Differences in Occupations & Earnings

Differences in Occupations & Earnings

How do occupations differ by race/ethnicity and gender? Let’s first look at men.

The highest percentages of non-Hispanic White men are in management and professional occupations. The highest percentages of Black men are in services and transportation. The highest percentages of Asian men are in professional occupations. The highest percentages of Hispanic men are in services and construction.

What about the women?

The women tend to have high percentages in professional occupations, services, and administrative support. The highest percentages of Non-Hispanic Whites and Asian women are in professional occupations, while the highest percentages of Black and Hispanic women are in services.

We can measure the extent of the differences in the occupational distributions of men and women using the index of occupational segregation.

Index of Occupational Segregation This index measures the percentage of females (or males) that must change jobs in order for the occupational distributions to be equal. It is calculated as follows:

½ |Mi – Fi| Where Mi is the percentage of males in the labor force in occupation i, and Fi is the percentage of females in the labor force in occupation i

Example 1: Complete segregation 100% of all men in blue-collar jobs 100% of all women in pink-collar jobs ½ [|100-0| + |0-100|] = 100 Occupation

Men

Women

Blue-Collar

100

0

Pink-collar

0

100

Total

100

100

This means that 100% of women would have to change to blue-collar jobs or 100% of men would have to change to pink-collar jobs for the occupational distributions to be the same.

Example 2: Complete integration 40% of men in blue-collar jobs, 60% in pink-collar jobs 40% of women in blue-collar jobs, 60% in pink-collar jobs Occupation

Men

Women

Blue-Collar

40

40

Pink-collar

60

60

Total

100

100

½ [|40-40| + |60-60|] = 0

This means that no one needs to change jobs to make the occupational distributions the same for the two genders.

Example 3: High integration 60% of men in blue-collar jobs, 40% in pink-collar jobs 40% of women in blue-collar jobs, 60% in pink-collar jobs Occupation

Men

Women

Blue-Collar

60

40

Pink-collar

40

60

Total

100

100

½ [|60-40| + |40-60|] = 20 This means that 20% of men would have to change to pink-collar jobs or 20% of women would have to change to blue-collar jobs to make the occupational distributions the same.

Example 4: Low integration 80% of men in blue-collar jobs, 20% in pink-collar jobs 20% of women in blue-collar jobs, 80% in pink-collar jobs Occupation

Men

Women

Blue-Collar

80

20

Pink-collar

20

80

Total

100

100

½ [|80-20| + |20-80|] = 60 This means that 60% of men would have to change to pink-collar jobs or 60% of women would have to change to blue-collar jobs to make the occupational distributions the same.

The very broad categories discussed previously do not show the full extent of occupational segregation. There is also occupational segregation in sub-categories. Consider, for example, the professional occupations. Women comprise a high percentage of workers who are dietitians, librarians, nurses, pre-school and kindergarten teachers, and elementary school teachers, while men represent a high percentage of workers who are architects, engineers, clergy, dentists, and computer scientists and systems analysts.

Index of Occupational Segregation by Sex, 2009 51.0% So about half of women (or men) would have to change jobs for the occupational distribution of the two groups to be the same.

Even the Index of Occupational Segregation calculations based on the detailed census occupational categories likely underestimates the full extent of employment segregation by sex. Job categories used by employers are even more detailed and would likely reveal more segregation. Also, particular firms often employ mostly men or mostly women, such as women in sales are heavily represented in clothing stores but not in electronics stores.

Not only do men and women tend to work in different occupations, but they also tend to be employed at different levels of the hierarchy within occupations.

Example: University Faculty, 2011-2012 Rank

Percent Female

Full Professors

28

Associate Professors

43

Assistant Professors

50

Instructors

61

To the extent that occupational segregation is due to socially imposed restrictions, removal of those barriers would increase efficiency and decrease frustration, since individuals could seek work suited to their particular aptitudes.

However, even if social barriers were removed immediately, the rate of change of occupational segregation is limited by the time it takes for new people to be trained. Past socialization also affects the preferences of people already in the work force. Less gender bias in the socialization of girls and boys would reduce the amount of occupational segregation, but it would take many years for these girls and boys to grow up and enter the labor force. Occupational integration is a very slow process.

Let’s move now from discussing occupational segregation to examining earnings differentials.

Female/Male Earnings Ratio Throughout the 1960s and 1970s, the ratio of female-to-male earnings for full-time, yearround workers hovered close to 59%. Over the last 30 years, it increased to 77% in 2011. Note that this means that women still earn only slightly over ¾ of what men earn.

The gap between men’s and women’s earnings tends to widen with age. There are several possible explanations, which are not mutually exclusive. The current younger cohort has choices more similar to those of men than the older cohorts had. The younger cohort is not facing as much discrimination as the cohorts before them. Women accumulate less experience than men, on average, as they age. Women face greater barriers to advancement at higher levels of the job hierarchy.

Female-to-Male Earnings Ratios by Education, 2011 Education 1-3 yrs of high school 4 yrs of high school 1-3 yrs of college 4 or more yrs of college

F/M (%) 66.7 70.0 71.1 69.0

Women at each level of education earn less than similarly educated men.

Female-to-Male Earnings Ratios for Full-Time, Year-Round Workers by Race/Ethnicity, 2011 Whites

77.1

Blacks

85.4

Asians

74.9

Hispanics

91.1

Hispanic and Black women earn more relative to men of the same race/ethnicity than White and Asian women do relative to White and Asian men. (Keep in mind, however, that the Hispanic and Black men are earning a lot less than the White and Asian men.)

Earnings Ratios for Full-Time, Year-Round Workers, 2011 Earnings ratios

Males

Females

Black-to-White

74.7

82.8

Asian-to-White

104.6

101.7

Hispanic-to-White

60.9

71.9

Relative earnings are lower for Hispanics than for Blacks. Hispanic and Black women earn more relative to White women than Hispanic and Black men earn relative to White men. (Remember however, that the White women are earning a lot less than the White men.)

Sexual Orientation Statistical analysis has been used to study the effects of sexual orientation on earnings. This research has generally found that gay men earn less than heterosexual men, while lesbians earn more than heterosexual women. Same-sex marriage has historically been illegal in most states. Gay men and lesbians may therefore have been less likely to pursue a traditional division of labor with their partners. That behavior may be one factor contributing to the observed earnings differentials. In addition, the lower earnings of gay men may be due in part to discrimination.

The earnings premium of lesbians may mask some discrimination against them. Lesbians may have characteristics - such as greater career orientation - that lead to greater productivity. Discrimination may partially offset that effect on wages. So their wages (though higher than heterosexual women) may not fully reflect their higher productivity. In addition, gay men and lesbians may trade off higherwage jobs for positions that are more open to sexual minorities. There is little research on earnings of bisexuals.

An interesting study of transgender individuals sheds light on the consequences of such transitions. The study examined the labor market outcomes of people who changed their gender, generally with hormone therapy and surgery. This research found that the average earnings of individuals who changed their gender from female to male increased slightly, while the average earnings of individuals who changed their gender from male to female fell by one-third. The authors of the study noted that their findings were consistent with reports that “for many male-to-female workers, becoming a woman often brings a loss of authority, harassment, and termination, but that for many female-to-male workers, becoming a man often brings an increase in respect and authority.” Kristen Schilt and Matthew Wiswall (2008) “Before and After: Gender Transitions, Human Capital, and Workplace Experiences,” The B.E. Journal of Economic Analysis & Policy, 8, no. 1, Article 39. Available at: http://www.bepress.com/bejeap/vol8/iss1/art39 .

Returning to the gender wage gap … Gender differences in earnings are due to many forces, including: • differences in the characteristics that men and women bring to their jobs (education, training) • differences in the characteristics of the jobs that men and women do • discrimination