Testimony to the House Democratic Policy Committee HB1250 Natalie Sabadish Policy Analyst, Keystone Research Center July 30, 2014

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1 Testimony to the House Democratic Policy Committee HB1250 Natalie Sabadish Policy Analyst, Keystone Research Center July 30, 2014 Good afternoon, Representative Donatucci, members of the House Democratic Policy Committee, and members of the public. My name is Natalie Sabadish, and I am a Policy Analyst for the Keystone Research Center and pursuing a graduate degree in public policy at Carnegie Mellon University. KRC is an independent, non partisan economic research and policy organization. A core focus of KRC s research is on the performance of the Pennsylvania economy from the perspective of typical families, including many working women. I am here today to speak in support of House Bill It has been over 50 years since President John F. Kennedy signed the Equal Pay Act into law and even longer since Pennsylvania passed its own Equal Pay Law. These were milestone pieces of legislation at the time, mandating equal pay for equal work. However, even President Kennedy maintained that, although the legislation [was] a significant step forward, much remains to be done to achieve full equality of economic opportunity. 1 By amending the state s Equal Pay Law and increasing penalties for unfair pay practices, HB1250 represents another important step towards combating discrimination in Pennsylvania. Women s labor force trends In Pennsylvania, women are playing an increasingly vital role in the labor market. At the turn of the 20 th century, very few women participated in the workforce. Most females stayed at home to look after the house and raise children, while men were the primary breadwinners. Women no doubt worked extremely hard, but this productivity was not rewarded in wages or formally recognized as part of the labor force. World War II was a turning point for working women. As scores of men went off to fight in Europe, women took their places in manufacturing and other typically male jobs to support the domestic war effort. The gender composition of the Pennsylvania labor force has changed drastically over the past century. The share of women participating in the labor force, meaning that they either are working or actively looking for a job, has increased steadily since 1979 and currently stands at 58 percent Pennsylvania. The majority of this increase occurred between 1979 and the late 1990s, and has been relatively flat since. Over the same time period, men s labor force participation in Pennsylvania has steadily fallen from about 75 percent in 1979 to 70 percent in Women now make up nearly half (47 percent) of the overall Pennsylvania workforce. 2 Many of these women are working mothers, primary breadwinners for their families, or are fighting to stay above the poverty line. 1 John F. Kennedy Presidential Library and Museum 2 Author s analysis of Economic Analysis and Research Network data (Current Population Survey) 1

2 The Gender Wage Gap While women are becoming an increasingly important share of the Pennsylvania workforce, they are still earning much less than men. The typical female worker in Pennsylvania earns only 81 cents for each dollar in median hourly wages that her male counterpart makes. The so called gender wage gap has been halved since the early 1980s, but the pace of decline in the gap is now so slow that we will not see pay equity for the next few decades. The wage gap declined for two main reasons. First, real median hourly wages for women steadily increased throughout the 1980s, 1990s, and into the early 2000s. For the past decade, however, female wage growth has stagnated, and real wages for women in Pennsylvania are nearly one percent lower than they were in Second, median hourly wages for men have been relatively flat over the past few decades and are currently lower than they were in both 1979 and The combination of these two forces led to the declining gender wage gap. 3 3 Author s analysis of Economic Analysis and Research Network data (Current Population Survey) 2

3 Over a 40 year career, the average woman in Pennsylvania will lose $463,000 in lifetime earnings due to the career wage gap. Among those with a college degree in the U.S., women will earn more than $700,000 less over a working life than their male peers. 4 Additionally, the gender wage gap may grow throughout a woman's lifetime. Among younger workers (age 25 to 34), woman earn about 85 percent of what their male counterparts make. For workers age 55 to 64, just before retirement, the gap is about 67 percent. Occupation segregation contributes to the gender wage gap Part of the gender wage gap can be explained by occupational segregation. There are two types of occupational segregation horizontal and vertical segregation. Horizontal occupational segregation refers to the concentration of various demographic groups across occupations, while vertical occupational segregation concerns the distribution within a certain occupation. Both types affect the female workforce, and both contribute to persistent gender pay disparities. Occupational segregation is a result of two major forces. Some of the phenomenon is due to self selection on the part of female workers, where women end up in certain occupations simply because they choose to. The remaining segregation can be attributed to employer discrimination in the hiring process or policies that screen out female candidates for non job related reasons. When women began to enter the labor market in large numbers, they tended to be employed in professions such as nursing, teaching, and childcare. Over the past few decades, women have 4 Arons

4 expanded their visibility in professional and managerial occupations, such as college professors, attorneys, physicians, and managers. Although some occupations have been trending toward further integration, other occupations remain greatly male dominated or female dominated. For example, 90 percent of child care workers, 80 percent of wait staff, and three quarters of cashiers in Pennsylvania are female. Alternatively, women comprise only two percent of carpenters and ten percent of engineers in the Keystone State. 5 Women are notably missing from Science, Technology, Engineering, and Math or STEM jobs where pay is higher than in non STEM fields and the gender wage gap is much smaller. Women are also under represented in leadership. Nearly a third of all lawyers nationwide are women, but only 19.5 percent of law firm partners are female. 6 Additionally, there are now 24 female CEOs at Fortune 500 companies. Although this is a record number, it still only represents 4.8 percent of these elite large firms. 7 The occupations in which women tend to be concentrated usually pay less than maledominated occupations. Nationwide, the top ten jobs held by women include secretaries and administrative assistants, elementary and middle school teachers, retail salespeople, and maids and housekeepers. 8 Women working full time, full year in these low paid, pink collar occupations are likely to have annual earnings that flirt with the poverty line, especially for women with children. More than twice as many women than men working full time are employed in occupations that pay less in median earnings than the federal poverty line for a family of four. 9 Occupations that have the highest concentrations of men are paid more than jobs that employ mostly women, regardless of education level. Economists have found that occupational segregation explains 35 to 40 percent of the gender wage gap. 10 They have also shown that occupational segregation is economically inefficient, preventing able people from moving into occupations where they could perform well and that would satisfy them more than the ones open to them. 11 Vertical occupational segregation also contributes to the persistent gender wage gap in Pennsylvania. This means that women are being paid less than their male counterparts even within an occupation. For example, in 2008, female lawyers and judges in Pennsylvania made almost $28,000 less annually than their male peers ($75,734 vs. $103,473, respectively). 12 Female CEOs earn only about 80 percent of what male CEOs make. 13 Even within the 20 5 Price, et al. 6 Catalyst Catalyst Glynn Hegewisch, et al Mouw 11 Hegewisch, et al Price, et al. 13 Hegewisch and Hudiberg

5 occupations that have the highest concentration of women, such as secretaries, waitresses, social workers, and nurses, female workers earn less than their male counterparts. 14 Workplace discrimination contributes to the gender wage gap Another contributor to the gender wage gap in Pennsylvania is workplace discrimination. Despite various legislation aimed at preventing gender based pay inequities, women across the state still face some discrimination in the hiring and promotion process, especially in maledominated industries. This unfortunate reality is largely a by product of shifting family structures and the emerging prominence of women as primary breadwinners. Workplaces have not adapted to these new structures by offering benefits like paid leave, child care, or flexible schedules. Even though more women are working, they are still more likely to pick up a sick child from school or take care of an aging parent, often taking off work to do so. Some researchers acknowledge the existence of a maternal wall, indicating the prejudice against hiring and promoting women with children based on the assumption that she will be less committed to her job. 15 Policies to shrink the gender pay gap Unfortunately, companies have not adjusted to reflect these changing workforce realities, and there has been very little legislative incentive for them to do so. HB1250 would expand upon the Pennsylvania Equal Pay Law, as well as similar nationwide legislation including the Lilly Ledbetter Fair Pay Act of 2009, by increasing the penalties for gender based pay practices. As long as the penalties outweigh the present value of the money saved by using unfair pay practices, even morally averse but profit maximizing businesses will adhere to the law s standards. Another proposal to decrease the gender pay gap is to raise wages at the bottom of the distribution. As has been demonstrated, female workers tend to be concentrated in low paying occupations, including many minimum wage jobs. Raising the wage floor will help the many women earning the minimum wage as well as those just above the minimum. In fact, over half (57 percent) of workers in the state that would be see a wage boost by increasing the minimum wage to $10.10 per hour are women. 16 In addition to raising the overall federal minimum, increasing the tipped minimum wage in Pennsylvania currently at $2.83 an hour would help the large swaths of women working in occupations such as waitressing and bartending. These workers rely mostly on tips and are particularly hard hit in economic downturns, when consumers pull back on spending. Women account for two thirds of tipped workers. 17 Raising both the overall minimum wage and the tipped minimum wage would help working women, many of whom are mothers, earn sufficient 14 Hegewisch, et al Noguchi 16 Economic Policy Institute 17 Allegretto and Cooper

6 wages to support their families. These policies would also start to close the gender wage gap, as many minimum wage occupations are dominated by female workers. It is time to improve the Pennsylvania s Equal Pay Law, an important but outdated piece of legislation. We need to identify policies that will be successful in further shrinking the wage gap and making workplaces more hospitable to women. These policies going forward must address the root causes rather than only implementing results based mandates. Addressing these issues and reducing the gender pay gap will help working women and Pennsylvania families, as well as improving economic efficiency and providing countless social and economic benefits throughout the Commonwealth. By increasing penalties for discriminatory pay practices, HB1250 is a good step in the right direction. Thank you for the opportunity to testify today. I would be happy to answer any questions you may have. 6

7 References Allegretto, Sylvia and David Cooper Twenty Three Years and Still Waiting for Change. Economic Policy Institute. for change tippedminimum wage/ Arons, Jessica Lifetime Losses: The Career Wage Gap. The Center for American Progress Action Fund. Catalyst Catalyst Quick Take: Women in Law in the U.S. law us Catalyst Women CEOs of the Fortune ceos fortune 1000 Cooper, David Raising the Federal Minimum Wage to $10.10 Would Lift Wages for Millions and Provide a Modest Economic Boost. Economic Policy Institute. wage state tables.pdf Glynn, Sarah Jane. 2012, April 16. The Top 10 Facts about the Wage Gap. The Center for American Progress. top 10 factsabout the wage gap/ Hegewisch, Ariane, Hannah Leipmann, Jeffrey Hayes, and Heidi Hartmann Separate but Not Equal? Gender Segregation in the Labor Market and the Gender Wage Gap. Institute for Women s Policy Research. and not equalgender segregation in the labor market and the gender wage gap Hegewisch, Ariane, Claudia Williams, and Vanessa Harbin The Gender Wage Gap by Occupation. Institute for Women s Policy Research. gender wage gap by occupation 1 Hegewisch, Ariane and Stephanie Keller Hudiberg The Gender Wage Gap by Occupation 2013 and by Race and Ethnicity. Institute for Women s Policy Research. gender wage gap by occupation and by race andethnicity 2013 John F. Kennedy Presidential Library and Museum. 1963, June 10. Remarks on signing Equal Pay Act of Viewer/Archives/JFKPOF aspx Mouw, Ted Occupational Segregation and the Gender Wage Gap Revisited. University of North Carolina, Chapel Hill. 7

8 e%20gender%20wage%20gap.pdf Noguchi, Yuki. 2013, June Years after The Equal Pay Act, Gender Wage Gap Endures. NPR. years after the equal pay act genderwage gap endures Price, Mark, Stephen Herzenberg, Natalie Sabadish, and Tiffany Scott The State of Women in the Pennsylvania Workforce. Keystone Research Center. 8

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