The Wage Gap: A Brief Review of the Economic Causes (plus some STEM) Presented at the Equal Pay Taskforce Meeting Butte, Montana April 10, 2015 Presented by Barbara Wagner, Chief Economist MT Dept. of Labor and Industry

The Raw Wage Gap Nationally, Women earn 70.6% of men. In Montana, Women earn 67.5% of men. Source: 2013 American Community Survey, 3-Year Estimates 2

The Full-Time, Year-Round Wage Gap Women are more likely to work part-time than men. Including only people that work full-time, year- round, – Women earn 78% of men nationally, – Women earn 75% of men in Montana. 3 Source: 2013 American Community Survey, 3-Year Estimates

U.S. Median Earnings by Education Category (25 Years and Older with Earnings) Source: 2013 American Community Survey 3-Year estimates, U.S. Census Bureau 68.3% $10, % $13, % $19,550 Women Men 67.1% $27,150 4

U.S. Median Earnings by Race and Gender (Full-time, Year-Round Workers) 5 Source: ACS year estimates, U.S. Census Bureau Women Men 90% $3,100 86% $5,050 90% $3,950 78% $11,200 80% $11,200

U.S. Median Wage by Gender and Class of Worker Source: ACS 2011, 3-year estimates Women Men % $9, % $11, % 7, % 11,850

Source: American Community Survey, Map prepared by Forbes.com. Casserly, Meghan, “The Geography of the Gender Pay Gap: Women’s Earnings by State” earnings-by-state. earnings-by-state 7

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Take Away Points Gender Wage Gap exists across – Most occupations (there are a few where pay is equal) – All industries – Private, public, and nonprofit – All education groups – All age groups – All states, with Montana on the bottom half Gap has improved over time, but improvement is slow. 9

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What Causes the Wage Gap? It’s not just discrimination – Occupation choice – Industry choice – Education – Experience – Part-time work/ flexible scheduling – Time out of workforce for family care – Union status Other factors that influence the size of the wage gap – Race-- Other factors – Age-- Behavior (i.e. asking for raises) 11 Some of these factors may be influenced by discrimination.

U.S. Occupations where Women Work 12 Source: ACS, Year Estimates. Some small occupations removed for simplicity. Less Money

U.S. Industries Where Women Work 13 Source: ACS, Year Estimates. Some small industries removed for simplicity. More Money Less Money

Occupation Choice Women choose to work in low-paying occupations 14 Pay Gap Ratio Percent Female Source: ACS, Year Estimates. Some small industries removed for simplicity.

Occupation and Industry Choice Choices are Good Choice and aptitudes. Women may prefer benefits, flexibility, or time off instead of high wages. – Men are slightly more likely to have access to paid leave. – Men and women roughly equally likely to have access to flexible scheduling Taking leave – Women more likely to take paid leave (among those that have it). – Some studies suggest men more likely to have flexible scheduling approved. Women more likely to work multiple jobs. 15 Source: Access to and use of paid leave from American Time Use Survey, Bureau of Labor Statistics (BLS), 2011 annual. Access to flexible scheduling from McMenamin, Terence. Monthly Labor Review, BLS, Dec For studies on approval of flexible scheduling, see Brescoll, Glass, and Sedlovskaya, Journal of Social Issues, June 2013.

Occupation and Industry Explains Part of the Wage Gap, But There are Caveats Even within each industry / occupation, there is a wage gap. Men are more likely to be promoted to management positions. – Only 39% of U.S. managers are female. – Only 26% of U.S. chief executives are female. Men are more likely to be hired than women, with the bias towards men increasing in higher-paid jobs. – For a low-wage job, females are 9% less likely to get the job. – At the top of the wage distribution, females are 50% less likely to get the job. 16 Source: 2013 ACS 3-Year estimates, Census Current Population Data, BLS. Gobillon, Meurs, Roux in Journal of Labor Economics, V33, n2, April 2015 and other studies.

State Pay Audit Found that occupations are the primary reason for pay discrepancies. – Very few women in blue collar (high pay) jobs. Women tend to be under-employed in lower band levels. – We don’t know if by choice or by system. – Fewer women than men in supervisor positions at nearly all band levels. Women tend to have slightly less experience in their current position. – No way to know if experience overall or if differences in skills. 17

Occupational Choice: STEM Trend2012 Mean Earnings All Science and Engineering Jobs22.9%27.5% Social Scientists50.7%58.1%$67,660 Biology/ Ag / Environment34.0%48.2%$69,980 Physical scientists21.3%30.0%$74,880 Computer/ math30.8%25.1%$76,170 Engineers8.6%12.7%$86, Source: National Science Foundation, STEM Education Data and Trends 2014.

Recent Studies on Women in STEM Occupations Women Leaving Engineering Women exit science and engineering jobs more than any other type of job. – Not due to family constraints. – Dissatisfaction with pay and promotion opportunities. – More likely to report sexual harassment. Women and Patents 7.5% of all patents 5.5% of commercialized patents Discrepancy attributed to fewer women in R&D positions Eliminating the gender gap in patenting would increase GDP per capita by 2.7% 19 Hunt et al, Natural Bureau of Economic Research, WP 17888, Hunt, Natural Bureau of Economic Research, WP 15853, 2010

Factors Influencing Pay and the Gender Gap Occupation choice Industry choice Education Experience Part-time work/ flexible scheduling Time out of workforce for family care 20

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What do studies show? Women have more education and slightly higher grades than men – Do women stay in school longer because they perform well? Different college majors plays a role – Even among students with the same major and equal school performance, men out-earn women – Significant attention to recruiting women into STEM degrees 22

U.S. Median Earnings by Education Category (25 Years and Older with Earnings) 23 Source: 2013 American Community Survey 3-Year estimates, U.S. Census Bureau 68.3% $10, % $13, % $19,550 Women Men 67.1% $27,150

Specific to STEM Education In high school, performance differences manifest, with females are less likely to take AP exams in STEM. Some research has suggested that STEM teachers give male students more praise and opportunities. Other research disagrees. 24 In elementary, males and females have equal performance in math and science. In 8 th grade, white males slightly outperform females on math and science exams. For blacks, the opposite is true, suggesting cultural factors play a role.

Specific to STEM Education 25 Women earn 57% of all bachelor’s degrees. – Roughly half of science and engineering degrees. – Men hold majority in engineering, computer science, and physics – Share of women in computer science has fallen from 28% in 2000 to 18% in Women earn 47% of all doctorates. – Less than 1/3 in physical science, math, computer science, and engineering. Source: National Science Foundation Education Data 2014.

Factors Influencing Pay and the Gender Gap Occupation choice Industry choice Education Experience Part-time work/ flexible scheduling Time out of workforce for family care 26

Experience: Part-Time Status 27 Source: 2013 ACS 3-year Estimates

Experience and Part-Time Work Women are more likely to care for children and family. Time out of workforce for childbearing. Choose part-time work or relaxed occupations to allow for work and family. Economic theory suggests that the lower-paid partner will take on more home responsibilities. 28

Pay Gap over Time by Age Group 29

Because of Part-Time Work and Motherhood, Women have Less Experience. Is this problematic? Why it might not be: – Women may choose to work part-time or take longer parental leave time for family care. Why it might be: – Discrimination causes men to earn higher wages, so families decide women should stay home. – What about dads? – Cultural pressure to work at home or fulfill motherly duties – Discrimination in hiring practices – Expectation of motherhood and early “leaning out” 30

Union Representation Narrows Gap Median Weekly Earnings by Union Status and Gender 31 Source: Bureau of Labor Statistics, 2014 Current Population Survey. 88.5%

Factors Influencing Pay and the Gender Gap Occupation choice Industry choice Education Experience 32 Montana Gap = $ ₵ 9₵ 7₵

Conclusions Much of the wage gap can be explained by human capital factors and productivity. There remains a gap. Research suggests cultural stereotypes of greater detriment than overt sexism. Culture changing more slowly than human capital factors. 33

What can we do? Economics traits that seem to help – Knowledge jobs over muscle jobs – Centralized pay decisions – Wage compression – Changing cultural norms Paid family leave increases women’s labor force participation and increases experience levels. Increased pay transparency provides greater ability to negotiate pay. – Both male and female managers can show bias in performance evaluations and discounting women’s experience. – Women often given office duties that can detract from achievements. 34

DATA AND PRESENTATIONS AVAILABLE AT 35 A special thank you for research assistance to Isabel Huff Smith College