Analysis Law and Policy

Living on the Edge of a Permanent Fiscal Cliff: Minimum Wage Workers See Few Gains

Sheila Bapat

While the "fiscal cliff" dominated the news ad nauseum, ten states quietly increased their minimum wage, effective January 1. A whopping 59 percent of all minimum wage earners are women.

Tax cuts for middle class workers may help many American families’ bottom line, but jobs that pay better help, too. And while “fiscal cliff” battles dominated the news over the New Years holiday, ten states throughout the country quietly increased the minimum wage for their state’s workers, effective January 1.

Salon reported on New Years Eve that ten states increased their minimum wage on Tuesday. Some states increased their minimum wages just a smidge, anywhere from 10 cents to 35 cents per hour. Most of these states increase their minimum wage automatically each year to keep up with the cost of living. But Rhode Island hadn’t bumped up its minimum wage in five years—the state finally passed a law this year increasing the state’s minimum wage from $7.75 from $7.40 this year. Washington State increased its minimum wage to $9.19 per hour—the highest minimum wage of all states and nearly two dollars higher than the federal minimum wage. In San Francisco, the city with the highest cost of living, the minimum wage is $10.55. (In states or cities where the minimum wage differs from the federal minimum wage, workers are entitled to the higher of the two.)

Who are the nearly one million American minimum wage earners who will benefit from these increases? The Economic Policy Institute tells us that 59 percent are women. Most of those women are over the age of 20. And according to the National Employment Law Project (NELP), workers in service occupations, including those who toil in the domestic sphere, are most affected by pay-scales for minimum wage jobs: “Fast-growing low-wage jobs like home care are disproportionately held by female and older workers.”

We know women tend to earn less than men in general, but NELP has further damning data about who are among the lowest earning Americans and what this means for women’s economic status overall. According to NELP’s “Fast Facts” there is 64 percent chance that any given woman earns a minimum wage. By contrast, there is mere 4 percent chance that any given woman is a Fortune 500 CEO.

Like This Story?

Your $10 tax-deductible contribution helps support our research, reporting, and analysis.

Donate Now

Despite these minimum wage increases in ten states, many workers are still toiling in low-wage jobs: about 20 states’ minimum wages match the federal minimum wage, which is $7.25 per hour. Had the minimum wage kept pace with inflation over the last forty years, it would currently hover around $10.58 per hour.

Even more troubling: the federal minimum wage for tip earners (waiters and waitresses, nail salon workers, etc) is a mere $2.13 per hour. Women represent nearly two-thirds of workers in these fields.

According to a 1995 report from the National Bureau of Economic Research, the failure of the minimum wage to keep pace with inflation over the years has played a substantial role in deepening wage inequality for women. The National Women’s Law Center (NWLC) corroborated this finding in November 2012, stating that 7 of the 10 states with the narrowest wage gaps have minimum wages above the federal minimum wage. By contrast, most states with starkest wage gaps tend to have a minimum wage below $7.25 per hour. And, increasing the federal minimum wage to $9.80 “would boost annual earnings by over $5,100, enough to pull a family of three out of poverty.”

What are the chances of increasing the federal minimum wage across the board? Given the frustrating performance with regard to the “fiscal cliff”—a concocted concept that just makes Americans feel there is a crisis and is arguably resulting in bad policy—it is unclear what the next four years can accomplish with respect to transforming the economy in a way that benefits low wage and women workers. Will Obama advocate for a minimum wage increase? Given that Congress has only raised the federal minimum wage three times in 30 years and Republicans enjoy saying no to Obama, would they even pass an increase? Thus far President Obama has not stated a minimum wage increase is as an explicit priority for his second term, though advocates at NELP, NWLC and other economic justice groups are likely to push for it.

Commentary Economic Justice

The Gender Wage Gap Is Not Women’s Fault, and Here’s the Report That Proves It

Kathleen Geier

The fact is, in every occupation and at every level, women earn less than men doing exactly the same work.

A new report confirms what millions of women already know: that women’s choices are not to blame for the gender wage gap. Instead, researchers at the Economic Policy Institute (EPI), the progressive think tank that issued the report, say that women’s unequal pay is driven by “discrimination, social norms, and other factors beyond women’s control.”

This finding—that the gender pay gap is caused by structural factors rather than women’s occupational choices—is surprisingly controversial. Indeed, in my years as a journalist covering women’s economic issues, the subject that has been most frustrating for me to write about has been the gender gap. (Full disclosure: I’ve worked as a consultant for EPI, though not on this particular report.) No other economic topic I’ve covered has been more widely misunderstood, or has been so outrageously distorted by misrepresentations, half-truths, and lies.

That’s because, for decades, conservatives have energetically promoted the myth that the gender pay gap does not exist. They’ve done such a bang-up job of it that denying the reality of the gap, like denying the reality of global warming, has become an article of faith on the right. Conservative think tanks like the Independent Women’s Forum and the American Enterprise Institute and right-wing writers at outlets like the Wall Street Journal, Breitbart, and the Daily Caller have denounced the gender pay gap as “a lie,” “not the real story,” “a fairy tale,” “a statistical delusion,” and “the myth that won’t die.” Sadly, it is not only right-wing propagandists who are gender wage gap denialists. Far more moderate types like Slate’s Hanna Rosin and the Atlantic’s Derek Thompson have also claimed that the gender wage gap statistic is misleading and exaggerates disparities in earnings.

According to the most recent figures available from the Census Bureau, for every dollar a man makes, a woman makes only 79 cents, a statistic that has barely budged in a decade. And that’s just the gap for women overall; for most women of color, it’s considerably larger. Black women earn only 61 percent of what non-Hispanic white men make, and Latinas earn only 55 percent as much. In a recent survey, U.S. women identified the pay gap as their biggest workplace concern. Yet gender wage gap denialists of a variety of political stripes contend that gender gap statistic—which measures the difference in median annual earnings between men and women who work full-time, year-round—is inaccurate because it does not compare the pay of men and women doing the same work. They argue that when researchers control for traits like experience, type of work, education, and the like, the gender gap evaporates like breath on a window. In short, the denialists frame the gender pay gap as the product not of sexist discrimination, but of women’s freely made choices.

Like This Story?

Your $10 tax-deductible contribution helps support our research, reporting, and analysis.

Donate Now

The EPI study’s co-author, economist Elise Gould, said in an interview with Rewire that she and her colleagues realized the need for the new report when an earlier paper generated controversy on social media. That study had uncovered an “unadjusted”—meaning that it did not control for differences in workplace and personal characteristics—$4 an hour gender wage gap among recent college graduates. Gould said she found this pay disparity “astounding”: “You’re looking at two groups of people, men and women, with virtually the same amount of experience, and yet their wages are so different.” But critics on Twitter, she said, claimed that the wage gap simply reflected the fact that women were choosing lower-paid jobs. “So we wanted to take out this one idea of occupational choice and look at that,” Gould said.

Gould and her co-author Jessica Schieder highlight two important findings in their EPI report. One is that, even within occupations, and even after controlling for observable factors such as education and work experience, the gender wage gap remains stubbornly persistent. As Gould told me, “If you take a man and a woman sitting side by side in a cubicle, doing the same exact job with the same amount of experience and the same amount of education, on average, the man is still going to be paid more than the woman.”

The EPI report cites the work of Harvard economist Claudia Goldin, who looked at the relative weight in the overall wage gap of gender-based pay differences within occupations versus those between occupations. She found that while gender pay disparities between different occupations explain 32 percent of the gap, pay differences within the same occupation account for far more—68 percent, or more than twice as much. In other words, even if we saw equal numbers of men and women in every profession, two-thirds of the gender wage gap would still remain.

And yes, female-dominated professions pay less, but the reasons why are difficult to untangle. It’s a chicken-and-egg phenomenon, the EPI report explains, raising the question: Are women disproportionately nudged into low-status, low-wage occupations, or do these occupations pay low wages simply because it is women who are doing the work?

Historically, “women’s work” has always paid poorly. As scholars such as Paula England have shown, occupations that involve care work, for example, are associated with a wage penalty, even after controlling for other factors. But it’s not only care work that is systematically devalued. So, too, is work in other fields where women workers are a majority—even professions that were not initially dominated by women. The EPI study notes that when more women became park rangers, for example, overall pay in that occupation declined. Conversely, as computer programming became increasingly male-dominated, wages in that sector began to soar.

The second major point that Gould and Schieder emphasize is that a woman’s occupational choice does not occur in a vacuum. It is powerfully shaped by forces like discrimination and social norms. “By the time a woman earns her first dollar, her occupational choice is the culmination of years of education, guidance by mentors, parental expectations, hiring practices, and widespread norms and expectations about work/family balance,” Gould told Rewire. One study cited by Gould and Schieder found that in states where traditional attitudes about gender are more prevalent, girls tend to score higher in reading and lower in math, relative to boys. It’s one of many findings demonstrating that cultural attitudes wield a potent influence on women’s achievement. (Unfortunately, the EPI study does not address racism, xenophobia, or other types of bias that, like sexism, shape individuals’ work choices.)

Parental expectations also play a key role in shaping women’s occupational choices. Research reflected in the EPI study shows that parents are more likely to expect their sons to enter male-dominated science, technology, engineering, and math (often called STEM) fields, as opposed to their daughters. This expectation holds even when their daughters score just as well in math.

Another factor is the culture in male-dominated industries, which can be a huge turn-off to women, especially women of color. In one study of women working in science and technology, Latinas and Black women reported that they were often mistaken for janitors—something that none of the white women in the study had experienced. Another found that 52 percent of highly qualified women working in science and technology ended up leaving those fields, driven out by “hostile work environments and extreme job pressures.”

Among those pressures are excessively long hours, which make it difficult to balance careers with unpaid care work, for which women are disproportionately responsible. Goldin’s research, Gould said, shows that “in jobs that have more temporal flexibility instead of inflexibility and long hours, you do see a smaller gender wage gap.” Women pharmacists, for example, enjoy relatively high pay and a narrow wage gap, which Goldin has linked to flexible work schedules and a professional culture that enables work/life balance. By contrast, the gender pay gap is widest in highest-paying fields such as finance, which disproportionately reward those able to work brutally long hours and be on call 24/7.

Fortunately, remedies for the gender wage gap are at hand. Gould said that strong enforcement of anti-discrimination laws, greater wage transparency (which can be achieved through unions and collective bargaining), and more flexible workplace policies would all help to alleviate gender-based pay inequities. Additional solutions include raising the minimum wage, which would significantly boost the pay of the millions of women disproportionately concentrated in the low-wage sector, and enacting paid family leave, a policy that would be a boon for women struggling to combine work and family. All of these issues are looming increasingly large in our national politics.

But in order to advance these policies, it’s vital to debunk the right’s shameless, decades-long disinformation campaign about the gender gap. The fact is, in every occupation and at every level, women earn less than men doing exactly the same work. The right alleges that the official gender pay gap figure exaggerates the role of discrimination. But even statistics that adjust for occupation and other factors can, in the words of the EPI study, “radically understate the potential for gender discrimination to suppress women’s earnings.”

Contrary to conservatives’ claims, women did not choose to be paid consistently less than men for work that is every bit as valuable to society. But with the right set of policies, we can reverse the tide and bring about some measure of economic justice to the hard-working women of the United States.

News Economic Justice

Colorado Voters Could Get a Chance to Boost the State’s Minimum Wage

Jason Salzman

A campaign fact sheet cited an April survey showing that 59 percent of the 2,400 U.S. small businesses polled favor raising the minimum wage, and that about 40 percent of those polled already pay entry-level employees "far above" the required minimum wage in their location.

Colorado’s minimum wage would increase from $8.31 to $12 by 2020 if Colorado voters approve a ballot initiative that could be headed to the November ballot.

Patty Kupfer, campaign manager for Colorado Families for a Fair Wage told reporters Monday that Colorado Families for a Fair Wage, a coalition of groups, submitted more than 200,000 signatures to the Colorado secretary of state, more than double the number required to make the ballot.

Hundreds of volunteers and dozens of organizations collected signatures, Kupfer said.

“Raising the minimum wage is fair and it’s smart,” Kupfer said. “It’s fair because people working full time should earn enough to support their families. It’s smart because when working people have more money in their pockets, they spend it here in Colorado, boosting our economy and helping our community thrive.”

Like This Story?

Your $10 tax-deductible contribution helps support our research, reporting, and analysis.

Donate Now

Speaking at the news conference staged in front of stacked boxes of petitions, Marrisa Guerrero, identified as a certified nursing assistant, said she works seven days a week and still relies on subsidized housing.

“Making $300 a week is not enough to pay rent and buy groceries for a family like mine,” said Guerrero, adding that she’d “really like” to see an increase in the minimum immediately, but “2020 would work wonders.”

After 2020, the state’s minimum wage would be adjusted annually for cost-of-living increases under the initiative.

Tyler Sandberg, a spokesperson for Keep Colorado Working, an organization opposing the initiative, appeared at the news conference and told reporters that he was “especially” worried about the initiative’s impact on small businesses.

“The big corporations, the wealthy areas of Denver and Boulder, might be able to afford [it], but small businesses, rural and poor communities, cannot afford this,” Sandberg told reporters. “So you are going to put people out of work with this. You’re going to harm the same people you’re trying to help.”

“It’s one size that doesn’t fit all. It’s the same for a small business as it is for Pepsi Cola,” said Sandberg, whose organization includes the Colorado Restaurant Association, the Colorado Association of Commerce and Industry, and the National Association of Independent Business.

Asked by Rewire to respond to Sandberg’s argument against a higher wage, Kupfer said, “Research shows small businesses support increasing the minimum wage. The truth is, when workers make more, that means more customers in local Colorado businesses. Both in rural and urban parts of the state, when working people do well, our communities thrive.”

A campaign fact sheet cited an April survey showing that 59 percent of the 2,400 U.S. small businesses polled favor raising the minimum wage, and that about 40 percent of those polled already pay entry-level employees “far above” the required minimum wage in their location.

“In my company, we have customer service representatives being paid $15 per hour,” Yoav Lurie, founder of Simple Energy, told reporters at the news conference. “While others might choose to pay customer service reps minimum wage, we have found that higher pay leads to improved performance and better retention and better customer satisfaction.”

Workers who rely on tips would see their minimum hourly wage increase by about 70 percent, from $5.29 to $8.98, while other workers would get a 44 percent increase by 2020. The initiative states that “no more than $3.02 in tip income may be used to offset the minimum wage of employees who regularly receive tips.”

Colorado passed a constitutional amendment in 2006 that bumped the minimum wage to $6.85. It’s been raised according to inflation since then.  The federal minimum wage is $7.25 and has not been increased since 2009.

Colorado’s Republican legislators killed legislation this year to allow cities to raise the minimum wage.