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Joint Economic Committee Examines GAO Report on Federal Pay Equity

On April 28, the Joint Economic Committee held a hearing, “Equal Pay for Equal Work? New Evidence on the Persistence of the Gender Pay Gap,” which detailed findings of the Government Accountability Office (GAO) report, “Gender Pay Gap in the Federal Workforce Narrows as Differences in Occupation, Education, and Experience Diminish.”

Chair Carolyn Maloney (D-NY) noted, “The report released today by the GAO provides additional evidence of the persistence of the gender pay gap, but the workplace setting is particularly troubling. The federal government should be a model employer, but today’s report tells us we have considerable work left to do to live up to that promise. The GAO finds that an 11-cent gap remains between men’s and women’s pay in the federal workforce, even after accounting for measurable differences like education, occupation, and work experience.”

She continued, “Moreover, the GAO previously has found that women with children earn about 2.5 percent less than women without children, while men with children enjoy an earnings boost of 2.1 percent, compared to men without children. So fathers enjoy a bonus, while mothers pay a penalty for their decisions to have children.”

Summarizing the GAO report, Andrew Sherrill, director of Education, Workforce, Income Security Issues at the GAO, said, “[W]e found that the pay gap — the difference between men’s and women’s average pay — in the federal workforce declined from 28 cents on the dollar in 1988, to 19 cents in 1998, and further to 11 cents in 2007. For each of the three years we examined, all but about seven cents of the gap could be explained by differences in measurable factors between men and women, including their occupations, and, to a lesser extent, their educational levels and years of federal experience. The gap diminished over time largely because men and women in the federal workforce are more alike in these characteristics than they were in past years.

Mr. Sherrill further explained, “While occupation, education, and federal experience accounted for much of the pay gap, the convergence between men and women with respect to these factors largely explains why the gap diminished over time:

  • Occupation: We found that the pay gap decreased in part because clerical, professional, and administrative occupational categories — which together accounted for 68 percent of federal jobs in 2007 — became more integrated by gender between 1988 and 2007. In particular, changes in the government’s clerical workforce explained a large reduction in the pay gap. In 1988, the clerical workforce — which accounted for 38 percent of all female federal workers — was among the lowest paid. From 1988 to 2007, the clerical workforce shrank in size by about 61 percent, and also became more integrated — i.e., the proportion of women decreased from 85 percent to 69 percent. In addition, the proportion of women in professional positions rose from 30 percent to 43 percent, and those in administrative positions rose from 38 percent to 45 percent.
  • Education: The pay gap also decreased as men and women in the federal workforce became increasingly similar in their levels of education. In 1988, only 23 percent of women held a bachelor’s degree or higher compared with 40 percent of men. By 2007, 41 percent of women held a bachelor’s degree or higher, compared with 47 percent of men.
  • Federal experience: Finally, men and women in the federal government became increasingly similar in their levels of experience. On average, men in 1988 had 14.4 years of federal experience, compared with 10.8 for women — nearly a four-year difference. By 2007, women had slightly more experience on average with 15.5 years of federal experience compared with 15.2 for men.

In each of the three years we examined, our model could not account for about seven cents of the pay gap. While we cannot be sure what accounts for this portion of the gap, it is possible that other factors for which we lacked data or are difficult to measure, such as work experience outside the federal government, could account for some of the unexplained gap. In addition, it is important to note that this analysis neither confirms nor refutes the presence of discriminatory practices.”

Diana Furchgott-Roth, senior fellow at the Hudson Institute, countered the assertion that pay gaps between men and women are the direct result of wage discrimination. She noted, “The 78 percent figure comes from comparing the 2007 full-time median annual earnings of women with men, the latest year available from the Census Bureau. The 2007 Department of Labor data show that women’s full-time median weekly earnings are 80 percent of men’s. Just comparing men and women who work 40 hours weekly, without accounting for differences in jobs, training, or time in the labor force, yields a ratio of 87.2 percent. These wage ratios are computed from aggregate government data and do not take into account differences in education, job title and responsibility, regional labor markets, work experience, occupation, and time in the workforce. When economic studies include these major determinants of income, rather than simple averages of all men and women’s salaries, the pay gap shrinks even more.” She continued, “A report by Jody Feder and Linda Levine of the Congressional Research Service entitled Pay Equity Legislation in the 110th Congress, declared that ‘Although these disparities between seemingly comparable men and women sometimes are taken as proof of sex-based wage inequities, the data have not been adjusted to reflect gender differences in all characteristics that can legitimately affect relative wages (e.g., college major or uninterrupted years of employment).’”

Ms. Roth added, “Many academic studies of gender discrimination focus on the measurement of the wage gap. Dozens of studies have been published in academic journals over the past two decades. These studies attempt to measure the contributing effects of all the factors that could plausibly explain the wage gap through an econometric technique called regression analysis. The remaining portion of the wage gap that cannot be explained by measurable variables is frequently termed ‘discrimination.’ Generally, the more explanatory variables that are included in the econometric regression analysis, the more of the wage gap that can be explained, and the less is the residual portion attributable to ‘discrimination.’ An analysis that omits relevant variables finds a greater unexplained residual. To take one study as an example, Professor June O’Neill, in an article published in 2003 in the economics profession’s flagship journal The American Economic Review, shows that the observed unadjusted wage ratio between women and men in 2000 is 78.2 percent. When data on demographics, education, scores on the Armed Forces Qualification Test, and work experience are added, the wage ratio rises to 91.4. The addition of variables measuring workplace and occupational characteristics, as well as child-related factors, causes the wage ratio to rise to 95.1 percent. When the percentage of females in the occupation is added, the wage ratio becomes 97.5 percent, an insignificant difference. In another study, Professors Marianne Bertrand of the University of Chicago and Kevin Hallock of Cornell University found almost no difference in the pay of male and female top corporate executives when accounting for size of firm, position in the company, age, seniority, and experience.”

Citing the American Association of University Women’s (AAUW) report,Behind the Pay GapLisa Maatz, director of Public Policy and Government Relations for AAUW, testified that not only does the pay gap exist among similarly educated men and women who are just starting their careers, but it widens over a ten-year period: “AAUW found that just one year after college graduation, women earn only 80 percent of what their male counterparts earn. Even women who make the same choices as men in terms of major and occupation earn less than their male counterparts. Ten years after graduation, women fall further behind, earning only 69 percent of what men earn. After controlling for factors known to affect earnings, a portion of these pay gaps remains unexplained and is likely due to discrimination.” She added that the pay gap can only be partially explained by personal choices, such as choice of major or choice of employment. “Despite some gains, many majors remain strongly dominated by one gender. Female students are concentrated in majors that are associated with lower earnings, such as education, health, and psychology. Male students dominate the higher-paying majors: engineering, mathematics, physical sciences, and business. Both women and men who majored in ‘male-dominated’ majors earn more than those who majored in ‘female-dominated’ or ‘mixed-gender’ majors. Women full-time workers earn less than men full-time workers in nearly every major, although the size of the gap varies. In education, a female-dominated major and occupation, women earn 95 percent as much as their male colleagues earn. In biology, a mixed-gender field, women earn only 75 percent as much as men earn, just one year after graduation.”

Ms. Maatz continued, “The kinds of jobs that women and men accept also account for a portion of the pay gap. While the choice of major is related to occupation, the relationship is not strict. For example, some mathematics majors teach, while others work in business or computer science. It is important to bear in mind that such choices themselves can be constrained in part by biased assumptions regarding appropriate career paths for men and women. Other differences in type of jobs also affect earnings. For example, women are more likely than men to work in the nonprofit and public sectors, where wages are typically lower than in the for-profit sector. AAUW’s analysis showed that men and women’s different choices can explain only some of the pay gap. After controlling for factors like major, occupation, industry, sector, hours worked, workplace flexibility, experience, educational attainment, enrollment status, GPA [grade point average], institution selectivity, age, race/ethnicity, region, marital status and children, a five percent difference in the earnings of male and female college graduates is unexplained. It is reasonable to assume that this difference is the product of discrimination.”

Randy Albelda, professor of Economics at University of Massachusetts-Boston, also testified.

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