Category Archives: Income Inequality/Gap

Workers’ wages fall after passage of GOP tax cuts

Source: Ryan Koronowski, ThinkProgress, June 13, 2018

Trump’s corporate tax cut hasn’t benefited workers like he said it would.

Related:
Real Earnings Summary – May 2018
Source: Bureau of Labor Statistics, Economic News Release, USDL-18-0996, June 12, 2018

All employees
Real average hourly earnings for all employees increased 0.1 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings being offset by a 0.2-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.1 percent over the month due to the increase in real average hourly earnings combined with the unchanged average workweek.

Real average hourly earnings were unchanged, seasonally adjusted, from May 2017 to May 2018. Combined with a 0.3-percent increase in the average workweek, real average weekly earnings increased by 0.3 percent over this period. ….

…. Production and nonsupervisory employees

…. From May 2017 to May 2018, real average hourly earnings decreased 0.1 percent, seasonally adjusted…..

Raise Anatomy: How to Ask for a Raise and Get It

Source: PayScale, Inc., June 2018

From the press release:
Today, PayScale, Inc., the world’s leading provider of precise, on-demand compensation data and software, released new research showing which employees are asking for pay raises and which employees are receiving them. This study is designed to educate both employees and employers about biases which may impact pay decisions in an effort to achieve equitable pay raises regardless of race or gender. One of the key findings from the “Raise Anatomy” report is that white men are far more likely to actually get a raise when they ask for it than a person of color. ….

Key findings from the report:
• The majority of employees (70 percent) who asked for a raise received at least some pay increase.
• Of those who asked for a raise, 39 percent of employees got the amount they requested, while 31 percent received a smaller raise than requested.
• People of color were significantly less likely than white men to have received a raise when they asked for one. Women of color were 19 percent less likely to have received a raise than a white man and men of color were 25 percent less likely. (Note: No single gender or racial/ethnic group was more likely to have asked for a raise than any other group.)
• The most common justification for denying a raise was budgetary constraints (49 percent). Only 22 percent of employees who heard this rationale actually believed it.
• One third of workers report that no rationale was provided when they were denied a raise.
• When workers don’t believe the rationale, or aren’t provided one, they reported lower rates of satisfaction with their employer and reported being more likely to quit.
• Of those who said that they did not ask for a raise, 30 percent reported their reason for not asking was they received a raise before they felt the need to ask their manager.
• Employees who are most satisfied with their work and their employers are those who agreed with the statement: “I’ve always been happy with my salary.” ….

Related:
How to boost your odds of getting a raise: Ask for one, and be a white man
Source: Rachel Siegel, Washington Post, June 6, 2018

Mothers Lose $16,000 Annually to the Wage Gap, NWLC Analysis Shows

Source: National Women’s Law Center (NWLC), May 23, 2018

From the press release:
While women in the U.S. who work full time, year round are typically paid just 80 cents for every dollar paid to their male counterparts, the wage gap between working mothers and fathers is even larger. Mothers typically are paid only 71 cents for every dollar paid to fathers, which translates to a loss of $16,000 annually, according to new National Women’s Law Center (NWLC) analysis of Census data. The motherhood wage gap exists in every state and can mean mothers lose thousands of dollars more than the national figure: mothers do best in Maine, where they are paid 85 cents for every dollar paid to fathers, and worst in Utah, where they are paid only 58 cents for every dollar paid to fathers. ….

Key findings of the analysis include:
– More than 2 in 5 mothers (42.2 percent) are employed in one of twelve occupations, and in every one of those occupations, mothers are paid between 52 cents and 85 cents for every dollar paid to fathers.
– The wage gap exists for mothers at every education level.
– Among full-time, year-round workers, mothers with a high school degree make just 68 cents for every dollar paid to fathers with a high school degree.
– Fathers who earn a master’s degree or a doctoral degree are typically paid $100,000 and $115,000 respectively. Conversely, mothers who complete these degrees are typically paid no more than $90,000 annually.
– Asian/Pacific Islander mothers are paid 85 cents for every dollar paid to white, non-Hispanic fathers; white, non-Hispanic mothers are paid 69 cents; Black mothers, 54 cents; Native mothers, 49 cents; and Latina mothers, 46 cents. The wage gap persists for mothers of all ages

5 wage gap myths about women at work

Source: Amy McCaig, Futurity, May 31, 2018

Blame for the gender wage gap in the United States shouldn’t fall on women, report researchers.

In a review paper, they draw on existing psychological research to highlight myths regarding the gap between men and women and to offer possible explanations for why it exists. ….

5 myths about the gender wage gap:
Myth 1: Women aren’t doing equal work. ….
Myth 2: Women leave the workplace to have and raise children. ….
Myth 3: Women choose less lucrative professions. ….
Myth 4: Women don’t ask for what they want. ….
Myth 5: Women don’t have as much education or experience as men. ….

6 ways organizations can eliminate the wage gap:
1. Identify and remove barriers. ….
2. Provide equal growth opportunities. ….
3. Take action toward implementing better work/life balance. ….
4. Provide ongoing training. ….
5. Have anti-discrimination policies. ….
6. Have and promote male allies. ….

Related:
Victim Precipitation and the Wage Gap
Source: Shannon Cheng, Abigail Corrington, Mikki Hebl, Linnea Ng, Volume 11, Issue 1 March 2018
(subscription required)

In response to: Beyond Blaming the Victim: Toward a More Progressive Understanding of Workplace Mistreatment
From the abstract:
Cortina, Rabelo, and Holland (2018) accurately cite the general public’s overuse of victim precipitation ideologies, or the notion that victims engage in actions that directly bring about their unfortunate circumstances. These ideologies also have permeated industrial and organizational (I-O) psychology and the study of people in the workplace (e.g., women’s choice in clothing leads to sexual harassment, certain target characteristics and actions incite workplace bullying). We agree with Cortina et al. that this ideology unintentionally benefits the perpetrator by placing blame and responsibility for nonoptimal workplace situations directly on the target. The field of I-O psychology needs to move away from this model of victim blaming as a remediation for workplace disparities.

Moral Economies or Hidden Talents? A Longitudinal Analysis of Union Decline and Wage Inequality, 1973–2015

Source: Tom VanHeuvelen, Social Forces, Advance Access, Published: May 30, 2018
(subscription required)

From the abstract:
The decline of labor unions in the United States has been central to the rise of wage inequality since the early 1970s. Recently, sociologists have noted that unionization influences inequality through both direct and indirect pathways, reconciled with the concept of the moral economy, broadly shared norms of fairness institutionalized in market rules and customs that can reduce inequality in pay. While the theory of the moral economy has been resonant in the stratification literature, few have held it to empirical scrutiny. The current study assesses how selection bias from unobserved worker-level heterogeneity influences the associations between unionization and wage attainment and dispersion. To do so, I merge data from the Current Population Survey to 33 waves of longitudinal data from the Panel Study of Income Dynamics. Using combinations of variance function regression models, fixed-effects regression models, and dynamic panel models, I find that the magnitudes of associations tend to be reduced by around half after accounting for unobserved heterogeneity. Yet, more critically, the pathways linking unions and wage inequality via the moral economy prove to be remarkably robust to all tests cast upon them. Results highlight the fundamental importance of labor power resources for the contemporary rise of inequality. They provide a micro-level foundation for theories linking unionization and stratification. They identify the importance of union decline for rising earnings volatility. And they provide implications for the fallout of economic well-being for workers following antiunion policy change. Additional theoretical and policy implications are discussed.

Unions and Inequality Over the Twentieth Century: New Evidence from Survey Data

Source: Henry S. Farber, Daniel Herbst, Ilyana Kuziemko, Suresh Naidu, NBER Working Paper No. 24587, May 2018
(subscription required)

From the abstract:
It is well-documented that, since at least the early twentieth century, U.S. income inequality has varied inversely with union density. But moving beyond this aggregate relationship has proven difficult, in part because of the absence of micro-level data on union membership prior to 1973. We develop a new source of micro-data on union membership, opinion polls primarily from Gallup (N ≈ 980, 000), to look at the effects of unions on inequality from 1936 to the present. First, we present a new time series of household union membership from this period. Second, we use these data to show that, throughout this period, union density is inversely correlated with the relative skill of union members. When density was at its peak in the 1950s and 1960s, union members were relatively less-skilled, whereas today and in the pre-World War II period, union members are equally skilled as non-members. Third, we estimate union household income premiums over this same period, finding that despite large changes in union density and selection, the premium holds steady, at roughly 15–20 log points, over the past eighty years. Finally, we present a number of direct results that, across a variety of identifying assumptions, suggest unions have had a significant, equalizing effect on the income distribution over our long sample period.

Related:
There Is Power in a Union
Source: Mike Konczal, The Nation, May 23, 2018

A new study overturns economic orthodoxy and shows that unions reduce inequality.
unions keep inequality in check

Women’s Earnings Lower in Most Occupations

Source: Amy Newcomb, U.S. Census Bureau, May 2018

Women continue to earn less than men in nearly all occupations, but this is more pronounced in fields that predominantly employ men and in professions with a comparable mix of men and women. The largest pay gap is within the finance and sales professions.

Overall, women are also more likely to be employed in lower-paying jobs.

Women's Earnings By Occupation

The data highlighted above comes from a recently released detailed table from the American Community Survey. It looks at the gender pay gap for more than 300 occupations. ….

As Wisconsin’s and Minnesota’s lawmakers took divergent paths, so did their economies – Since 2010, Minnesota’s economy has performed far better for working families than Wisconsin’s

Source: David Cooper, Economic Policy Institute, May 8, 2018

From the summary:
Since the 2010 election of Governor Scott Walker in Wisconsin and Governor Mark Dayton in Minnesota, lawmakers in these two neighboring states have enacted vastly different policy agendas. Governor Walker and the Wisconsin state legislature have pursued a highly conservative agenda centered on cutting taxes, shrinking government, and weakening unions. In contrast, Minnesota under Governor Dayton has enacted a slate of progressive priorities: raising the minimum wage, strengthening safety net programs and labor standards, and boosting public investments in infrastructure and education, financed through higher taxes (largely on the wealthy).

Because of the proximity and many similarities of these two states, comparing economic performance in the Badger State (WI) versus the Gopher State (MN) provides a compelling case study for assessing which agenda leads to better outcomes for working people and their families. Now, seven years removed from when each governor took office, there is ample data to assess which state’s economy—and by extension, which set of policies—delivered more for the welfare of its residents. The results could not be more clear: by virtually every available measure, Minnesota’s recovery has outperformed Wisconsin’s.

The following report describes how Minnesota’s and Wisconsin’s economies have performed since 2010 on a host of key dimensions, and discusses the policy decisions that influenced or drove those outcomes.

Key findings include:
– Job growth since December 2010 has been markedly stronger in Minnesota than Wisconsin, with Minnesota experiencing 11.0 percent growth in total nonfarm employment, compared with only 7.9 percent growth in Wisconsin. Minnesota’s job growth was better than Wisconsin’s in the overall private sector (12.5 percent vs. 9.7 percent) and in higher-wage industries, such as construction (38.6 percent vs. 26.0 percent) and education and health care (17.3 percent vs. 11.0 percent).

– From 2010 to 2017, wages grew faster in Minnesota than in Wisconsin at every decile in the wage distribution. Low-wage workers experienced much stronger growth in Minnesota than Wisconsin, with inflation-adjusted wages at the 10th and 20th percentile rising by 8.6 percent and 9.7 percent, respectively, in Minnesota vs. 6.3 percent and 6.4 percent in Wisconsin.

– Gender wage gaps also shrank more in Minnesota than in Wisconsin. From 2010 to 2017, women’s median wage as a share of men’s median wage rose by 3.0 percentage points in Minnesota, and by 1.5 percentage points in Wisconsin.

– Median household income in Minnesota grew by 7.2 percent from 2010 to 2016. In Wisconsin, it grew by 5.1 percent over the same period. Median family income exhibited a similar pattern, growing 8.5 percent in Minnesota compared with 6.4 percent in Wisconsin.

– Minnesota made greater progress than Wisconsin in reducing overall poverty, child poverty, and poverty as measured under the Census Bureau’s Supplemental Poverty Measure. As of 2016, the overall poverty rate in Wisconsin as measured in the American Community Survey (11.8 percent) was still roughly as high as the poverty rate in Minnesota at its peak in the wake of the Great Recession (11.9 percent, in 2011).

– Minnesota residents were more likely to have health insurance than their counterparts in Wisconsin, with stronger insurance take-up of both public and private health insurance since 2010.

– From 2010 to 2017, Minnesota has had stronger overall economic growth (12.8 percent vs. 10.1 percent), stronger growth per worker (3.4 percent vs. 2.7 percent), and stronger population growth (5.1 percent vs. 1.9 percent) than Wisconsin. In fact, over the whole period—as well as in the most recent year—more people have been moving out of Wisconsin to other states than have been moving in from elsewhere in the U.S. The same is not true of Minnesota.