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  1. 1. Closing the Wage Gap: A Possible Role for Comparable Worth? December 10, 2012 Nicole Taverna Tara Lombardia Matthew Vittorio Nolan Harrington Andrea Schroeder
  2. 2. Evidence of continuing Wage GapPossible Explanations:- Crowding Hypothesis - Women “crowd” into typically female occupations because there are limited opportunities for them in “men’s work” - Leads to reduced wages- Social norms - Women are expected to give up promotions to spend time with their children - Women tend to choose jobs with flexibility- Factors that reduce wages: - women tend to work in fields that require less training - women have less experience
  3. 3. Evidence of continuing Wage GapStatistics about Wage Gap:- Wage gap widens with age- Wage gap widens as level of education is increased- Right out of college, women only earn 80% of what their male counterpart earns- Wage gap widens for women of color and Hispanic descent - Narrows most for Asian women- Half of the wage gap remains unexplained
  4. 4. Evidence of continuing Wage GapProblems women continue to face:- Employers are less likely to hire women with children - Women with children are seen as less productive and reliable - If hired, they are usually offered lower salaries- Increasing the number of women in traditionally male fields is likely to improve wages for women, but it’s unlikely to fully eliminate the pay gap.
  5. 5. Why Does The Wage Gap Matter? Maximizing profits Occupational wage gap decreases with development and FDI Globalization, trade and job opportunities, investments in infrastructure The wage gap as a tool to change the gender gap
  6. 6. What Are Some Causes Occupational segregation  50% Inequity at home and in the marketplace Firms vs. families
  7. 7. What Can Be Done Policy efficiency depends on the magnitude of the components targeted Comparable worth Contracts
  8. 8. Potential Solution: Comparable Worth Men and women should be compensated equally for work requiring comparable skills, responsibilities and effort Introduced in 1970’s following Equal Pay Act in 1963 Evaluating Comparable Worth: Job Evaluations  Leave out market forces
  9. 9. Comparable Worth: Why It Matters Comparable worth shows that work has an intrinsic or an innate value apart from the monetary wage it commands in the labor market Remedy for the earnings differential between male and female jobs  And as a remedy for the low incomes and growing poverty among women
  10. 10. Helpful, Not Harmful Where comparable worth has been implemented, the effects of eradicating pay inequality have been large and the costs have been relatively small and distributed over a number of years There will be costs for firms, but they are necessary Help all women, more so low wage workers than higher paid workers
  11. 11. Potential Comparable WorthProblems: Is it really the solution? Personal Freedoms  Speech, Press, Religion Economic Freedom  Cannot simply alter the Free Market System Slowly giving Government control over wages  Also, over employee-employer relationships
  12. 12. Comparable Worth Shortcomings Economic principles are ignored  Supply and Demand Individual choices determine S&D for employment  These interactions determine wages Individual liberty cannot and should not be quantified or controlled Does not have the ability to adjust for change  Buggy Whip making  To deny employers the right to adjust wages will doom our economy
  13. 13. The Willis Scale Best known comparable worth scale  Basis of One-Billion-Dollar court decision in Washington Four factors  Knowledge/Skill  Mental Demands  Accountability  Working Conditions Sub-categories  Ex. “the impact of one’s work”  Private consulting firms
  14. 14. The Willis Scale Cont. Example: A man in Venice Beach, California  Juggles live-running chainsaws  Skill, mental demands, varying work conditions, crowd accountability CEO or Nuclear Engineer Why difference in wages?  NO DEMAND Also, unable to measure job satisfaction
  15. 15. More Shortcomings If unjust to pay women less, it is unjust to pay anyone less than their “worth” Government would eventually mandate every wage based on worth determined by faulty measurements Would not be correlation between wages and demand for skills Ineffectively distributed labor  Scarcity of engineers, surplus in female dominated fields No such thing as intrinsic economic value  Given a wage based on worth suppresses right for free and mutually agreeable exchanges
  16. 16. Other Options? Affirmative Action -Policies that recommend the deliberate recruitment, hiring, and promotion of underutilized groups -Increasingly used by the feminist movement throughout the 1970s to promote women’s occupational advancement -Positives: Benefitted women who gained entry into male-dominated professional, managerial, and craft jobs; made lawful for women to claim gender-based improvement in economic conditions -Shortcomings: Only helps small percentage of women, suggests that upward mobility is only achieved in male occupations, women lose monopoly over their traditional jobs, led to men’s subtle domination within traditionally women occupations, degradation of job status where women have integrated
  17. 17. Other Options? Support for working mothers/families -parental leave policies, promotion of child care, flexible work hours, reducing daily hours of work -More career interruptions (such as leaving to take care of children) for women has helped lead to wage gap -Family and Medical Leave Act: Approved period of unpaid maternity leave -Benefits: reduces minimum time requirement, removes burden of searching for another job -Shortcomings: Only applies to women in mid-size or large companies, time-span is relatively short, leave is unpaid
  18. 18. Other Options? Train Women to Negotiate Better -Women are reluctant to believe they deserve more and are more hesitant to bargain for a greater salary -Most employers expect new hires to bargain over their initial employment terms and don’t understand why more women don’t do so -Women have the capabilities to negotiate (better and reading nonverbal signals, have an indirect style which may induce opponents to lower their guard) -Specific training in negotiation courses, teaching women that they are worth as much as their male counterparts, and encouraging women to negotiate their initial terms of employment when offered a new job can all help -Difficulties: Women are taught from a young age to focus on others more than themselves. Would have to thus overcome entrenched societal expectations