On Equal Pay Day 2018, There’s a Troubling Trend Behind the Shrinking Gender Pay Gap

Source: Claire Zillman, Fortune, April 10, 2018

Tuesday, April 10 marks Equal Pay Day in the United States—a day that signifies how far into the new calendar year women have to work to earn what men made the previous year. The occasion prompts an annual examination of the gender pay gap in the U.S. and this year such study will turn up good news.

According to Census data released in September, the gender pay gap—generally defined as the difference between men’s earnings and women’s—shrank in a statistically significant way for the first time since 2007, with women earning 80.5 cents for every dollar men earned in 2016. That was up from the 79.6 cents women made in 2015. All told, women’s average earnings were $41,554 for full-time workers in 2016, compared to an average of $51,640 for men.

But women shouldn’t give a whole-hearted cheer just yet.

Part of the progress is worth celebrating—average wages for women increased by 0.7% in 2016, returning to 2007 pre-recession levels. A big part of that uptick is attributable to women’s educational attainment. In analysis of the Census data, Ariane Hegewisch, program director for employment and earnings at the Institute for Women’s Policy Research, points to women being “highly invested in their education—more so than men.” That pursuit prepares women for more lucrative jobs.

But at the same time, men’s wages decreased 0.4%, failing to recover crisis-era losses. When the Brookings Institution looked at this on-going trend, it cited three factors: workers getting more of their compensation in benefits versus cash wages, labor’s declining share of national income (compared to capital’s growing share), and the rise of inequality or the widening of the gap between the earnings of the highest-paid workers and those in lower-paid tiers. “Economists differ over how much of this is the result of globalization, technological change, changing social mores, and government policies,” the Brookings report says, “but there is no longer much dispute about the fact that inequality is increasing.”

Job site Indeed says that men’s full-time, full-year, inflation-adjusted earnings peaked in 1973 at $54,030. Since then through 2016, they dropped in real terms by almost $2,400 as women’s earnings got a boost of $11,000. “That means almost 20% of the gender wage gap closure over this time frame is due to earnings losses for men,” according to Indeed. “In fact, in almost half the years since 1968 where the gender wage gap closed, men’s earnings fell while women’s earnings rose.”

The phenomenon paints closing the gender wage gap as a zero-sum game, but that’s not the case. The IWPR notes that for the divide between men and women to close, women’s real wages just need to rise faster than men’s, but men’s wages can tick up too.