Women’s Earnings Finally Felled by the U.S. Economy

Women’s Earnings Finally Felled by the U.S. Economy

The news on U.S. personal incomes over the past decade or so has been pretty dismal, and following the recession it has been especially dismal. The one bright spot, however, has been for women who as a gender have somehow managed to move ahead even as the economy stagnated. Unfortunately, however, a new report by the Institute for Women’s Policy Research (IWPR) suggests that the weakness in the U.S. economy has finally caught up with them as well.

The IWPR report concerns itself mostly with the ‘pay gap’, as measured by the Female to Male Earnings Ratio, for full time year round workers.  I have some issues with using this measure at all, given that tends to overstate the difference in male and female wages. That is, the measure does not adjust for years of experience, which tend to lower on average for women than for men. Women are more likely to take breaks from the labor force (usually for childcare) than are men, and fairly or unfairly they are nailed for it on a salary basis.  If you compared men and women with equivalent years of experience, you would get a smaller gap between men and women.

 

To get a better idea of how wages have changed, I did some simple calculations on how median earnings have changed for each of men and women (using the data from the WPI survey, which comes directly from the U.S. Bureau of Labor Statistics).  What I found was that women have had a pretty good run, but that the past couple of years have indeed set back their progress.

 

First, the good news. For the entire period from 2000 to 2013, women’s inflation-adjusted earnings grew by 5.8 percent, compared to a decline of 0.8 percent for men. Even since the recession, there have been gains. Women’s earnings were up by 2.3 percent between 2008 and 2013, compared to a decline of 0.3 percent for men.  The last few years however – which were technically part of the ‘recovery’ not the ‘recession’ – were brutal for both groups.  Women’s earnings slipped by 1.3 percent between 2010 and 2013, while men’s slipped by 2.3 percent.

 

So what is the overriding theme here? I’d skip any gender politics and just focus on the fact that the U.S. economy is still a pretty dreadful place for men and women in income terms.  That women made such progress in earnings growth for a decade speaks to the fact that they have been more likely than men to stay in school, and have by and large had a leg up in terms of skills that were needed in the economy.  With the manufacturing and construction industries hit hard early in the recession, men’s earnings got hit hard as well. At this point, however, women are more vulnerable. They are disproportionately employed in the public and para public sectors, and those sectors are getting hit hard by budget cuts.

 

So is this a situation that needs to be ‘fixed?’. I would argue that it does, but that it again has little to do with gender.  For real earnings to rise for both men and women will take a substantial recovery in the U.S. labor market, one more far-reaching than the tentative decline we have seen in the unemployment rate over the past few months.

 

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