Wonk Word Wednesdays: Wage Gap

Jun 03, 2015

By MBPC Staff

Last week we learned that wage replacement lets working parents remain financially secure during leave. Today, we’ll look at another wage-related Wonky Word, the wage gap.

I’m sure many of you have heard the statistic that a woman working in the United States makes 77 cents for every dollar a man makes. This is the wage gap – and as you will learn today – it is more complicated than you may think.

The wage gap, (often referred to as the gender wage gap or gender pay gap), is the average difference between male and female earnings, usually as a percentage of male earnings. Note that when you read these statistics it’s important to be clear about what type of workers are being compared. In Montana, a full-time working woman makes just 76 cents for every dollar a man is paid. When we consider all types of workers (full- and part-time) the wage gap increases. On average, a working woman in Montana is paid 67 cents to every dollar a man is paid. That’s a wage gap of 33 cents!

Today, women work at a higher rate than they did several decades ago, is present in more occupations, and more families rely on mothers’ earnings as a significant share (if not entire) portion of household income.

Researchers have identified “measurable factors” like occupation, leave-taking practices, educational attainment, age, and industry as factors that explain a portion of the wage gap (see graphic below).

Here is the breakdown from the Montana Department of Labor and Industry, on various factors that can help explain the wage gap:

• Occupation accounts for 9 cents (27.3%) of Montana’s 33 cent wage gap. Women are more likely to work in jobs that pay less, such as nursing.
• Industry makes up 7 cents (21.2%) of the 33 cent wage gap. Like occupation, women are more likely to work in industries that pay less, such as social services.
• Labor force experience accounts for 3.5 cents (10.5%) of the gap. Women are more likely than men to take time off work to care for children and family members.
• Education explains 2 cents (-6.7%) of the gap. Higher education attainment (graduate and professional degrees) helps to close the pay gap but unfortunately not by much. Women with bachelor’s degrees are paid 70% of what men are paid and women with graduate degrees are paid 73% of what men are paid on average.
• 14 cents or 42.4% of the 33 cent wage gap cannot be explained. Many people suggest that it is in part due to discrimination.

In Montana, the wage gap means that on average, women make almost $10,000 less than men each year. A full-time working female is paid $31,775 per year compared to a full-time working male, who is paid $41,656 per year. As a group, full-time working women lose $1.3 billion each year. If we eliminated the wage gap in Montana, the savings that would occur would enable women to purchase over 1-years’ worth of food, pay for eight months worth of a mortgage and utilities, 14 months of rent, or buy 3,000 gallons of gas.

Solutions exist that would enable Montana women to be paid the same as their male counterparts. We should consider legislation that creates transparency in the workplace and help shed light on unfair pay differences between men and women doing the same job. Additionally, paid family leave would help women remain economically secure and employed when they take leave to care for family members.