Category Archives: Income Inequality/Gap

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

Source: Henry S Farber, Daniel Herbst, Ilyana Kuziemko, Suresh Naidu, The Quarterly Journal of Economics, Volume 136, Issue 3, August 2021
(subscription required)

From the abstract:
U.S. income inequality has varied inversely with union density over the past 100 years. But moving beyond this aggregate relationship has proven difficult, in part because of limited microdata on union membership prior to 1973. We develop a new source of microdata on union membership dating back to 1936, survey data primarily from Gallup (N ≈ 980,000), to examine the long-run relationship between unions and inequality. We document dramatic changes in the demographics of union members: when density was at its mid-century peak, union households were much less educated and more nonwhite than other households, whereas pre-World War II and today they are more similar to nonunion households on these dimensions. However, despite large changes in composition and density since 1936, the household union premium holds relatively steady between 10 and 20 log points. We use our data to examine the effect of unions on income inequality. Using distributional decompositions, time series regressions, state-year regressions, as well as a new instrumental-variable strategy based on the 1935 legalization of unions and the World War II–era War Labor Board, we find consistent evidence that unions reduce inequality, explaining a significant share of the dramatic fall in inequality between the mid-1930s and late 1940s.

Job-Hopping Toward Equity

Source: Boris Groysberg, Paul Healy, and Eric Lin, MIT Sloan Management Review, July 14, 2021

Changing employers can help narrow the gender gap in executive compensation.

For managers and executives, changing employers has been linked to larger increases in pay. So we set out to explore whether women — particularly those in senior roles — can use external moves to increase their own compensation and perhaps narrow the gender pay gap.

Existing survey-based studies suggest that gains from switching employers are less pronounced for women than for men. These studies broadly compare leavers versus stayers by gender. However, leavers and stayers may have different attributes that drive pay increases — and those differences may vary by gender.

For such reasons, we think it’s necessary to take a finer-grained look at the issue by asking some pointed questions. For instance, in external labor markets, do executive women primarily get paid less for doing the same job, or does the disparity have more to do with getting barred from job opportunities with higher pay? Recent work suggests that access to those plum opportunities is a critical component. Short-listing practices in external search firms have been shown to disadvantage women. But studies also show that once executive women enter consideration pools, they are as likely to be selected as men with comparable credentials. That finding raises another question: Once women are placed in these competitive roles as external hires, how do their pay increases compare with those of men brought in from the outside?

In our analysis, they actually compare favorably. Using proprietary data from a top-five executive placement firm, interviews with search firm executives, and career history information on LinkedIn, we looked at more than 2,000 senior-level external job switches across a wide variety of industries and functions. Surprisingly, we found that among executives who change jobs, women get higher-percentage increases than men overall. In this article, we quantify these differences and explore contextual factors that appear to be associated with the gains for women, shedding light on when women might fare better financially in changing employers.

To be clear: Higher increases are not the same thing as higher pay. In our sample of executive job switchers, women are paid, on average, less than men both before the move and after. But in some situations, external moves do appear to reduce pay disparities.

Out of Work, Taking on Care: Young Women Face Mounting Challenges in the “She-Cession”

Source: Shengwei Sun, Institute for Women’s Policy Research, IWPR #C498, Briefing Paper, April 2021

From the abstract:
Longstanding inequities in access to quality jobs and affordable care, along with uneven caregiving responsibilities, create unique challenges for young women of color during this prolonged pandemic recession. Young women (aged 16 to 24) were more likely to lose their job than young men and workers of other age groups in the initial months of the pandemic recession, largely due to their concentration in industries and occupations that have been hit the hardest by the economic downturn.

Mobility, Inequality, and Beliefs About Distribution and Redistribution

Source: George Wilson, Vincent Roscigno, Carsten Sauer, Nick Petersen, Social Forces, Advance Access, May 10, 2021
(subscription required)

From the abstract:
Classic theory has long been interested in mobility, but with limited attention to the implications of intergenerational movement for inequality-specific beliefs. In this article, we introduce a dynamic conception and modeling of the impact of intergenerational occupational mobility on inequality orientations generally and distributive and redistributive beliefs in particular. The diagonal models we employ using 2008–2010 General Social Survey samples—modeling that considers intergenerational occupational origin and destination, and that is replicated on a larger sample across three waves of the GSS—reveal strong conservatizing effects of mobility overall. Those who occupationally fall relative to their parents, although somewhat more progressive by virtue of the downward mobility experience, tend to cling more so to the conservative beliefs characteristic of their higher status origins. Those experiencing mobility gains, in contrast, usually adopt the more conservative orientations of those who they are now surrounded by and in ways that legitimize individual efforts. These patterns are notably pronounced compared to other aspects of one’s job, political affiliation, and status-related attributes; are somewhat stronger among men than women; and differ significantly for Blacks. We elaborate and conclude by highlighting the need for a mobility-centered corrective to sociological understandings of inequality beliefs and how workplace-related experiences in particular shape ideological leanings.

How to Ensure Pay Equity for People of Color

Source: Michael A. Tucker, HR Magazine, Spring 2021

Employers are scrutinizing their pay policies to eliminate racial disparities.

….That slow progress and the United States’ bloody legacies prompt a fundamental question when the issue of pay equity and race is broached: How can the U.S. value the work of people of color if it doesn’t value people of color?…

Impact of Compensation on Inclusive Organizations

Source: Muhammad Irfan, Omar K. Bhatti, Rashida K. Malik, Compensation & Benefits Review, Vol 53, Issue 3, 2021
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From the abstract:
Discrimination in compensation for minority groups and individuals with regard to gender, physical disability, religion, and culture affects inclusion in an organization. This study is a combination of two studies and endeavors to verify our initial inference that compensation gaps are significantly related to inclusion. A mixed method approach has been adopted; in first part of the study, compensation data obtained from 32 organizations (608 observations) have been analyzed quantitatively. The study finds significant correlation between components of compensation gaps and inclusion. Gender as basis of discrimination was found insignificantly correlated to compensation, while pay for performance was found negatively related to inclusion. We have proposed a model to predict feeling of inclusion if components of compensation and discriminatory factors are known. In second part of the study, based on 25 in-depth interviews, cognitive basis of compensation gaps has been divulged, and we conclude that implementation of compensation equity and removal of cognitive bases of discrimination seem mandatory actions for inclusion.

Beyond Wages: Effects of the Latina Wage Gap

Source: National Partnership for Women & Families, Fact Sheet, March 2021

…Even as Latinas have entered the workforce in record numbers – now with more than 12 million workers – they continue to face the largest wage gap among women. Latinas in the United States are typically paid just 55 cents for every dollar paid to White, nonHispanic men. Overall, all women employed full time, year-round are typically paid 82 cents compared to every dollar paid to the general population, both men and women, employed full time, year-round.

Black Women and the Wage Gap

Source: National Partnership for Women & Families, Fact Sheet, March 2021

…Today this means that Black women in the United States who work full time, year-round are typically paid just 63 cents for every dollar paid to white, non-Hispanic men. The wages of Black women are driven down by a number of current factors including gender and racial discrimination, workplace harassment, job segregation and a lack of workplace policies that support family caregiving, which is still most often performed by women. Overall, women employed full time, year-round are typically paid 82 cents for every dollar paid to men.

Asian American and Pacific Islander Women and the Wage Gap

Source: National Partnership for Women & Families, Fact Sheet, March 2021

…Today this means that Asian American and Pacific Islander (AAPI) women who work full time, year-round are paid as little as 52 cents for every dollar paid to white, nonHispanic men, as Burmese women are. Asian American women overall are paid just 87 cents for every dollar paid to white, non-Hispanic men. The wages of AAPI women are driven down by a number of current factors including gender and racial discrimination, workplace harassment, job segregation and the devaluing of jobs dominated by women, and the lack of support for family caregiving, which is still most often performed by women.