Prosperity Watch (Issue 48, No. 3)

April 21, 2015

Wages have rightly been front and center in the discussion of North Carolina’s economic recovery that officially began in 2009 but failed to deliver improved well-being to all in the state. Women, in particular, continue to face ongoing barriers to both an economic recovery as well as equal pay in the workplace. The slight closing of the earnings differential between men and women that occurred in the recovery period has perversely been driven by wage declines that have been greater for men than women. Ultimately, it matters not just that there is a earnings difference by gender but how it is closed.

It is important to note that the difference in earnings for women and men persists, even when accounting for differences in occupations and other factors. In fact, a recent analysis of data from the U.S. Census Bureau on median wages in 342 occupations found that just nine occupations saw women earning more than men. Analysis of wages by educational attainment also points to the lack of wage equity for the typical female worker who has the same level of education as their male equivalent. In fact, the typical women’s wage differential from the typical man with the same education grows with more education. Finally, the wage difference for men and women is far greater for women of color. According to the Institute for Women’s Policy Research (IWPR), Latina and African-American women in North Carolina earn just half and two-thirds of white men’s median earnings, respectively.

Closing the earnings difference by gender, according to the IWPR, will not happen under current trends until 2058 for the nation. For North Carolina, the difference in earnings between women and men will not close until 2064.  That translates into 60 years of underperformance in the state economy. With lower earnings, women contribute less to the economy in the form of purchases and investments than otherwise would be possible given their work and productivity. Women are also more likely to face economic hardship, through living in poverty and struggling to make ends meet when they are the sole breadwinner.

Looking back at median wage levels by gender since 1979 provides important insight into when and how progress has been made to ensure earnings are on par across genders. In 1980, the difference between women and men stood at its highest level in the 30 year period, a difference of $4.59 per hour. In the pre-Great Recession period, men’s wages rose to a peak of $17.83 by 2002, an increase of 14 percent since 1979. Meanwhile, women’s wages rose at a faster rate over the same period, by 30 percent, to reach $14.57 in 2002. The difference in earnings in that year between men and women was $3.26. The typical woman’s wage peaked in 2009 at $15.57 and then begin to fall.

The Great Recession saw declines across the board for the typical (or median) worker in North Carolina and, despite the official recovery, those declines have continued. In 2014, the typical man eanred $1.31 less than they did in 2009. Women’s earnings in 2014 were $0.97 less than in 2009.

A Thirty Year History of Failing to Boost the Economy through Equal Pay

First and foremost, the way to see genuine improvement in women’s earnings relative to men’s and boost the economy requires raising all workers wages. But to ensure that women workers earn wages that can boost the economy, however, targeted policies will be needed. Among policy tools that have proven effective at bring women’s wages in line with men’s wages are: “comparable worth” laws that require equity in pay for those working in similar occupations; greater transparency in wage earnings within places of employment; addressing the tipped minimum wage; and the elimination of penalties for women who have caring responsibilities through the enactment of paid sick days and other work/family policies. Addressing the difference in wages will also require a system of skills training and education that ensures that pathways into non-traditional occupations—often that pay higher wages—are accessible to women and that women are supported into those occupations.

For our state to bend the trend line for women’s wages upward and in favor of boosting the economy, North Carolina needs public policies that promote pay equity.