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The Wage Gap Between Men and Women Is Narrowing The Wage Gap. 2008. Lexile Measure: 1270L. COPYRIGHT 2008 Gale, Cengage Learning From Opposing Viewpoints In Context. Full Text: Article Commentary

Mark Doms and Ethan Lewis, "The Narrowing of the Male-Female Wage Gap," reprinted from Federal Reserve Bank of San Francisco's Economic Letter 2007-17 (June 29, 2007). The opinions expressed in this article do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco, or of the Board of Governors of the Federal Reserve System.

Marc Doms is a senior economist employed by the Federal Reserve Bank of San Francisco. Ethan Lewis is an assistant economics professor at Dartmouth University.

According to several measures, the difference in wages between men and women, the so-called "male-female wage gap" (MFWG), has shrunk substantially—by about half—over the past several decades. This phenomenon has been the subject of much research, speculation, and contention. For example, some seek to explain why the gap narrowed so dramatically in the 1980s only to narrow much more slowly in subsequent years. Others have considered the role of new technology, which may have helped level the playing field between the sexes; this view recalls the rise of office work at the turn of the 20th century, which is also thought to have benefited women.

In this [viewpoint], we focus on an important portion of the research in this area, particularly as it pertains to the very sharp decline in the MFWG during the 1980s. We summarize three of the more well-known possible explanations: declining discrimination against women, rising skills and workforce attachment of women, and changing selection. While each has strong merit in its own right, none has come to be the dominant explanation. We speculate that it may be fruitful, though challenging, to consider whether these three explanations worked together, occurring simultaneously and reinforcing one another, to result in the sharp narrowing of the MFWG in the 1980s.

Measuring the Male-Female Wage Gap There are several ways to compare the wages of males and females, and no single measure is perfect or preferable in every instance. The method most often used in academic studies is to examine hourly wages for only full-time workers using data sets such as the Current Population Survey (CPS) or Decennial Census. These studies typically measure the difference in wages between the sexes after controlling for differences in years of education and age. This approach ensures that, for example, the wage of a 50-year-old female with a post-college degree is not directly compared to that of an 18-year-old male who dropped out of high school....

Decline in Discrimination Differences in pay between men and women may be partly the result of discrimination against women in the workplace. Such gender discrimination may have lessened, especially as a result of changes that occurred in the 1970s and 1980s. For example, in Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations (1973), the U.S. Supreme Court upheld an ordinance that prohibited publishing job advertisements that sorted positions into "Help Wanted: Male" and "Help Wanted: Female." In addition, [American University professor Rita J. Simon and Eastern University assistant professor Jean M. Landis] found that opinion polls showed that men's willingness to accept women in the workplace rose considerably in the 1970s and 1980s.

Unfortunately, ascertaining whether the MFWG has shrunk because of lessening discrimination against women is difficult, because measuring discrimination itself, let alone changes in discrimination, is difficult.

Rising Skills and Workforce Attachment Unlike discrimination, trends in the skills of women and their attachment to the workforce (that is, their staying in the workforce) since the 1970s are more easily demonstrable. In terms of education, [Harvard professors Claudia Goldin and Lawrence F. Katz and Princeton professor Ilyana Kuziemko have determined that] American women born after 1960 began completing college at higher rates than men. Perhaps more importantly, during the 1970s, women entered professional graduate programs and went on to professional careers in record numbers. This is important because professional occupations tend to have higher pay than many of the jobs that used to be listed in the "Help Wanted: Female" ads. Additionally, women's attachment to the labor force may have increased. For instance, opinion surveys show a dramatic rise in the proportion of women who say they planned to work at age 35 during the 1970s. Also, ... from 1983 to 2006, the median job tenure rose noticeably for women but remained relatively unchanged for men.

Rising wages and work experience of women could account for some of the increase in women's relative wages in the 1980s and 1990s.

These trends could help reduce the measured MFWG in several ways. An increased attachment of women to their careers would tend to raise women's average wages by lengthening their average work experience. If, for a given age and education, women gained more experience, then their wages relative to men's would be expected to increase. Similarly, if women made career investments that are not picked up in surveys (such as what they study in school instead of years of schooling), then that could lead to a narrowing in the measured MFWG.

Establishing the relative importance of the rise in workplace human capital among women on the narrowing of the MFWG, however, has not been straightforward. One reason is that the data sets used most frequently in such analyses contain only indirect measures of either workplace experience or career investments. For example, potential work experience in many studies is derived using the age and education of workers in the sample. By contrast, [Francine D. Blau, Cornell University professor of industrial and labor relations and labor economics, and Lawrence M. Kahn, Cornell professor of labor economics and collective bargaining,] use a data set that does contain years of actual work experience. They found that the rising wages and work experience of women could account for some of the increase in women's relative wages in the 1980s and 1990s. They also found that human capital (a combination of work experience and education) of women increased in the 1980s at about the same pace as it did in the 1990s. So although the increase in human capital may have helped close the MFWG, the human capital story says little about why the MFWG closed faster in the 1980s than it did in the 1990s.

Changing Selection As stated earlier, the MFWG is usually computed using only full-time workers. However, full-time workers may not be representative of the population. Put another way, not everybody works, and economists believe that people's decisions to work or not depend, in part, on what they would earn if they did work, their so-called "earnings potential." Therefore, researchers have studied how much the decline in the MFWG may reflect the selective entry of women with high earnings potential into working. [Casey Mulligan, University of Chicago economics professor, and Yona Rubinstein, Brown University economics professor,] argue that the "stay-at-home" women of the 1960s had high earnings potential compared to those who were working; in other words, they were disproportionately women who would have had high pay if they had chosen to have a career. During the 1970s and 1980s the pay for high-skill and professional jobs increased relative to the pay for low-skill jobs. This better pay may have induced women with high earnings potential to pursue careers rather than stay at home. This latter point is buttressed by [Sandra E. Black, assistant economics professor at UCLA, and Chinhui Juhn, University of Houston economics professor].

Since changes in women's earnings potential cannot be observed directly (one only observes the wages of those who are actually working), Mulligan and Rubinstein offer indirect evidence to support their story. They show that two groups of women likely to have high earnings potential—women with high "IQs" and women with educated mothers—have increased their propensity to work significantly more than other women. In addition, they show that wages grew more quickly over the past 30 years for the kinds of women who were least likely to work in the 1960s—for example, married women with children—and less quickly for women who always had higher rates of participation, such as single women. Overall, Mulligan and Rubinstein suggest that most of the closing of the MFWG was due to changing selection.

While many might agree that changing selection played a role in the increase in women's wages—due in part to Mulligan and Rubinstein's evidence—there is less consensus over how much changing selection contributed to the increase in women's pay. For instance, Blau and Kahn, using other methods, suggest that the impact is much smaller.

Possible Interactions Exploring whether and how these three explanations may have worked together to narrow the MFWG so dramatically in the 1980s is challenging both theoretically and empirically, and it is beyond the scope of this [viewpoint]. However, we believe it may be a fruitful avenue to pursue. For example, consider the link between the decline in discrimination and rising skills among women: It is conceivable that less discrimination reinforced women's decisions to invest more in their own human capital, perhaps by furthering their education or pursuing more lucrative occupational paths. The decline in discrimination also could be linked to the selection explanation, in that it may have lured women with high earnings potential into the labor market. The causality between discrimination and labor force attachment could also go the other direction: For example, greater attachment to the labor force may itself help reduce discrimination if the perceptions of women's attachment to the labor force change as a consequence. Clearly, the phenomenon of the MFWG remains a rich field of research, not only to understand the rapid narrowing of the gap in the 1980s and the slower narrowing in later years but also the persistence of the gap today.

Books

Francine D. Blau, Marianne A. Ferber, and Anne E. Winkler The Economics of Women, Men, and Work. Upper Saddle River, NJ: Prentice- Hall, 2006. Matthew J. DeLuca and Nanette F. DeLuca Perfect Phrases for Negotiating Salary and Job Offers: Hundreds of Ready-to-Use Phrases to Help You Get the Best Possible Salary, Perks or Promotion. New York: McGraw-Hill, 2006. Warren Farrell and Karen DeCrow Why Men Earn More: The Startling Truth Behind the Pay Gap and What Women Can Do About It. New York: AMACOM, 2005. Robert H. Frank Falling Behind: How Rising Inequality Harms the Middle Class. Berkeley and Los Angeles: University of California Press, 2007. Joni Hersch Sex Discrimination in the Labor Market. Hanover, MA: Now, 2007. Ira Katznelson When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America. New York: Norton, 2005. Stephanie Luce Fighting for a Living Wage. Ithaca, NY: Cornell University Press, 2004.

Meizhu Lui, Rebecca Anderson, Betsy Leondar-Wright, Barbara Robles, and Rose Brewer Color of Wealth: The Story behind the U.S. Racial Wealth Divide. New York: New Press, 2006. Sugata Marjit and Rajat Acharyya International Trade, Wage Inequality and the Developing Economy. New York: Springer-Verlag, 2003. Deborah Reed and Jennifer Cheng Racial and Ethnic Wage Gaps in the California Labor Market. San Francisco: Public Policy Institute of California, 2003. Alan Reynolds Income and Wealth. Westport, CT: Greenwood, 2006. Beth Shulman Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans. New York: New Press, 2005. Brian Smedley, Alan Jenkins, and Bill Lan Lee All Things Being Equal: Instigating Opportunity in an Inequitable Time. New York: New Press, 2007. Barbara Stanny Secrets of Six-Figure Women: Surprising Strategies to Up Your Earnings and Change Your Life. New York: HarperCollins, 2004. Veronica Jaris Tichenor Earning More and Getting Less: Why Successful Wives Can't Buy Equality. Piscataway, NJ: Rutgers University Press, 2005. Nancy R. Venneti Labor, Job Growth, and the Work Place of the Future. Hauppauge, NY: Nova Science, 2004.

Periodicals

Sigal Alon and Yitchak Haberfeld "Labor Force Attachment and the Evolving Wage Gap Between White, Black, and Hispanic Young Women," Work and Occupations, November 2007. Robert Bartley "'Affirmative Action': Devil in the Details," Wall Street Journal, February 10, 2003. Thomas J. Billitteri "Curbing CEO Pay: Foreigners Resent U.S. CEO's High Pay," CQ Researcher, March 9, 2007. Elaine L. Chao "Knowledge Key to Higher Wages," Messenger Inquirer (Kentucky), September 2, 2007. Ann Crittenden "Don't Get Mad, Get Even," American Prospect, May 2006. Phil Davies "Wives at Work," Region, December 2003. Sandra Davis "Education Holds Key to Improving Wage Gap and Poverty Standards," Saint John Telegraph-Journal (New Brunswick, Canada), July 25, 2007. Maria E. Enchautegui "Immigration and Wage Changes of High School Dropouts," Monthly Labor Review, October 1997. Marilyn Gilory "Hispanic Women Exerting Economic Influence," Hispanic Outlook in Higher Education, February 27, 2006. Paul Gordon "Central Illinois Nearing Career Crisis—Experts Speak of Urgency in Training Workforce for Highly Skilled Jobs;" Lincoln(NE) Journal Star, October 11, 2007. John Henry "Arkansas Women Narrow Pay Gap," Arkansas Business, November 29, 2004. Mark A. Hoffman "Employers Score a Win with Pay Bias Decision; Supreme Court Puts Firm Limit on Filing Period," Business Insurance, June 4, 2007. Chinhui Juhn "Labor Market Dropouts and Trends in the Wages of Black and White Men," Industrial and Labor Relations Review, July 1, 2003. Linda Meric "Wage Gap for Women Narrows—but Still a Long Way to Go to Parity with Men!" Colorado Woman, April 2003. Joan Oleck "Poor Literacy Skills Threaten Our Future: Report Warns that Many Kids Won't Have a Chance Unless We Narrow the Achievement Gap," School Library Journal, March 2007. Deborah Perelman "Among Tech Execs, Men Face Gender Wage Gap," eWeek, January 24, 2007. www.eweek.com. Garth C. Reeves Jr. "Blacks Not Seeing the Fruits of Their Labor," Miami (FL) Times, September 11, 2007. Robert J. Samuelson "The Quagmire of Inequality; Citing Income Increases of the Most Wealthy Evokes Images of Greedy CEOs and Hedge-Fund Managers. But the Story Is More Complicated," Newsweek, June 11, 2007. Jennifer Schramm "Wage Gap Reversals," HR Magazine, October 2007. Keith Sill"Widening the Wage Gap: The Skill Premium and Technology," Business Review (Federal Reserve Bank of Philadelphia), Winter 2002. Kelly Weeks, Matthew Weeks, and Lauren Frost "The Role of Race and Social Class in Compensation Decisions," Journal of Managerial Psychology, 2007.

Source Citation (MLA 8th Edition) Doms, Mark, and Ethan Lewis. "The Wage Gap Between Men and Women Is Narrowing." The Wage Gap, edited by Christina Fisanick,

Greenhaven Press, 2008. Current Controversies. Opposing Viewpoints in Context, http://link.galegroup.com/apps/doc/EJ3010529206/OVIC?u=lom_umichdearb&sid=OVIC&xid=f6f109cb. Accessed 3 Mar. 2019. Originally published as "The Narrowing of the Male-Female Wage Gap," Federal Reserve Bank of San Francisco's Economic Letter, 2007.

Gale Document Number: GALE|EJ3010529206