Chapter 8

Recent Developments in the Labor Market: Their Impact on Women & Men

What do you think of this recent development? http://www.cnn.com/

Chapter Highlights

Trends in Female and Male Wages The Declining Gender Pay Gap The Rising Payoff to Education Changing labor Market Dynamics The Rise of the NonStandard Workforce The Growth in Women’s Self Employment The Changing Face of Labor Unions

Trends in Female and Male Wages Males:

Median earnings for year round full time workers rose substantially during 60s,

moderately during the 70s, declined over the 80s and increased slightly during the 90s and 2000s.

Trends in Female and Male Wages Females

Median earnings for year round full time workers rose substantially during 60s,

moderately during the 70s, During the 80s women’s earnings rose by 11.5% During the 90s 2000s rose more than men’s.

Differences:Between groups

A Reminder:

The wage gap is a statistical indicator often used as an index of the status of women's earnings relative to men's. It is also used to compare the earnings of other races and ethnicities to those of white males, a group generally not subject to race- or sex-based discrimination.

The Declining Gender Pay Gap During the last 30 years, women managed to

narrow the pay gap (the differences in pay between men and women).

How did they do this?

They Made Strides in Overcoming:1. Wage Structure

2. Human Capital Investments

3. Labor Market Discrimination

1) Wage Structure

“Returns that the labor market offers for various skills and for employment in higher-paying industries or occupations”. How did they overcome this:

By improving their overall qualifications relative to men. They improved their labor market experiences. They took less time out of the workforce.

2) Human Capital Investments

“Resources which are invested in an individual today in order to increase his or her future productivity and earnings” How did they overcome this:

Increased their college and professional degrees They got training (seminars, workshops)

3) Labor Market Discrimination

“when two equally qualified individuals are treated differently solely on the basis of their gender (race, age, disability)”. How did they overcome this:

Lawsuits!! Proving to their bosses that women can be as

aggressive, competent, committed as men.

Increased their “Returns to Skill” Rewards that the labor market gives for

various worker skills or qualifications. (wages)

There has been an increased demand for “skilled” workers. Reasons: technological advances & international

competition. Both of these negatively impact unskilled workers.

We’re talking about “Real Wages” Wages that have been adjusted for changes

in the cost of living or the price of inflation. For example: If you earn $100 a day this

year, and inflation is at 4% this year, then next year, you would have to earn $104 a day just to break even. If your raise isn’t at or above the rate of inflation then your wages are not keeping up with inflation.

Another example:

If you are making $10 per hour and your boss offers you a 25 cent per hour raise. Your raise is:

.25

10.00 or 2.5%

Inflation is currently 4.2% so you lose 1.7% in earning power with this small raise!!!!

To calculate how much you need in a raise to keep up with inflation:

.042 * $12.00 = .50 or 50 cents

.042 * $ 9.00 = .38 or 38 cents

.042 * $8.00 = .34 or 34 cents

Wage Inequality

The widening dispersion in the distribution of earnings within each group (men and women) Meaning: the gap between those at the bottom of

the group and those at the top of the group widened considerably.

Differences:Within Groups

White Women

Asian Women

African American Women

Causes of Differences: Attractiveness and the Job Market

Hammermesh, Biddle, & Crawley If you are perceived as being a beautiful

woman you probably earn about 5 percent more than ordinary-looking women.

If you are perceived as being an attractive man, you probably earn about 10 percent more than ordinary-looking men. If men do most of the hiring, why is it important for

a man to hire a good looking man?

Their research, not mine

Many of the most unattractive women opt out of the labor force entirely.

Unattractive women tend to attract the lowest quality husbands (education & earning potential); thus, decreasing their household income potential.

Another cause: Your weight

Hammermesh, Biddle, & Crawley An extra 65 pounds costs a white woman 7

percent of her wages. Losing 65 extra pounds is the same as an extra

year of college, or three years of work experience. Extra weight had no impact on the salaries of

men or underrepresented populations of women.

A Vicious Cycle

Being attractive allows you to earn a good salary which allows you to maintain or increase your beauty (make up & cosmetic surgery).

Higher salaries leads to higher self esteem which leads to better eating/exercise habits which result in better weight control.

A note:

Beautiful women do not better on the marriage market than do average women.

And, for men, looks don’t seem to affect marriage prospects at all.

What if you were born with brains?

The Rising Payoff to Education

The less educated are increasingly falling behind. For men the disparity is substantial. For women, real wages declined or grew more

slowly for the less educated.

In 2003

Women and men with college degrees earned more than twice as much as high school graduates.

Among men, only those with college degrees saw an increase in real wages.

Real earnings declined for high school drop outs but rose for those with college degrees.

And for those with beauty and brains….