Pay gap between men and women: What the research says

The JR Guide to the 2020 Democratic Policy Proposals

(Chloe Reichel)
By

January 24, 2020

In the lead-up to the 2020 elections, the Journalist’s Resource team is combing through the Democratic presidential candidates’ platforms and reporting what the research says about their policy proposals. We want to encourage deep coverage of these proposals — and do our part to help deter horse race journalism, which research suggests can lead to inaccurate reporting and an uninformed electorate. We’re focusing on proposals that have a reasonable chance of becoming policy. For us, that means at least 3 of the 5 top-polling candidates say they intend to tackle the issue. Here, we look at what the research says about the pay gap between men and women.

Candidates favoring legislation or using executive authority to try to close the pay gap

Michael Bennet*, Pete Buttigieg, John Delaney*, Tulsi Gabbard, Deval Patrick*, Bernie Sanders, Tom Steyer, Elizabeth Warren, Andrew Yang*

What the research says

Women working full-time in the U.S. made a median of $821 each week in 2019, compared with a weekly median of $1,007 for men — that’s about 81 cents women earned for every dollar men earned — according to the Bureau of Labor Statistics. The pay gap between men and women refers to that 19-cent-per-dollar discrepancy. Research shows that the pay gap narrowed in the 1980s and 1990s as women gained work and educational experience, but the gap persists today and has not changed much in recent years.

Key context

The Equal Pay Act of 1963 provides federal protection so that men and women receive “equal pay for equal work,” according to the Equal Employment Opportunity Commission, the federal agency that enforces workplace laws. Work tasks must be similar but they don’t have to be identical to be considered legally “equal.” Title VII of the Civil Rights Act of 1964 more broadly outlaws workplace discrimination on the basis of sex, including pay discrimination.

“Gender wage gap” is the phrase politicians, academics and journalists sometimes use to describe the per-dollar difference between what men and women earn. Courts haven’t settled if federal law also covers people on the basis of gender identity and sexual orientation, or if protections are limited to biological sex alone. This is the difference between sex and gender identity, according to the National Institutes of Health:

Sex is biological. It’s based on your genetic makeup. Males have one X and one Y chromosome in every cell of the body. Females have two X chromosomes in every cell. These cells make up all your tissues and organs, including your skin, heart, stomach, muscles, and brain.

Gender is a social or cultural concept. It refers to the roles, behaviors, and identities that society assigns to girls and boys, women and men, and gender-diverse people. Gender is determined by how we see ourselves and each other, and how we act and interact with others.

Whether Title VII extends beyond a biological interpretation of “sex” will be clarified when the Supreme Court decides R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission. The case centers on a funeral home that fired a transgender employee after she began living as a woman in 2013. The justices heard arguments in October 2019, but there’s no timeframe for when they’ll issue an opinion.

Elizabeth Warren is one candidate still in the race who has proposed an in-depth pay gap policy that specifically addresses the pay gap for black women. Black women make about 68 cents for every dollar a white man makes, according to the 2019 BLS numbers.

Joe Biden has released a broad plan that aims to ensure “women of all ages have a fair chance to earn a good living” and mentions that the “Obama-Biden Administration fought for equal pay for women,” but doesn’t offer specifics related to closing the pay gap.

Pay transparency — making pay rates public — is something candidates sometimes talk about as a solution to narrow the pay gap. In Canada, faculty salaries above a certain level at public universities were made public by law starting in the mid-1990s. Researchers writing in a November 2019 National Bureau of Economic Research working paper find “robust evidence that the laws reduced the gender pay gap between men and women by approximately 30%.”

“One effect of the provision of information on gender-based salary disparities within an organization is that it may lead individuals to privately demand higher pay from their employer,” the authors write.

Another NBER working paper, from January 2018, finds that after private-sector pay transparency legislation passed in 2006 in Denmark, the gender pay gap there declined by 7% over the following two years.

When it comes to the size of the median hourly wage gap, the U.S. ranks among the worst of 30 high-income countries — better than Finland, the United Kingdom, Estonia and the Republic of Korea, but worse than Spain, Australia, France, Italy and others — according to the 2018-2019 Global Wage Report from the United Nations’ International Labour Organization.

Formative findings

Researchers largely agree that the pay gap between men and women narrowed most in the 1980s and 1990s and has leveled since the early 2000s. The closing gap in the 1980s was driven by women improving their qualifications, gaining work experience and moving into professional and managerial roles, according to a 2001 analysis from Cornell University labor economists Francine Blau and Lawrence Kahn.

By 2010, factors like education and work experience explained little of the persistent gap, according to a 2017 paper by Blau and Kahn in the Journal of Economic Literature. The gap for top-paying jobs, like executive-level positions or slots at major law firms, has closed more slowly than for jobs at middle and lower pay tiers. Workforce interruptions and women working fewer hours than men are to blame for the gap that remains at the top, the authors find when reviewing the literature.

“Considerable empirical evidence indicates a negative relationship between children and women’s wages, commonly known as the motherhood wage penalty,” the authors write.

Recent data on full-time wage and salary workers from the Bureau of Labor Statistics show a wide range of pay gaps by occupation. Chief executives, surgeons and financial advisors are among the occupations with the biggest pay gaps between men and women. Occupations in which women make more per dollar than men include fast food servers, paralegals, editors and receptionists.

A Pew Research report, published January 30, 2020, finds more women than men working in certain high-skill, higher-paying jobs, based on 2018 data — a trend that may have contributed to the overall gap being smaller today than 40 years ago. Women are now more likely than men to hold jobs that require strong social skills, like sales managers, and also occupations that require critical thinking and writing skills, like teaching, according to the report.

Though the overall pay gap is much smaller than it used to be, the fact remains that federal legislation, like the EPA and Title VII, has allowed redress through the courts but hasn’t eliminated the gap. The most recent federal legislation linked to equal pay is the Lilly Ledbetter Fair Pay Act of 2009, the first law Barack Obama signed as president.

Ledbetter worked as a shift supervisor at Goodyear Tire & Rubber Company through the 1980s and most of the 1990s. She sued Goodyear in 1998 after she discovered she was making less than her male counterparts. The Supreme Court threw out her case because, according to Title VII at the time, plaintiffs had to file suit within 180 days of the first act of discrimination. The act named for her amends Title VII and re-starts that 180-day countdown each time there is a discriminatory pay action — like each time an employee receives a paycheck.

Though the act makes it possible for someone like Ledbetter — who found out about pay inequality well after the initial fact — to file suit, the act hasn’t led to a huge increase in claims of pay discrimination because of sex with the Equal Employment Opportunity Commission, according to a 2017 paper in Advancing Women in Leadership.

Recent research

There are 24 states with equal pay laws that “differ in some material way” from the EPA, according to University of Florida law professor Stephanie Bornstein, writing in 2018 in the Maryland Law Review.

“Three states in particular, California, Massachusetts, and Oregon, have succeeded in enacting the most far-reaching legislation to date that promises to offer new solutions to remedy both gender and racial pay gaps,” Bornstein writes.

Laws in those three states aren’t identical, but each protects more classes of people from pay discrimination than the EPA does. California in particular has a long track record of attempting to address equal pay discrepancies. The state passed its first equal pay act in 1949 — 14 years before the federal equal pay law — and strengthened statewide protections in 2015.

In September 2018, California passed a law mandating representation from women on corporate boards. By the end of 2019, public companies based in the state had to have at least one female director, with more female directors required by 2021, depending on the size of the board. California is the first state to set such quotas. Women hold 20% of board seats among the 3,000 most valuable publicly traded companies in the U.S., according to executive data collection and analysis firm Equilar.

Research indicates that having more women in top management positions can help close the pay gap and improve company performance. An October 2007 analysis in the American Sociological Review suggests that “the presence of high-status female managers has a much larger impact on gender wage inequality” than promoting women to lower-level managerial positions.

“This finding highlights — in a new way — the significance of the ‘glass ceiling,’” the authors write. “If our findings hold, not only are qualified women blocked from upper-level managerial positions and denied the benefits of those jobs, but their absence has ripple effects that shape workplace outcomes for non-managerial women as well.”

Another analysis, from January 2012 in the Strategic Management Journal, takes 15 years of data from top managers at U.S. firms listed on the S&P 1500 stock market and finds that “a given firm generates on average 1% (or over $40 million) more economic value with at least one woman on its top management team than without any women on its top management team and also enjoys superior accounting performance.”

Corporate board quotas by gender may, however, lead to short-term losses. Firms affected by a board quota that went into effect in Norway in 2006 “undertake fewer workforce reductions than comparison firms, increasing relative labor costs and employment levels and reducing short-term profits,” finds a July 2013 paper in the American Economic Journal.

Similarly, a January 2019 research paper from the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill finds short-term losses in stock value for companies headquartered in California when the state’s board quota law was signed. The authors tie short-term losses particularly to companies that don’t have access to a “local pool of female directors.” In other words, the search for women directors would be more costly and time consuming for those companies.

“We acknowledge, however, that these policies may have positive long-term effects on women’s labor market outcomes, may enhance fairness and equity in the workplace, and ultimately may lead to improved outcomes for firms’ stakeholders,” the authors write.

Closing the remaining pay gap between men and women may come down to shifts in workplace and cultural values — not just how long people work, but when during the day work is done. Harvard University economist Claudia Goldin offers this perspective in the American Economic Review:

The solution does not (necessarily) have to involve government intervention and it need not make men more responsible in the home (although that wouldn’t hurt). But it must involve changes in the labor market, especially how jobs are structured and remunerated to enhance temporal flexibility. The gender gap in pay would be considerably reduced and might vanish altogether if firms did not have an incentive to disproportionately reward individuals who labored long hours and worked particular hours.

Labor law experts Gary Siniscalco, Lauri Damrell and Clara Morain Nabity put equal weight on the need for legislation and the need for society writ large to recognize underlying cultural reasons for the persistent pay gap.

For example, they offer that women working in different industries may value their time and interests outside of work differently. Divergent pay between men and women, in some cases, may come down to personal choice, like the decision to start a family or not.

The authors explain, writing in the American Bar Association Journal of Labor and Employment Law:

Whether these decisions are voluntary ‘choices’ or fueled by implicit or overt bias is extraordinarily difficult to discern and varies greatly from woman to woman, employer to employer, and job to job. Therefore, solutions cannot fit into a one-size-fits-all mold. Placing blame on employers and focusing narrowly on antidiscrimination legislation ignores a broader problem based on deeply entrenched societal assumptions related to how we collectively define our roles as women and men.

Further reading

National Board Quotas and the Gender Pay Gap among European Managers

David J. Maume, Orlaith Heymann and Leah Ruppanner. Work, Employment and Society. August 2019.

The gist: “Drawing a sample of managers in the 2010 European Social Survey, the gender gap in pay was decomposed, finding that employer devaluation of women accounted for the majority of the gender gap in pay.”

Does the Equal Pay Act Prohibit Discrimination on the Basis of Sexual Orientation or Gender Identity?

Adam Romero. Alabama Civil Rights & Civil Liberties Law Review, 2019.

The gist: “This article is the first to consider whether the Equal Pay Act’s prohibition of sex-based wage disparities encompasses wage disparities on the basis of sexual orientation or gender identity.”

A Systematic Review of the Gender Pay Gap and Factors That Predict It

Sebawit G. Bishu and Mohamad G. Alkadry. Administration & Society, March 2016.

The gist: “Confirming findings from past studies, this study also finds that the public sector performs relatively better in most aspects of the gender pay gap and factors that espouse it.”

Expert sources

Sebawit G. Bishu, assistant professor of public administration, University of Colorado Denver; research fellow, Harvard Kennedy School’s Women and Public Policy Program.

Stephanie Bornstein, associate professor of law, University of Florida Levin College of Law.

Claudia Goldin, Henry Lee Professor of Economics, Harvard University.

Adam Romero, director of legal scholarship and federal policy, UCLA School of Law.

Elena Simintzi, assistant professor of finance, University of North Carolina at Chapel Hill.

This article was updated on January 31 to include the January 2020 Pew Research report.

 

*Dropped out of race since publication date.

 

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