Despite women’s increased educational attainments and labor market experience, the gender wage gap persists.
According to the American Association of University Women’s 2012 report, year round full-time women workers are paid 77 percent of what men are paid. In addition to the fact that a large part of this wage gap cannot be explained by observable factors, this gender wage gap also contributes to the growing income inequality in the United States.
This gender wage gap is not only due to the lack of women in higher paying leadership roles but also the low pay in predominantly female occupations.
What are these occupations? The Department of Labor cites the top occupations for employed women as secretaries and administrative assistants, elementary and middle-school teachers, registered nurses, and nursing, psychiatric and home health aides — not that much different from the post-World War II statistics for women in the work force. These are occupations that have been dubbed “the caring industry” and are overwhelmingly female. While I briefly addressed the issue of how companies can retain high performing female workers in my last piece, the low pay of women in predominantly female occupations has many far reaching consequences beyond the contribution to the gender wage gap and income inequality in the 21st century.
While it is imperative that women have the opportunity to enter any occupation they desire, valuing and rewarding the work being done in the “caring industry” is just as important. Since a large proportion of women work in these occupations, increasing the level of pay in these occupations will certainly contribute to closing the gender wage gap and reducing income inequality. Just as important, if these occupations continue to pay low wages and the opportunities for women in other occupations continue to increase, fewer and fewer women (or men for that matter) will choose to enter these occupations.
Not addressing this issue will impact who will enter these occupations. "The Role of Female Labor Markets in the Decline of Teacher Quality" outlines the negative impact not addressing these issues has had on teacher quality. Who then will provide day care and educate our children, provide care for those who are sick, and tend to a rapidly aging population? It will either be those with less of the characteristics we desire or else the this generation and the next will have to spend more and more time out of the labor force to provide these services for their children and aging parents.
Why do these jobs in the “caring industry” pay so little? The first reason is that the hierarchy of relative pay levels of these occupations is very rigid. Many of the wages were set long ago when gender was a direct factor in establishing salaries. When wages for many jobs were established within firms (all the way from entry level positions such as secretaries or retail sales clerks, up to top positions as managers, and also in civil service jobs) the levels were influenced not only by supply and demand but also by cultural issues and social norms, such as who held these jobs (men or women). There was much debate about whether or not women should work and the fact that men were deemed to need a living or family wage, and that women did not need a pay level that supports a family.
In addition, rules existed that restricted women’s employment in law, medicine, fire departments, teaching, the postal service and the armed forces. These relative wages based on gender persist into today. Second, these jobs are paid far less than the value of the services they provide since many of the benefits accrue to others than the recipient of these services. Third, characteristics most would value in those providing such services are not measured and valued sometimes because they are thought to be difficult to measure.
If wage hierarchies are rigid, if the benefits are not measured, and if the characteristics desired in workers in these occupations is not recognized and rewarded, then workers will move towards occupations where they are rewarded, especially as more and more opportunities open up for women.
What then can companies and policy makers do to begin to address this problem?
1. Conduct pay equity studies. Given the relative inertia in relative wages over time, employers may not realize that jobs that require similar levels of knowledge, responsibility, or other characteristics pay differently. By inviting experts in that specialize in studies of pay and job characteristics they will find out if there are pay differences they need to address. Besides addressing any existing inequities fairer pay practices generally make for more satisfied workers who will then be more productive and more likely to remain with the firm.
2. Measure and reward important characteristics of workers. If firms, including non-profit firms such as school boards, want to attract and retain workers with certain characteristics, then these characteristics must be measured and rewarded. While some may be more difficult to measure, most firms include a qualitative part to their evaluation of employees. These characteristics might include, reliability, compassion, patience, empathy, and advocating for those for whom they are caring.
3. Make pay systems more transparent. This goes along with the first suggestion. Making pay ranges, job requirements and promotion requirements more transparent helps to make pay more fair, helps workers to assess how their job and pay fits in with others, and can also increases job satisfaction. This might also help to reduce the rigidity of relative wages.
4. Measuring all, or at least more, of the benefits of the work done. Many of the benefits of good teachers, nurses, social workers and others in the caring industries accrue to more than just the direct recipient of such services. Measuring these benefits is the work of both companies and the government. These benefits include a more well trained workforce, a healthier population, and the ability for family members to work while their children or other family members are educated or cared for.
If we value these benefits as a society then there is justification for directing resources towards these services. The consequence of not doing so may be more inequality, as those who can afford to pay for a better education and better care for their children or aging relatives can work more, while many others will have to expend their own time caring for their family members, or simply leave them uncared for.
With the call for more and better teachers for the next generation, an increasingly older baby boom generation already straining our health care system, and the need for more well and highly trained “caring industry” workers soaring, the time has come to take action to be sure that we have the type of workers that we need to support future generations.
This article originally appeared at Villanova School of Business . Copyright 2014.