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  • Subject area(s): Engineering
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  • Published on: 7th September 2019
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The wage gap between men and women is a feature of the economy that has been measured and studied extensively. There is still debate, however, about the extent of this wage gap, the reasons it exists, and what consequences it has on the economy and society. Understanding the scope of this issue and its consequences are necessary for determining how great of a problem this really is and what steps are appropriate for addressing it.

Overview—Size and Scope of the Gender Wage Gap

The gender wage gap is measured in terms of the disparity in the pay that men and women receive for doing equivalent or comparable work. The wage gap has been measured since women began to enter the workforce in significant numbers. From the 1950s to the 1980s, women earned an average of 60% of the wages that men earned. During the 1980s, women’s wages began to “rise sharply” and have seen a “continued, but slower and more uneven rate of increase thereafter.” Today, the gender wage gap is smaller than it once was but persists at a noticeable rate. According to statistics gathered through the U.S. Census Bureau, the gender wage gap in 2015 was 80% and there has not been a statistically significant annual change in this rate since 2007. So while progress has been made on the gender wage gap from its historic height, achieving a closer wage parity has proven to be a persistent issue.

A related and contributing factor to the gender wage gap is occupational segregation. This refers to the tendency for some occupations to be seen as the purview of men and others of women. This affects the gender wage gap when there is a disparity in wages between these different occupations, such as if only men are able or permitted to become executives and women can only become secretaries. Even though occupational segregation has decreased, however, women remain more likely to be employed in lower-paying industries and occupations. It has even been argued that occupational segregation remains the most significant cause of the gender wage gap. One survey finds that the gender wage gap “nearly evaporates when you control for occupation and experience among the most common jobs, especially among less experienced workers. It is only as careers advance that men outpace female earnings.” So while women may still face difficulties attaining the highest-paying jobs later in their careers, this is a result of what kinds of occupations men and women pursue, according to this analysis. The relationship between occupational segregation and the causes of the gender wage gap, however, can be understood in a couple of different ways as will be discussed below.

Causes of the Gender Wage Gap

A number of causes of the gender wage gap have been proposed, some of them related to the concept of occupational segregation. One set of causes relate to the idea that women have been and potentially remain less qualified than men in some sense. For the entirety of the twentieth century, for example, women had lower average levels of education than men, especially at the post-secondary and graduate levels. Lower education levels meant that more women lacked the qualifications to take higher paying jobs or to advance to a higher rank within their workplace, lowering average wages for women. The problem with this, however, is that women in the United States closed the education gap by 2011 and now have higher average levels of education than men and are more likely to hold advanced degrees. If the gender wage gap were only a product of education, then, we should expect women to now earn more than men on average, and this is not the case.

Another type of causes that are given for the gender wage cap are cultural. Overt discrimination or unconscious bias may contribute to the kind of occupational segregation that exacerbates the gender wage gap. Women are underrepresented at the college level in the higher paying STEM fields (science, technology, engineering, mathematics). Women receive only 35% of all STEM bachelor degrees and are more than twice as likely to leave these professions mid-career than men, with 40% of those who leave citing the “macho” culture of these fields as a primary reason for doing so. Occupations that have been traditionally dominated by men can retain a culture that sees women as outsiders and interlopers. This can be exacerbated by the perception that some occupations are most suitably filled by people possessing certain personality traits when those personality traits are understood to have a gendered breakdown. One study found that women are more associated with the personality trait of “agreeableness,” which correlates to lower-paid professions, while men are more associated with “intellect” and have access to correspondingly higher-paying jobs. This means that women and men are assessed according to different characteristics and pushed towards different occupations based on their perceived traits, regardless of whether or not these traits are accurate. These kinds of cultural causes can explain why the gender wage gap persists even when it is not based on conscious discrimination.

A third set of causes for the gender wage gap are based on the idea that women impose additional costs on employers and receive lower salaries accordingly. This is primarily related to healthcare and childcare. One study found that women face a significant wage penalty when they have employer-sponsored insurance when compared with women without it, and this is explained by the fact that women have higher expected healthcare expenses than men do during their prime working years. A lower salary is made up for, according to this, though the provision of greater healthcare benefits. The problem with this is that it is not clear if this is true. There is evidence that the gap between men and women only increases when full compensation packages are considered, with women less likely to have employer-sponsored health insurance, retirement savings plans, or access to paid leave than men do. Higher healthcare costs could only justify a gender wage gap if women were actually able to avail themselves of these services. Still, the perception that women use greater healthcare resources could contribute to the cultural basis of the gender wage gap. This can be seen in childcare. Research shows that women experience a penalty to wages when they have children or in anticipation of them having children, while men who become fathers experience a pay premium. There is no logical reason why women would be penalized for becoming parents while fathers are rewarded, suggesting that employers are taking advantage of cultural attitudes about women and motherhood to deflate wages. The evidence that women actually are more costly to employ than men is sparse and contradictory.

Addressing the Gender Wage Gap

The gender wage gap is more than just unfair, representing tangible consequences for our economy and society. One example of this is the connection between the gender wage gap and domestic violence. According to the theory of household bargaining, women who have relatively lower wages than their partners and are therefore economically dependent on them are more likely to experience and endure domestic violence. The gender wage gap, then, can be seen as a way that women are marginalized in society and made less able to exercise their autonomy and pursue their well-being. So while the gender wage gap has decreased over time, as noted, shrinking it further or eliminating it entirely remain a positive policy goal.

The United States has been a global leader in the creation of equal employment policy. Title VII of the Civil Rights Act of 1964 banned sex discrimination in “virtually all aspects of the employment relationship, including hiring and firing, training, promotion, wages, and fringe benefits.” But while this may have had an impact on the gender wage gap in the decades immediately following its passage, the current regulatory environment has been insufficient to fully close the gender wage gap. There is some evidence to suggest, however, that greater attention to this issue from policymakers can have a positive effect. One study shows that the gender wage gap is lesser in “more liberal states with larger public sectors” because of “government oversight to ensure equality empowered more women who then reduced the gender gap in pay.” Meaningful policies to address the gender wage gap, then, can have a measurable impact on the size of this gap. Economic development and international trade has also been shown to have a positive impact on the gender wage gap, suggesting certain structural changes to the economy that can be beneficial. Globalization has been shown to lead to a reduction in discrimination in hiring and compensation, while increasing demand for female labor. Pursuing economic development in a globally integrated context, then, could also help reduce the gender wage gap.

Conclusion

The gender wage gap is a persistent phenomenon in our economy, one that has shrunk over past decades but that has recently been stalled. Explaining the gap in terms of either qualifications or additional costs is not well supported by evidence, suggesting that it is cultural factors that play the greatest part. Since the gender wage gap has negative consequences for women and the economy as a whole, it is appropriate to pursue policy and regulation to reduce this gap.

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