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May 15, 2013
The gender wage gap: Do women get paid less for equal work?

Both the Equal Pay Act and Title VII of the Civil Rights Act of 1964 prohibit gender pay discrimination, so why does the gender wage gap persist? Surely most employers strive to ensure that men and women receive equal pay for equivalent roles. Yet it remains true that women earn an average of 77 cents for every dollar that men earn. What's the explanation?

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The story lies in understanding the root of that statistic. The statistic actually compares the average earnings of all men with the average earnings of all women. Those broad averages do result in the 23 cents/hour difference we’ve all heard of. However, differences in the jobs women and men typically hold (and their respective average pay rates), differences in the amount of time women and men spend in the workforce, and many other factors make up the average amounts paid across the board.

There are many factors that go into individual compensation decisions, such as:

  • Education
  • Prior experience
  • Amount of time in that role
  • Market rates for that job/industry/geography/etc.

So the statistic is not actually making an apples-to-apples comparison of men and women with the same experience levels in the same roles within the same geographic location. That said, it does not mean a gender wage gap does not exist. It does, it’s just not necessarily all caused by simple gender-based pay discrimination.

What causes the gender wage gap?

If the differences in the average amount women and men are paid cannot be fully explained by discrimination against women, what causes the gap to persist?

"One of the main explanatory factors is occupational category." Stephanie R. Thomas explained in a recent BLR webinar. "Occupation plays a large role in explaining the differences in earnings between men and women. This is attributed to something called occupational segregation."

Occupational segregation means that some jobs or job types have been dominated by a single gender. This creates a situation where women are concentrated in occupations that have lower earnings in general. When this happens on a large scale, then differences in pay between genders can result—and this happens without a difference in pay for men and women who are in the same job.

Another contributing factor is the fact that women are more likely than men to be in jobs where they work less than 40 hours a week. Couple that with the fact that men in full-time roles are more likely to work overtime hours (thus increasing total pay), even more of the gender wage gap is explained. This difference is actually quite important because it represents a situation where men and women may be paid the exact same hourly rate for the same work, yet men have a disproportionate number of hours—thus meaning the men are paid more total pay in the same job type. Since our "77 cents" statistic looks at total compensation, it will show men being paid more, but not explain why.

The factors outlined here are just a sample of the factors that influence the gender wage gap. To get more information, order the webinar recording of "Gender Pay Equity: How to Use More Than Salary Numbers to Close the Gap." To register for a future webinar, visit http://store.blr.com/events/webinars.

Stephanie R. Thomas, Ph.D., is the founder and CEO of Thomas Econometrics Inc. She specializes in applied statistics and mathematical economics. She has extensive experience in the statistical analysis of gender, race and age discrimination claims with respect to compensation, hiring, promotion, termination and other employment practices.


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