Economic & Workforce Briefing

Lean Pay? Lean In!

Here is the shocking fact of the week for you from Pennsylvania Business Central: men and women are different. On many dimensions. Especially in economic and working life. And, yes, in Pennsylvania, too.

“The State of Working Pennsylvania 2012,” published by Keystone Research Center, a tax–exempt nonprofit think tank based in Harrisburg, reported that Pennsylvania women experienced wage gains of nearly 25% from 1979 to 2011. For women working full-time and full-year, earnings rose from $11.99 per hour in 1979 to $14.97 in 2011, an increase that boosted annual pay nearly $6,200. In contrast, the median hourly wages of white, black and Hispanic men in Pennsylvania actually declined through 2011. 

As men’s wages fell, women’s wages rose, resulting in a narrowing of Pennsylvania’s gender pay gap.  Yet, the median 2011 wage of Pennsylvania’s women workers remained 83% of the typical man’s wage. Certainly an improvement from 61% in 1979. But, a gap still.

Women’s relatively low educational attainment and limited accumulated work experience probably accounted for women’s historically low wage status. One longitudinal study suggested that about one-third of the gender pay gap observed in the late 1980s is explainable by gender differences in skills and experience. 

Gender differences in educational attainment have narrowed over the previous 20 years, which led to increasing qualification and access of women for better paying work. However, gender differences in labor market experience seem to persist. 

Family formation is a major factor that affects women’s labor market experience, which, in turn, influences women’s pay significantly. Women with children, especially young children, are less likely to participate in the labor force than other women. And, when mothers are able to work, their wages can be as much 5 percent lower per child. Compounded over time, these work experience and wage differentials result in lower lifetime earnings for women.

What work women do and for whom affects their pay. A study by the President’s Council of Economic Advisors concluded that crowding of women into low wage work clerical, retail, and service occupations that were already dense with women increased the gender pay gap by as much as 3 percent during the 1980s. Also, remarkable gender wage differences by industry are evident. For example, wages in the utilities industry and the oil and gas industry, industries that are dominated by male workers, are much higher than in the retail trade industry, which is female–dominated. 

Increases in educational attainment and shifts in the types of investments in occupational training by women have led to substantial gender desegregation of occupations and industries to help reduce the gender wage gap. However, the Institute for Women’s Policy Research located in Washington, DC, found that women’s 2012 median earnings were lower than men’s in nearly all occupations, whether women worked in occupations predominantly done by women, occupations predominantly done by men, or occupations with a more even mix of men and women. The Institute estimated that, if current trends in occupational segregation by gender continue, the gender wage gap cannot be expected to close until at least 2057.

In her much-acclaimed best-selling book, “Lean In,” Sheryl Sandberg, COO of Facebook, offered suggestions for closing gender gaps in employment and pay. According to Sandberg, thirty years after women became 50% of the college graduates in the U.S., men still hold the vast majority of leadership positions in government and industry. This means that women’s voices still are not heard equally in decisions that most affect all of our lives. Further, Sandberg believes that women’s progress in achieving leadership roles has stalled. 

Sandberg’s advice? Women should lean into, not push away from, power and influence in organizations, as Sandberg says they have.

Sandberg’s book has spurred a number of follow-ons aimed at bringing together groups of women to aid each other with issues such as negotiations, team dynamics, and influence. For example, the Clayman Institute (http://gender.stanford.edu/) has made available its online curriculum, “Voice & Influence,” aimed not only at women, but also at men and organizations, featuring videos and materials developed by university faculty that furnish specific actions for improvement that people can take to reach their potential. 

As another example of practical spin-offs from Sandberg’s book, the official “Lean In” web site (http://leanin.org) is promoting “Lean In Circles,” which are small groups that meet regularly to share and learn together — like a book club focused on helping members achieve their goals.

Tucked away in Sandberg’s book is a provocative proposition about the general benefits of gender equality at work. Sandberg asserts that, “If we tapped the entire pool of human resources and talent, our collective performance would improve.” 

A recent National Bureau of Economic Research report might be a test of Sandberg’s proposition. Specifically, just how large was the macroeconomic improvement that resulted from the improved educational attainment and occupational access by women and minorities between 1960 and 2008? The February 2013 report, “The Allocation of Talent and U.S. Economic Growth,” found that these changes explained 15 to 20 percent of growth in aggregate output per worker over this period. The authors of the report attributed essentially all of this portion of macroeconomic growth to the movement of women into high-skilled occupations.

For a moment, forget about the politics of gender. Here is an economic idea for private enterprise, governments, militaries, and, yes, even churches to consider: development and unfettered allocation of talent to productive work can promote superior economic performance for us all.