Category Archives: Income Inequality/Gap

Closing the Gender Pay Gap

Source: Tamara Lytle, HR Magazine, Vol. 64 no. 2, Summer 2019
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The gender pay gap has been stubbornly hard to close, but the tide may be turning.

…. These pay gaps are due to many factors, including women’s stepping out of the workforce for family obligations, the concentration of women in certain relatively low-paying “pink collar” occupations (such as teaching and hospitality), stereotypes that women aren’t tough negotiators on pay and plain old bias, whether conscious or not. ….

…. Big-Picture Questions on Pay Disparities

• Do women generally wait longer than men for promotions?
• Are female workers shunted into lower-paying jobs?
• Are performance reviews based on subjective factors that can be clouded by unconscious bias?
• Is the company culture welcoming to women?
• Are there gender differences in nonsalary compensation such as bonuses, overtime opportunities and stock options?

The Rich Can’t Get Richer Forever, Can They?

Source: Liaquat Ahamed, New Yorker, August 26, 2019

Inequality comes in waves. The question is when this one will break. ….

…. Tocqueville, who was the youngest son of a count, was deeply impressed by how equal the economic conditions in the United States were. It was, at the time, an accurate assessment. The United States was the world’s most egalitarian society. Wages in the young nation were higher than in Europe, and land in the West was abundant and cheap. There were rich people, but they weren’t super-rich, like European aristocrats. According to “Unequal Gains: American Growth and Inequality Since 1700,” by the economic historians Peter H. Lindert and Jeffrey G. Williamson, the share of national income going to the richest one per cent of the population was more than twenty per cent in Britain but below ten per cent in America. The prevailing ideology of the country favored equality (though, to be sure, only for whites); Americans were proud that there was a relatively small gap between rich and poor. “Can any condition of society be more desirable than this?” Thomas Jefferson bragged to a friend.

Today, the top one per cent in this country gets about twenty per cent of the income, similar to the distribution found across the Atlantic in Tocqueville’s day. How did the United States go from being the most egalitarian country in the West to being one of the most unequal? The course from there to here, it turns out, isn’t a straight line. During the past two centuries, inequality in America has been on something of a roller-coaster ride. …..

US Labor Studies in the Twenty-First Century: Understanding Laborism Without Labor

Source: Jake Rosenfeld, Annual Review of Sociology, Vol. 45, July 2019
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From the abstract:
In recent years, labor studies has flourished even as labor unions in the United States have continued their long-term downward trajectory. One strain of this research has situated the labor movement, and its decline, at the center of economic inequality’s rise in the United States. Another has explored the labor movement’s interconnections with political dynamics in the contemporary United States, including how labor’s demise has reshaped the polity and policies. This body of scholarship also offers insights into recent stirrings of labor resurgence, ranging from the teachers’ strikes of 2017 to the Fight for 15 minimum wage initiatives. Yet the field’s reliance on official union membership rates as the standard measure of union strength, and on official strike statistics as the standard measure of union activism, prevents it from fully understanding the scope and durability of worker activism in the post-Wagner age.

The Wage Gap: No One’s Responsibility, But Everyone’s Problem

Source: Lori Allen Ford, Bryan J. Deptula, Compensation & Benefits Review, OnlineFirst, Published August 7, 2019
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From the abstract:
Wage inequality in America is ballooning. The issue is receiving significant attention in the public discourse but to what avail? It is an issue that affects the entire economy although the suffering thus far has focused primarily on the lower 90% of wage earners. The long-term impacts, however, may be even more encompassing. Regardless of the potential costs, under the currently understood societal roles of corporate leaders and politicians, the issue of wage inequality is currently no one’s specific responsibility to address, but everyone’s problem. We examine the current wage status of the economic classes, the compensation practices that contribute and potential societal and economic costs if no action is taken. Finally, we consider the roles that potential players currently perform and should consider in the future to strategically address this issue.

Tackling the Global Profitarchy: Gender and the Choice of Business Sector

Source: Markus Goldstein, Paula Gonzalez Martinez, Sreelakshmi Papineni, World Bank Policy Research Working Paper No. 8865, May 24, 2019

From the abstract:
Sectoral segregation is often used to explain a large part of a well-documented gender earnings gap in business profits. Women tend to sort into different sectors than men, and the sectors dominated by women tend to be less profitable. This paper investigates the horizontal dimension of sectoral segregation by studying global data on female and male enterprises operating in sectors that are typically dominated by the same and opposite sex. The analysis uses the novel Future of Business dataset, which spans 97 countries and was administered to enterprise owners, managers, and employees who use Facebook. The analysis finds that some of the earnings gap can indeed be explained by sector choice: female-owned businesses in male-dominated sectors make significantly higher profits than those in traditionally female sectors. The evidence points to a hierarchy of earnings, with male-owned businesses in male-dominated sectors earning the most, women in male-dominated sectors and men in female-concentrated sectors in the middle tier, and women in female-concentrated sectors at the bottom. Correlational analysis suggests that women who own businesses in male-dominated sectors are younger, married, and more likely to have inherited the business than women in female-concentrated sectors. They have similar education to women in female-concentrated sectors and present higher self-efficacy but lower entrepreneurial identity and commitment to the sector. Male support networks appear to be key for female-owned firms, with co-ownership with husbands and male role models factoring into the decision to cross over.

Stranded! How Rising Inequality Suppressed Us Migration and Hurt Those Left Behind

Source: Tamim Bayoumi, Jelle Barkema, International Monetary Fund (IMF), IMF Working Paper No. 19/122, June 2019

From the abstract:
Using bilateral data on migration across US metro areas, we find strong evidence that increasing house price and income inequality has reduced long distance migration, the type most linked to jobs. For those migrating uphill, from a less to a more prosperous location, lower mobility is driven by increasing house price inequlity, as the disincentives from higher house prices dominate the incentives from higher earnings. By contrast, increasing income inequality drives the fall in downhill migration as the disincentives from lower earnings dominate the incentives from lower house prices. The model underlines the plight of those trapped in decaying metro areas-those ‘left behind’.

Is Technology Widening the Gender Gap? Automation and the Future of Female Employment

Source: Mariya Brussevich, Era Dabla-Norris, Salma Khalid, IMF Working Paper No. 19/91, May 2019

From the abstract:
Using individual level data on task composition at work for 30 advanced and emerging economies, we find that women, on average, perform more routine tasks than men/tasks that are more prone to automation. To quantify the impact on jobs, we relate data on task composition at work to occupation level estimates of probability of automation, controlling for a rich set of individual characteristics (e.g., education, age, literacy and numeracy skills). Our results indicate that female workers are at a significantly higher risk for displacement by automation than male workers, with 11 percent of the female workforce at high risk of being automated given the current state of technology, albeit with significant cross-country heterogeneity. The probability of automation is lower for younger cohorts of women, and for those in managerial positions.

Executive Paywatch 2019

Source: AFL-CIO, 2019

In 2018, CEOs of S&P 500 companies received, on average, $14.5 million in total compensation. The average S&P 500 company CEO-to-worker pay ratio was 287 to 1. The imbalance in our economy between the pay of CEOs and working people continues to be a problem.

Highest-Paid CEOs
CEO pay continues to outpace the pay of working people. In the past 10 years, CEO pay at S&P 500 companies increased more than $500,000 a year to an average of $14.5 million in 2018. Meanwhile, the average production and nonsupervisory worker saw a wage increase of $785 a year, earning on average just $39,888 in 2018.

Company Pay Ratios
Publicly traded companies are required to disclose the pay ratio between their chief executive and median employee. Company pay ratio data is important. It shows which companies are investing in their workforce to create high-wage jobs. The table below shows how companies pay their CEOs relative to their workforce.

CEOs made 287 times more money last year than their workers did
Source: Alexia Fernández Campbell, Vox, June 26, 2019

Companies have finally started reporting CEO-worker pay ratios. Now we know why they fought so hard to avoid it.

Unsurprisingly, the gap is obscene. The average chief executive of an S&P 500 company earned 287 times more than their median employee last year, according to an analysis of the new federal data released Tuesday by the AFL-CIO labor federation. America’s CEOs earned a staggering $14.5 million in 2018, on average, compared to the average $39,888 that rank-and-file workers made. And CEOs got a $500,000 bump compared to the previous year, while the average US worker barely got more than $1,000. ….

…. But there is another Reagan-era policy that has contributed to skyrocketing CEO pay: stock buybacks. Corporate executives have spent trillions of dollars buying back their company’s own stocks since the 1980s to temporarily boost its value. …. Over the past 15 years or so, firms have spent an estimated 94 percent of corporate profits on buybacks and dividends. That means companies are barely investing any of their profits in their companies, or workers. Which is why we end up with charts that look like this. ….

Has Higher Education Solved the Problem? Examining the Gender Wage Gap of Recent College Graduates Entering the Workplace

Source: Xueqing Fan, Michael Sturman, Compensation & Benefits Review, OnlineFirst, Published June 19, 2019
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From the abstract:
While there has been extensive historical evidence demonstrating the gender wage gap, gains made by women in terms of higher education may be reducing the gap among those recently entering the workforce. Education is a major determinant of wage, and women are often outpacing men now in terms of educational achievement. Thus, the question remains of whether these gains in education have reduced or even eliminated gender wage inequality. This study examines the gender wage difference among new graduates with the same education level using the most recent data from National Longitudinal Survey of Youth, 1997 cohort. Despite the hope that greater representation of women with higher degrees would reduce or eliminate the gender wage gap for new entrants to the labor market, our results show that newly graduated men with an associate, bachelor’s, or master’s degree still earn significantly higher wages than newly graduated women with a same degree. Thus, in what we argue is a highly conservative test for the presence of the gender wage gap, the evidence strongly suggests that the wage gap is a continued and pervasive problem in the modern workplace.