To target gender pay gap, address underlying structures

Median usual weekly earnings of full-time wage and salary workers by sex, race, and Hispanic or Latino ethnicity, 2012 annual averages from the Bureau of Labor Statistics in October 2013.In 1911, the political philosopher Hurbert Croley wrote, “a democracy, not less than a monarchy or an aristocracy, must recognise [sic] political, economic, and social distinctions, but it must also withdraw its consent whenever these discriminations show any tendency to excessive endurance.The gender-based pay gap is one such distinction that needs to be revisited. However, education, career choice, and hours worked contribute most to this pay gap, meaning those factors – rather than discrimination – deserve our attention.

by Samir Salifou

The notion that equality of opportunity undergirds political and economic success lies at the core of American meritocracy. Hard work and determination, as opposed to family background, should allow individuals to ascend the socioeconomic ladder.


In 1965, when discussing race-based affirmative action, then-President Lyndon Johnson recognized this issue, sayingthe United States had an obligation to do more than undo inequitable laws. “You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say you are free to compete with all the others, and still just believe that you have been completely fair,” Johnson said.

Title VII of the Civil Rights Act of 1964 already bans sex-based discrimination, and the 19th Amendment gave women the right to vote, but those changes did not address structural concerns. In 2009, President Barack Obama signed into law the Lilly Ledbetter FairPay Act. The law restored preexisting law, which helped guarantee that individuals subject to pay discrimination have up to 180 days from their last discriminatory paycheck to file a civil suit against their former employer. But this bill failed to address underlying structural issues.

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American socioeconomic structures have caused a gender-based pay gap where women earn, on average, 77 percent of what their male counterparts earn. President Obama asserted this during his 2014 State of the Union Address. He called on Congress to pass legislation that would address the issue. “Women deserve equal pay for equal work,” Obama said. However, regression analysis shows that most of this gap comes from non-discriminatory issues.

Gender-based pay disparities have a real economic impact as well. The International Monetary Fund reports that, if the female labor force participation rate was equal to male labor force participation, there would be a five percent increase in the annual U.S. GDP.

Women are the primary providers of unpaid economic activity, such as childcare and elderly care. Alone, these explain 69 percent of the career breaks women take. Yet, women are not compensated for this. Instead, the job market penalizes them for stepping away. Public policy should account for this market failure.

Research have found that being a married woman with children, women’s career and education choices, and the number of hours worked at “regular” jobs outside of the home account for much of the pay gap.

A “Fair Pay and Economic Opportunity Bill” would support child and elderly care, restructure maternity and paternity leave, and provide incentives for women to enter science, technology, engineering, and mathematics, or STEM, disciplines.

The bill would restructure federal maternity and paternity leave policy, which will create an incentive for both parents to take equal parental time off.Sweden, for example, has a 60-day “use it or lose it” leave period – with 100 percent paid time off – for each parent following a child’s birth. This incentivizes men to take as much parental leave as women. Experts mainly attributeSweden’s significantly lower 6 percent income gap to this policy.

Incentives for STEM education will help reduce the discrepancy between high-paying educational majors and lower-paying majors. Incentives should include tax credits for women that declare a STEM major. This should include funding for STEM camps in public high schools for young girls.

Now that the 2014 elections have finished, Congress should address this issue. Business interests may frame this bill as burdensome new regulation. The U.S. Chamber of Commerce, Americans for Prosperity, the Heritage Foundation, and Tea Party law markers, among others, may fight these changes. However, the White House, Congressional Democrats and various Catholic organizations will likely support such measures. In order to overcome these potential roadblocks to passage, supporters must frame this bill as an economic development plan. Doing so will create urgency and further open the policy window.

While pay equality mandates could, in theory, cut more directly to the heart of this issue, litigation would increase cost and cause uncertainty in the labor market. It would also put a focus on discrimination and does not address the structural causes of sex-based pay inequality.

A Presidential executive order could create one-to-one pay equality for federal employees and their private contractors. This would avoid going through Congress and mitigate litigation concerns stated above, but it only requires one subset of private industry to comply with new standards. In fact, such a change may have a negative long-run wage equality outcome by discouraging women from pursuing more competitive educational degrees.

A “Fair Pay and Economic Opportunity Bill” can help remedy the structural difficulties that American women have in gaining pay equity. The bill would encourage more female students to enter into higher-paying fields while in college, and the economy could reap the long-term benefits of women taking fewer career breaks.

Revising structural pay inequality will help reaffirm America’s legendary meritocracy, which has made her the land of opportunity.

This post reflects the views of the author and does not reflect those of the Virginia Policy Review and The Third Rail.