The gender wage inequality in the workplace is a complex issue that has persevered to modern day, despite the Equal Pay Act of 1963 that promised equal pay for equal work. While a definitive full understanding and adequate reasons remains elusive, several causes and contributing factors are observable, including the demand-side issue of industrial discrimination, the supply-side issue of professional segregation, and the cultural prevalence of traditional gender roles that place limitations on the promotion of women in the to workplace, and has marginalized women to the burdens of family and household responsibilities. Although the gender wage inequality gap has lessened substantially since the enactment of the Equal Pay Act of 1963, many scholars argue that the gap has not narrowed fast or far enough.
Most research on earnings inequality has focused on the growing gap between workers of different ethnic backgrounds and dissimilar levels of education, age, and income. However, according to McCall (2000), the gap in wage inequality amongst workers who share similar characteristics such as education and age has been growing steadily, and is perceived to be equally important as wage inequality amid workers who show an absence in commonality. Studies indicate that the within-group component of inequality has accounted for one quarter to over one half of the overall increase in inequality and has risen higher than between-group inequality (McCall, 2000, p. 415).
The implications that this research analysis within the article reveals are that they’re two frequently cited explanations of rising wage inequality, which are industrial shifts and increased technology and trade. However, the article emphasized that over a period of time these two cited causes have little impact on within-group wage inequality when measured at the local labor market level. Adversely, McCall (2000) believed that flexible and insecure employment conditions (unemployment, contingent work, and immigration) are connected strongly with high local levels of within-group wage inequality, especially among women.
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Coleman (2012) affirms that men and women who receive the same education, possess equal volumes of experience, and apply for the same jobs after college, get paid less. Coleman suggests that women on average earn 18% less than men. In order to explain the disparity in wage distribution, Coleman begins to prepare her resolutions by primarily examining a study called Graduating to a Pay Gap. The study assessed men and women who lead similar lives regarding career choices and education, in the likelihood of finding evidence either supporting the pay gap or not.
The study discovered that in the field of education, female college graduates earned 11 percent less than men. In business, women earned 86 percent compared to men, and in the industry of sales & marketing occupations, women earned 77 percent of what men took home. Another supporting reason in gender wage inequality is that women file more complaints in the workplace than men, therefore creating distrust in the workplace, leaving employers more hesitant to hire more women, especially in a male dominant profession. Coleman (2012) last assertion in support of her claim is that women either don’t want to or aren’t able to negotiate salaries with their employer.
Coleman attributes blame on employers who don’t exercise a gender-balanced workplace and men who don’t believe women are equal, and deserve equal treatment. Coleman (2012) fosters that the government has played a crucial role in the growth of gender wage inequality by not being adamant and strict about gender equality both at home and the workplace. The resolution Coleman has provided is “Congress should adopt new laws beefing up federal equal pay laws” (Coleman, 2012). Another proposed solution from Coleman is encouraging women to think long term as far as majors and professions and the implications of choosing a generally lower income career/major.
Significant correlations were found between pay expectations and negotiation strategies. Bowles and Babcock stated that, “research on salary negotiations suggest that gender differences in starting salaries are a significant contributor to long-term earning differentials between men and women” (Bowels and Babcock). Bowels and Babcock (2012) performed two experimental studies; each testing to see which method of women negotiations was more effective. The first study tested women expressing concern about their current salaries and suggesting a more desired amount for compensation. The second study tested women explaining to their employer why their desired compensation request is legitimate in relational terms. The first study results showed that individuals were more willing to work with women who expressed concern over organizational relationships but had no improvement on their negotiated salary.
Women using an outside offer as leverage raised their negotiated salary by legitimizing their request for a higher salary, but had no affect on their social outcomes. When women expressed concern for organizational relationships in addition to providing a legitimate outside offer, it did not improve their social outcomes though it did improve their negotiation outcomes. The researchers suspected that the outside offer was a legitimate explanation for the salary request, however it contradicted the expression of concern for organizational relationships. The second study was successful in supporting that the utilization of the relational strategy can improve negotiation outcomes. Using relational accounts (i.e., explaining the legitimacy of the negotiation request in terms that were consistent with concern for organizational relationships) improved both social and negotiation outcomes for women, but not for men.
The article implies that women are penalized socially more than men when negotiating for higher pay. The constant wage gap disparity in the workplace between genders can be credited to gender discrimination, where men are expected to get paid more with no definitive reasoning other than its been a reoccurring practice in the culture. For women, the second study produced an outcome that has the potential to make a difference in the process of negotiation by using a relational method to employers, finding a loophole in the social consequences of negotiations.
According to Lemieux, Macleod, and Parent (2009), “The standard competitive model of the labor market supposes that wages are equal to marginal products and that the wage structure is determined by the equilibrium of supply and demand” (p. 1). Many jobs in the United States labor market pay their employees based on their performance using bonus pay or commissions. Lemieux, Macleod, and Parent (2009) examined data from the Panel Study of Income Dynamics, in which they concluded that compensation in performance paid jobs is more closely associated to both observed (education) and unobserved (worker specific) productive characteristics of workers than compensation in non-performance-pay jobs.
Lemieux, Macleod, and Parent (2009), acclaims that there are various reasons why organizations (firms) introduce performance paid structures, even if it encompasses substantial monitoring and administrative costs. Conventionally, firms will be willing to incur these additional costs provided that they obtain sufficient benefits in return from their employee’s productive characteristics (Lemieux, Macleod, & Parent, 2009, p. 4). The implications of this article suggest that workers who work for firms that offer added compensation based on performance provides a path through which underlying changes in returns to skill, gets translated into higher wage inequality. Lemieux, Macleod, and Parent (2009) determined that this channel accounts for “21% of the growth in the variance of male wages between the late 1970s and the early 1990s and for most of the increase in wage inequality above the eightieth percentile over the same period” (p. 46).
Koeniger, Leonardi, and Nunziata (2007) scrutinized how labor market institutions such as unemployment insurance, unions, termination regulations, and minimum wages have negatively affected and resulted in the evolution of wage inequality among male employees. In their study, Koeniger, Leonardi & Nunziata (2007) used panel data on institutions in several Organizations for Economic Co-operation and Development (OECD) countries to determine how much of the increase in wage inequality can be significantly attributed to changes in labor market institutions within these countries between the years of 1973 and 1998. The following eleven countries were examined tries: Australia, Canada, Finland, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom, and the United States. According to Koeniger, Leonardi, & Nunziata (2007), “We focus on men because data are available for a longer time period for men than for women and the male wage is less affected by changes in labor force participation” (p. 343).
Koeniger, Leonardi, and Nunziata (2007) determined that they were 4 major factors that had a negative association with male wage inequality; the strictness of employment protection law, unemployment benefit duration and generosity, union density/coordination and the scope of the minimum wage. Koeniger, Leonardi, and Nunziata (2007) concluded that over the 26-year period, institutional changes were associated with a 23% reduction in male wage inequality in France, due to minimum wages being increased and employment protection becoming stricter, however institutional changes enhanced wage inequality amongst men by 11% in the United States and United Kingdom, resulting from unions diminishing in power and (in the United States) the downfall of the minimum wage.
In conclusion, ideologies and societal norms consistently remain the most influencing factors and major impediments to women. The research supports that increased wage inequality can be most commonly attributed to industrial shifts and increased technology and trade. However, the research shows that over a period of time these two cited causes have little impact on gender wage inequality when measured at the local labor market level. It is understood that flexible and insecure employment conditions (unemployment, contingent work, and immigration) are connected strongly with high local levels of gender wage inequality, more so women than men. Women with the same college education and work experience, while applying for jobs were found to receive less initial compensation than their male counterparts.
Social consequences shadowing negotiation requests by women for higher salaries were avoided, pending the burden women had to prove in legitimacy of relational methods. Compensation based on performance resulted in the growth in variance of male wages between the late 1970s and the early 1990s, which later translated into the growing gender wage gap that exists today. Research determined that they were 4 major factors that had a negative association with male wage inequality; the strictness of employment protection law, unemployment benefit duration and generosity, union density/coordination and the scope of the minimum wage. These 4 elements could play a major role in the abolishment of gender wage inequality if they existed in the United States. However, between the years of 1973 and 1998 institutional changes enhanced wage inequality amongst men by 11% in the United States and United Kingdom, resulting from unions diminishing in power and (in the United States) the downfall of the minimum wage.
References
- Bowels, Hannah and Linda Babcock. “How Can Women Escape the Compensation Negotiation Dilemma? Relational Accounts Are One Answer.” Research Article. 2012.
- Coleman, K. (2012, October 24). Equal Pay For Equal Work: Not Even College Helps Women. Retrieved March 2013, from NPR: http://www.npr.org
- Koeniger, W., Leonardi, M., & Nunziata, L. (2007). Labor Market Institutions and Wage Inequality. Industrial and Labor Relations Review, 60(3), 340-356. Retrieved from http://0-www.jstor.org.liucat.lib.liu.edu/stable/25249090
- Lemieux, T., Macleod, W., & Parent, D. (2009). Performance Pay and Wage Inequality. The Quarterly Journal of Economics, 124(1), 1-49. Retrieved from http://0-www.jstor.org.liucat.lib.liu.edu/stable/40506223
- McCall, L. (2000). Explaining Levels of Within-Group Wage Inequality in U.S. Labor Markets. Demography, 37(4), 415-430. Retrieved from http://0-www.jstor.org.liucat.lib.liu.edu/stable/2648069
