Fall

Running head: WAGE INEQUALITY

Wage Inequality
Review of Literature
Areli Garcia
University of Texas at El Paso

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WAGE INEQUALITY
Abstract
Wage inequality is an issue that has been brought up throughout the years because
progress has been made but the wage gap has not been able to fully close. After being
able to define what wage inequality is, the other research questions will be easier to
answer. The research questions are as follows: What is wage inequality, what are the
causes of wage inequality, what can we do to close the wage inequality gap, and what
benefits will closing the gap do to the economy. The wage inequality gap can be

observed further apart or closer together depending on its location. Many may argue that
the wage gap is due to poor decision of women of all categories (regardless of age, race,
or sexual orientation). Women are accused to cause the wage gap that affects their low
wage by poor decisions in education and prioritizing in family, although discrimination
has more support for the wage gap. To reduce the wage gap it can be broken down to
different levels within the system, not only must women have to learn more in regards to
math or science (skills that are mostly strived on) but the government can implement laws
that will prevent further discrimination, and employers can have programs that will be
unbiased and fair on the distribution of pay. In closing the gap the economy will strive
because that money will be going back to the government in more than one way, such as
making more women join the workforce because they have that extra income that they
need.

WAGE INEQUALITY
Wage Inequality
Review of Literature
With the recent presidential campaigns several issues have been brought up
including wage inequality. The gap for wage inequality seems to be growing more and

more each year, seen between the wages of men and women, young and old, and in racial
and ethnic groups, this affects everyone. Some people may argue that there is
discrimination by employers, others say that their education led them to be paid less, but
through statistics and facts the issue will be regarded.
Information for this issue can be traced back to a very long time ago but it has
significantly increased since the 1970s. There are several ways to close this wage
inequality that is in the United States, not only have both political parties gotten the facts
of wage inequality but the people will as well. The way to understand how wage
inequality has impacted the lives of Unites States citizens is to have the following four
questions answered:
1.
2.
3.
4.

What is wage inequality?

What are the causes of the gender pay gap?
How do people reduce the wage gap?
How can closing the gender pay gap help the economy?
Wage inequality cannot be defined with income distributed in an uneven manner

but how, why, and who it involves because this will help determine how we can reduce it
and how it will benefit society overall.

WAGE INEQUALITY
What is Wage Inequality?

Wage inequality is the extent to which income is distributed in an uneven manner

among population. Such wage differences can be linked to understandable causes may
nevertheless be tainted with discrimination. Wage inequality for similar work may occur
within teams or departments in terms of the qualifications needed for its proper
execution. Therefore it can be observed between men and women performing similar
jobs or tasks and should be rewarded equally and be receiving the same hourly wages.
This implies that their type of contract (fixed or not) or duration of their working week
(part time or full time) cannot serve as a pretext for unequal pay (Mendelson & Priester,
2015).
Equal pay is crucial for all women, whether they are single, married, mothers,
transgender, homosexual, young, old, or of color. To their white male counterpart;
African Americans make only 63 percent, Latinas make 54 percent, and Asian American
make 85 percent. Never-married women without children who work full time, year round
are typically paid 73 cents for every dollar paid to me who work full time. Transgender
women make less after they transition, one-third to be exact. Lesbian women have a
median personal income of $38,000, compared to $47,000 for homosexual men and
$48,000 for heterosexual men. Women of 15-24 working full time, year round are
typically paid 91 cents for every dollar their male counterparts are paid. Among older
women, the gap is larger getting typically paid 72 cents (NWLC, 2016).
Wage inequality can also be observed depending on location, according to the US
Bureau of Labor Statistics (2016) larger areas, especially in the Northeast and on the
West Coast, typically have greater wage inequality, while smaller areas, many of which

WAGE INEQUALITY

are in the South and Midwest, have less inequality. Metropolitan areas with high
concentrations of employment in higher paying occupations also tend to have greater
inequality. Data shows that the 90th-percentale annual wages in the United States for all
occupations combined was $88,330 in 2013, and the 10th-percentile wage was $18,190.
Real annual wages increased for the highest paid workers and decreased for the lowest
pad workers. Nominal wages for both measures increased, but the 90th-percentile grew
faster than the 10th-percentile, this pattern hold for most metropolitan areas (BLS, 2016).
What are the causes of the gender pay gap?
The causes of the gender pay gap can range from education, occupation
(profession or trade), sector, large or small company, working part time or full time, and
additional training on the job. Men and women typically make different choices, relating
to gender than the matter of free will. For example, if a woman were a mother and wants
to continue her education she will want to work around the schedule that will be more
easy in regards to her family. Another example is that men a generalized to have a more
flexible schedule despite him being a father therefore they are given more hours.
Economic-based arguments suggest that the gender pay gap was derived primarily
from womens behaviors and preferences, and ignored any potential institutional or
discriminatory barriers. In earlier research literature argued that the pay gap is caused by
decisions by women to focus on domestic activities rather than education and the
development of their own human capital. Through this earlier research it was stated that
the effect of the education differential worsens when women take long breaks from the
workforce to have children. Recent data has showed that data should not show that, it
should show that women are penalized less for time spent out of the labor force if they

WAGE INEQUALITY
choose predominately female occupations that if they choose occupations more typical
for males, thus the gap could be explained by discriminatory policies rather than
education gaps.
While there have been advancements in ensuring female access to high-paid
professions, women are more likely to gain positions where there are a shortage of male
applicants. Additionally, some women in this situation have the internal inequalities,
including barriers to advancement and continued disparity in household responsibilities.
If the job environment is female dominated this can influence pay practices such as the
wage gap of 45% or more that gender bias in the distribution of bonuses and
performance-related pay in more than half the cases the gap for discretionary
performance-related pay (Hill, 2016).
How do people reduce the wage gap?
There are several ways to reduce the gender wage gap. The way women can

reduce the wage gap is by the following; women can choose to further education knowing
what is demanded to be employed, to finish this education once you started, choose an
occupation that is many sided (learn skills that can be applied widely), negotiate your
salary at each new career step, keep learning and use training-on-the-job offers or workrelated courses (the labor market changes constantly), and to keep an eye on your pension
fund/rights.
What employers can do is to provide transparency of wages and have an open eye
for promotion opportunities for both men and women alike by conducting salary audits to
proactively monitor and address gender-based pay differences. The employer may also
facilitate the combination of working and family life, especially when kids are still small,

WAGE INEQUALITY

by providing flexible schedules for both men and women parents. Employers may
forestall the firing of pregnant employees and create safe and healthy working conditions
for pregnant workers (Dragstra & Osse, 2016).
Trade unions and employers association can agree to not allow pay gaps in
companies to surpass certain levels, stating a legal minimum wage that is easy to enforce.
Both organizations have an interest that allow women to grow in their jobs and make
careers which is helpful for women to at least be in the same plane field as men (Europa,
2016).
Political organizations and the government can assist by creating a proper worklife balance and the provision of adequate education and training for all age groups. The
Paycheck Fairness Act would improve the scope of the Equal Pay Act (which has not
been updated since 1963), with stronger incentives for employers to follow the law,
enhance federal enforcement efforts, and prohibit retaliation against workers asking about
wage practices. Women, their partners, family members, colleagues, social partners,
political parties, parliament and government have a stake in well educated women, who
use their skills and knowledge, earn their own incomes, pay taxes and obtain economic
independence while doing so, thus avoiding ending up poor and poorer still as they grow
old (Bassett, 2012).
How can closing the gender pay gap help the economy?
The closing of the gender pay gap will help the economy by making more profit
to the economy as a whole. Women have played a vital role in employment and
economic growth and their skills necessary for the economic and social development of
out societies.

WAGE INEQUALITY

The undervaluing of womens work and the underutilization of womens skills is a

lost resource for the economy and for society at large. According to Gupta (2015), If
that gap were to close and women were to be paid the difference, economist Heidi
Hartmann, president of the Institute for Womens Policy Research, estimates that the
stimulus effect would grow the U.S. economy by at least three to four percentage points.
The $800 billion economic stimulus package that Congress passed in 2009 to bail banks
out of recession, by contrast, is estimated to have grown the GDP by less than 1.5 percent
overall.
Women are more likely to personally stimulate the economy by spending the
additional income they receive. Many women live in poverty and need every income of
their paychecks to support themselves and their families. Women currently make up 70
percent of Medicaid recipients and 80 percent of welfare recipients, but closing the wage
gap would allow them to be less reliant on federal assistance. Paying women more would
give them a bigger financial incentive to enter the workforce adding 3 to 4 percent to the
size of the US economy (Gupta, 2015).
Not only is wage inequality still affecting the US society but also there are several
ways to close the wage gap. Not only must people be informed with what the wage
inequality gap is but the causes of the gap. In knowing this information it can be
established that there are ways to close it regardless of position, it is a group effort like
anything that affects the US government. Because everyone can be involved in changing
the wage gap it makes it reasonable that everyone in the US is going to benefit.

WAGE INEQUALITY
References
Mendelson, A., & Priester, M. (2015, November). Income Inequality | Inequality.org.
Retrieved from
http://inequality.org/income-inequality/
The Wage Gap: The Who, How, Why, and What To Do - NWLC. (2016, April 1).
Retrieved from
https://nwlc.org/resources/the-wage-gap-the-who-how-why-and-what-to-do/

Measuring wage inequality within and across U.S. metropolitan areas, 200313: Monthly
Labor Review: U.S. Bureau of Labor Statistics. (2015, September). Retrieved
from
http://www.bls.gov/opub/mlr/2015/article/measuring-wage-inequality-withinand-across-metropolitan-areas-2003-13.htm
Hill, C. (2016). The Simple Truth about the Gender Pay Gap (Spring 2016). Retrieved
from
http://www.aauw.org/research/the-simple-truth-about-the-gender-pay-gap/
Dragstra, D., & Osse, P. (2016). Frequently Asked Questions about Gender Pay Gap.
Retrieved from
http://www.wageindicator.org/main/wageindicator-15-years/frequently-askedquestions-about-gender-pay-gap
Why is it important to tackle the gender pay gap? (2016, February). Retrieved from
http://ec.europa.eu/justice/gender-equality/gender-pay-gap/tackle/index_en.htm
Bassett, L. (2012, October 24). Closing The Gender Wage Gap Would Create 'Huge'
Economic Stimulus, Economists Say. Retrieved October 16, 2016, from

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http://www.huffingtonpost.com/2012/10/24/gender-wage-gap-economicstimulus_n_2007588.html
Gupta, P. (2015, October 24). Equal pay, gender wage gaps and "constantly moving
goalposts": Review of 40 years of research - Journalist's Resource. Retrieved from
http://journalistsresource.org/studies/society/gender-society/equal-pay-genderwage-gaps-moving-goalposts-research-review