Gender Wage Gap Raises the Stakes for the American Economy

Originally published in The American Prospect on August 11, 2016.
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Full-time female workers across the country still earn just 79 cents for every dollar men earn, and the gap widens further for women of color. A new report on the gender wage gap by the Economic Policy Institute, a Washington-based think tank, shines a light on why these disparities persist and what policies would most effectively eliminate them.

Though encouraging women to pursue careers in fields like science and engineering carries intrinsic importance, the authors say closing existing gaps within occupations would actually eliminate 68 percent of the gender wage gap. That means figuring out why waiters earn more than waitresses with similar work experience and education could go a long way towards ending gender wage disparities.

The massive increase of women working outside the home has been one of the greatest economic shifts of the 20th century. In 1950, roughly 34 percent of women aged 16 and older were in the labor force. That figure rose to nearly 45 percent in 1970 and peaked at 60 percent in 1999. This influx of female workers produced nearly a fifth of real GDP growth in the 1970s and ’80s.

But over the last 15 years, women’s labor force participation has dropped to 57 percent, at a time when most other OECD countries saw increases. This decrease can be partly explained by the failure of the United States to implement policies that would make it easier for women to balance work and family responsibilities—which still fall disproportionately on female shoulders.

Some pundits dismiss the idea that discrimination leads to a gender wage gap, insisting that discrepancies in pay are just the natural result of women choosing to work in certain fields. “Critics will say well if we just led a herculean effort and transported women into jobs that men have, then that would close the gender wage gap,” says Jessica Scheider, one of the co-authors of the Economic Policy Institute report. “The reality is that if you were to do that, it wouldn’t actually get you as far as these critics think it would.”

The gender pay gap is not just limited to low-wage professions, and the Economic Policy Institute authors argue that “women cannot educate themselves out” of these disparities. In fact, the gender wage gap is actually largest for highly-educated women working in white-collar jobs. In one study, Harvard economist Claudia Goldin found that while men and women earned similar salaries right after graduating from University of Chicago’s business school, a decade later the women with MBAs earned just 57 percent of what their male peers made.

Democratic presidential nominee Hillary Clinton has been speaking out on the campaign trail about her plans to boost the economy with higher female employment and more family-friendly labor policies. One item on Clinton’s economic agenda involves tackling wage discrimination. “If you believe that your working mother, wife, sister, or daughter deserves equal pay, join us,” Clinton declared at the Democratic National Convention last month.

Clinton also proposes raising the minimum wage, ending the “tipped” minimum wage, establishing paid sick leave, affordable child care, and promoting pay transparency legislation to narrow the gender wage gap.

In a recent Vox feature, journalist Sarah Kliff notes that Harvard’s Goldin tends to be skeptical of policies like paid maternity leave that aim to close the gender wage gap. “Well-intentioned policies backfire 98 percent of the time,” Goldin said. For example, in certain professions, taking paid leave could disrupt a woman’s career trajectory and lead to lower wages.

Yet Elise Gould of the Economic Policy Institute, who also worked on the gender wage gap report, says that federal and state policies are important, in part because they can change perceptions. “I think often times government policies can help, just like executive orders aimed at federal contractors can help,” says Gould. “If you can set an example for sectors that are disproportionately affected by federal contractors, then those things might begin to be expected in non-federal contractor sectors. It’s similar to how unions can set standards in non-unionized sectors. If it’s a benefit that is recognized and appreciated by workers, then other workers can demand for that as well.”

Today if a two-parent household has to decide which parent will take the unpaid family leave to care for their newborn, usually the mother decides to take it, since she likely earns less money than her husband. However, by leaving the workforce, the woman’s career could take a hit, which perpetuates the gender wage gap.

Eileen Applebaum, an economist at the Center for Economic and Policy Research, finds encouraging evidence that California’s paid family leave policy, launched in 2004, changed these gender dynamics. The state agency that administers paid leave found that the percentage of men who took leave increased from 17 percent in the program’s first year to 30 percent today.

The increase in the percentage of men taking parental leave enabled more women to decrease the amount of time they took off: The percentage of California women who took paid leave dropped from 83 percent in 2004, to 70 percent today.

“In 2010, when [labor sociologist] Ruth Milkman and I were field interviewing employers, we came across a company that just had its first baby shower for a male employee—and was very proud of it,” Applebaum tells The American Prospect. “The HR manager at another company told us that in her view, men at her company did not view the [unpaid] Family and Medical Leave Act as applying to them. But once the leaves were paid leaves, they felt comfortable taking them.”

Gould of the Economic Policy Institute agrees. “For all of these policies, men stand to gain as well,” she says. It’s also about making it more palatable for men to take time off.”

Clinton talks often about universal child care and early childhood education, which would provide not only benefits for young children, but also to working families, particularly working mothers. The Economic Policy Institute says an investment that caps child-care expenditures at 10 percent of a family’s income, another Clinton proposal, could increase overall women’s labor force participation and boost GDP by roughly $210 billion.

Republican presidential nominee Donald Trump has offered very few policy ideas about women’s economic security, and the ones he has proposed have been vague and contradictory. Though at the Republican National Convention, his daughter Ivanka Trump said her father would support equal pay for women and push for affordable, accessible child care, policy experts say Trump’s proposed child-care plan is highly regressive and would provide little economic relief to struggling families.

Addressing the gender wage gap and other barriers women face in the workplace will require a mix of tools, policies, and cultural shifts. Gould notes that if congressional gridlock continues, many changes may need to take place at the state level. “So much of these problems are cultural, but if you create the right financial incentives, then you’ll change people’s minds,” she says.

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