crazy!” Lang says. “There are assumptions that women will always have men who will take care of them, that women will get married, have children and drop out of the labor force. All those assumptions are just not true.”

The pay gap has certainly narrowed since Congress first passed the Equal Pay Act in 1963, when women earned 59 percent of men’s wages. But economists say this is largely because men’s wages in the decades since have either fallen or were flat. Today, the recession — in which so many more men have lost jobs that some dub it the “mancession” — has left more women than ever as primary breadwinners.

As Obama has noted, the pay disparity means they’re losing hundreds of thousands of dollars over the course of a career. “It’s about parents who find themselves with less money for tuition and child care,” Obama said last year. It’s about “couples who wind up with less to retire on. [In] households where one breadwinner is paid less than she deserves, it’s the difference between affording the mortgage or not.”

The Pay Gap, 1963-2008

The Pay Gap, 1963-2008

Source: U.S. Census Bureau

The Paycheck Fairness Act would make it easier to prove gender discrimination and would toughen penalties. It would also try to erode what advocates say is a paralyzing secrecy around salaries: The bill would ban companies from retaliating if workers talk to each other about pay. Rep. Rosa DeLauro reminded a Senate hearing last month that Lilly Ledbetter’s case only came about because someone left an anonymous note on her windshield.

“Just ask Lilly Ledbetter how much sooner she could have found out that she was being discriminated against had this protection been in place,” DeLauro said.

Equal Pay For Different Work?

Women’s groups say that fields traditionally dominated by women tend to be undervalued, and that this accounts for much of the ongoing gender pay gap. This is a contentious claim, with critics offering a number of other reasons, such as the danger associated with many mostly male fields. In any case, the Fair Pay Act — which is considered unlikely to pass Congress — would have companies evaluate their salary structure to ferret out such bias. Many large corporations, countries like Sweden and Canada, and a number of U.S. state governments already do this. The state of Minnesota has a gender pay equity law and uses an outside consultant to help set wage levels.

In 1982, a state evaluation found a sex-based wage disparity between delivery van drivers and clerk typists. The two jobs were deemed to be “equal work,” yet the drivers (mostly men) at the time earned $1,900 a month, while the typists (mostly women) earned $1,400.

Pay Inequity Crackdown

Economist Heather Boushey of the Center for American Progress testified that the pay gap grows over time. Research shows that women are less likely than men to negotiate for a higher salary. Then “as a woman goes through her career,” she said, “you’re asked at every job, ‘Well, how much did you make at your last job?’ And then that exacerbates the pay gap.”

Critics worry the Paycheck Fairness Act would encourage a surge of unfounded class-action lawsuits. Labor and employment lawyer Jane McFetridge said small businesses would also find the new requirements cumbersome. For example, an employer who pays a man more than a woman for the same job might have to show that it’s a “business necessity.”

“Do we want the government deciding what is business necessity?” McFetridge asked lawmakers at the hearing. “Isn’t that for the business owner to decide?”

Whether or not the Paycheck Fairness Act becomes law, the Obama administration plans to crack down on pay inequity. Labor agencies, which saw their budgets shrink under the Bush administration, are getting a new infusion of staff and money. Pay equity consultant Tom McMullen says companies should prepare.

“They better get their foundation right soon, because I think there’s a new wind blowing in Washington that this is on their radar screen,” McMullen says.

In February, the Obama administration announced a task force to coordinate enforcement of equal pay laws. It plans an education campaign to make sure that companies know: Equal work means equal pay.


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