Inquiry #9

Gender Income inequality

Report

Introduction

Income inequality is causing a lot of negative effects to people around the world. It is not only affecting people of the same gender but it is a huge problem with how much money women get paid compared to men. Throughout this inquiry we will explain what income inequality is, state the different problems that this issue is causing and a solution to mitigate and stop income inequality between people on the same job. The solution to this problem is a combination of increasing the minimum wage, stop basing employee pay on salary history and implement fair scheduling practices.

What is income inequality?

Income is the money that people receive from the work that they do, it normally includes the money we get from services we provide. There are two main types of wealth inequality, income inequality and wealth inequality. Income inequality is basically how this income is being distributed, because with income you build up your wealth if you make good money. Income inequality exists when there is an unequal distribution of incomes across various groups of people and households. However it may also be the incomes of men versus women, or white people versus African Americans. We usually express income inequality in percentage form. For example we may say that the top 10 percent of earners represent fifty percent of a country’s total income. Income distribution looks at how much different socioeconomic groups in a country, region or the world earn. To define income inequality we need to know what the income distribution is. Differences in income between individuals or families, between different groups, areas and countries.

We will explain different income inequality between race, jobs but gender will be the main focus in this report because it is the main point of income inequality.

Income inequality and automation

As What is income inequality explains, there is another strong factor that leads to income inequality. It is automation. Robots, computers and AI threaten to aggravate income inequality. The Institute for Public Policy Research warns that increasing automation will affect low range workers the most. Low tier jobs are more likely to be automated than higher income jobs.

What are the effects of income inequality?

There are many different effects of income inequality and none of them are good. The three main effects we found of inequality are effects on health, poverty, and housing. None of these effects are good.

Housing:

As income inequality is becoming a more known issue there are more effects being found. The first we will be talking about is housing troubles. Income inequality can affect how people can live, for example people not being able to afford a house because of their low income but they still need somewhere to live so they take the second most reasonable option and rent a house. However when people rent houses sometimes the landlord displaces families from their apartments/ homes. After watching Home renters' powerless TED talk we found in New York these so-called slumlords. They do this because in New York there are under 50% of rentable homes that are controlled and are only allowed to raise the rent price, slum lords put up the price however they want and when they like and end up displacing families from their homes. These actions can have devastating effects on the family's upcoming generations for years to come.

However there are some things that can be done to reduce and or stop this from happening. One of the ones we found very effective is a website where the house is posted and previous tenants can post feedback anonymously and ratings on the house. This might mean that the slumlords’ description of an apartment is great and looks pleasing, but if you look at the description from the public and it says: hot water problems (9months ago), rodents (3 months ago) etc. from this website the public can take out the slumlords and pick better homes with good landlords. With this rating system, the public will start pushing landlords and landowners to make better houses, or renovate the homes. The way that the person talking in Home renters are powerless TED talk put it is that the crowd will start pushing on what the public needs.

Health:

Two British researchers Richard G. Wilkinson and Kate Pickett using statistics from 23 different developed countries and the 50 states of the US discovered that social and health problems are lower in countries like Japan and Finland or another example would be states like Utah or New hampshire. These states and countries all have high levels of equality. However countries like the US or the UK or even in states like Mississippi and New York all have large differences in household income inequality. Tend to have higher social and health problems. Access to clean water, full stomachs, and warmth all have been linked to better health all round and longer life spans. This theory of higher material living standards leads to longer life expectancy still stands true to this day but mainly in poorer countries where the average life expectancy rises rapidly as does the income per person rises. However this has now slowed and eventually plateaued in the middle income countries in the recent decades.

Different countries life expectancy relationship with income per person

About the graph

This graph shows the average life expectancy of different countries on their national income per person. As you can see the countries with the highest income aren't necessarily the ones with the longest life span expectancy. Even though the USA has the highest average income per person they have the fourth lowest life expectancy. I am not trying to say that countries with the lowest income per person live longer because all countries are very different in many ways. This makes it hard to find a pattern in this chart.

Poverty:

It is obvious that income inequality will affect how people live. Families and people that have got a good income, have enough money to feed their family, pay the bills, own a home and not have to rent as well as doing extra things with their money. On the other hand, this income inequality is causing some problems. People that get a low income due to either not having the right skill for the job or they do have the skill but get underpaid. What this is doing is just widening the gap between rich and poor people’s way of living. The rise in inequality, in turn, has been dominated by inequality of pre-tax, pre-transfer and market incomes. This means that making real progress on pushing the poverty rate down going forward would be helped enormously by checking or even revising this growth in market income inequality. In other terms, this means that we need wages to up for those at the bottom and middle of the income distribution.

What jobs have the biggest income inequality and why?

The current top job with the biggest income gap is a personal financial advisor. This job has the biggest pay discrepancy between men and women. Even as wages for women in the occupation increased and wages for men decreased last year. According to USA today a female personal financing advisor will only earn as much as 58.9% as much as a man would in the same position. Women personal financing advisors median weekly income is $979 US dollars while men’s is $1662 per week. While the pay gap is certainly to a large extent the result of gender bias, there are other causes that contribute to the pay gap. One explanation is that men and women tend to gravitate towards different jobs, at different pay levels. Of course, too may have deep roots in years of gender bias and enduring traditional roles today.

It is however common sense if someone has different qualifications than others, a different personality or experience which will definitely change the wage between two individuals. For example if two people of the same gender, and are both architects, one of them has 25 years of experience in the job and the other has only 5, this will change the wage and pay gap between the two people. This also includes qualifications in some cases. This basically proves that income inequality does not always have to do with race and gender. In some cases this could be unfair if two people have similar experience, qualifications and skills on the job and one of them gets paid a lot less than the other.

Who is mostly affected by income inequality and why?

There are two main groups of people that are affected by income inequality, these being genders and races. When I found that income inequality does have to do with race and gender I was shocked.

Race:

An example of race income inequality was shown on this website on income inequality between races. This source shows that in 2016 the average household income in the U.S with the head of the house being black was around $140,000. When I first saw this I thought that race wouldn't change the income and I was expecting most households' average income to be similar to this. However when I found that the average income for a white household was around 6.5 times more than that of an average black household. This got me wondering what is the cause of the large income gap and the inequality of those between that 140,000 of a black household and the 901,000 of an average white household. The fact that there was such a large income gap amazed me, but also the fact that blacks, on average, have considerably less wealth than whites is troubling enough. But then realising that the inequality of incomes can most definitely lead to inequality of opportunities between families meaning this problem will not change by itself. The economic opportunities provided by wealth range from ensuring composition against disruption to a household disposable income ( such as surprise medical expenditures or unemployment spells) to enabling access to housing, good public schools, and postsecondary education.

Gender:

Gender equality has become a more primary topic of discussion in American politics over the past few years. One of the main topics being targeted is the fight against the gender pay gap and instead having income equality between all genders. Even in today's world most american women only earn as much as around 82 cents for every dollar the average american man would earn. And this is average for most jobs but even in some jobs the wage gap is even larger between genders. However these pay figures alone don't tell the whole story. Because there are several non-obvious explanations for the gender pay gap. For example men are more likely to work longer hours and to be classified in higher paying positions within certain occupational categories.Some times this can be because the mother is looking after the children so the husband can work longer. Even with such circumstantial factors taken into consideration there is still a gender pay bias in the labor market in the United States.

As you can proberly tell the gender pay gay is a very large and important issu in our modern day socity. The following are some of the factors that contribute to the pay gap and inequality between men and women of today's world. The first factor contributing to the gender pay gap according to Employment New Zealand is that women are more likely to be clustered at the middle or bottom roles in an organisation or business where the pay is not as good as it would be at the top half roles in the job. The second reason is more and more women now are trying to combine part time work with primary caregiving. This goal is more easily achieved in a lower paying and lower hours job, position, or occupation. Therefore a lot of women's access to better paying jobs is restricted due to this.

Numerical data:

Key:

Men’s income

Women’s income

This graph above shows the difference between men’s and women’s average yearly income for a number of jobs in the US. This graph clearly shows that women, for every single job, get paid less than men. For some jobs the gap isn’t that big but some it is huge. The top axis of the graph shows the pay of each job per year in thousands. The dot plot compares the pay between men and women. For example a male doctor & surgeon gets paid around $104K US dollars ($148K NZ) and a female surgeon gets paid a mere $64K per year ($91K NZ). This is a shocking difference in pay, and this is unfair because both the male and female surgeons will most likely be at the same skill level, and a female gets paid less than a male. According to Male and female surgeon pay gap that male and female surgeons are taking the same amount of time to perform common procedures but women are still earning 24% less per hour. In conclusion the information that this graph is showing us is that females are paid less than men in all of the jobs listed above.

What could be done to mitigate the pay disparities between people of different gender doing the same jobs?

According to 9 Strategies For Narrowing The Gender Pay Gap In 2021 there are many ways to lower the pay gap between people of different genders in the same job. After doing some research we found out that the problem mainly revolves around gender inequality. So we then found and listed below all of the possible solutions that we found relevant and that could be effective.

Raise the minimum wage:

Womens over-representation in low-range work, such as service sector jobs and tipped employment, is one of the factors that contribute to the gender pay gap. Women represent nearly two thirds of workers who receive the federal minimum wage, raising the minimum wage would have a rapid effect in terms of narrowing the gender pay gap and lifting women out of poverty. Raising the minimum wage would also positively impact all low range workers regardless of their gender.

Increase pay transparency:

If you do not know how much your workmates are making it can be difficult to determine whether or not you are being paid fairly for what you are doing. Many workplaces actively discourage employees from sharing salary information, while others foster a culture of secrecy that prevents employees from being comfortable disclosing their pay to co-workers. So if people start being more transparent in how much they earn people will start to realize if they are being paid fairly and if they are not happy they can start protesting to their employer for a change in pay.

Implement fair scheduling practices:

Unpredictable schedules affect all kinds of workers but they can have a strong impact on working mothers. This is because they have to constantly change schedules, making it difficult to arrange childcare and family schedules. Fair scheduling practices can help close the gender pay gap by allowing employees to ask for scheduling accommodations and reducing inconsistent and unpredictable working schedules. As we looked through 9 Strategies For Narrowing The Gender Pay Gap In 2021 we found out that several states in America and cities have implemented “fair workweek” laws designed to increase predictability and flexibility when it comes to employee work schedules. These policies can help to make workplaces more family-friendly and narrow the gender pay gap by providing a more accommodating work environment for working parents and mothers.

Increase access to childcare:

Child care in the US is more expensive than ever, with costs exceeding that of a college tuition in many states. As a result of these high costs a lot of families are finding this unaffordable especially if they are only earning minimum wage. In many families it makes more financial sense for one parent (normally the mother) to leave their work in order to care for their child rather than staying in a low pay job that hardly covers the cost of the child's care. increasing access to affordable child care would help narrow the income gap between gender by retaining more working mothers in the workforce. It would also help working parents better balance the demands for their families and careers.

Stop basing employees pay on salary history:

When employers are negotiating salary with their new applicants or employees, they often ask their employees about their salary history in their previous positions or jobs. In some cases this strategy for hiring people is used to justify low pay based on how much the employee earned in his or her previous job. Basing employee pay on salary history can also disproportionately affect women who are already more likely to earn less than their male peers and coworkers. If employers keep asking for an employees previous salary this cycle of unequal pay will continue in all jobs and positions.

We found the best way to resolve this issue was instead of basing new employees' pay on their salary history. All employers should consider setting a clear salary range for the position they are hiring for. Some states in the US have taken the first step to an equal income future for everyone by passing legalization to prevent employers from requiring their employees to give their previous salary. Therefore the employee will not be forced to tell the employer their past pay and the employer will be able to give them the right pay based on what the position is worth. Rather than basing the pay on previous income.

Improve work life balance:

According to the European institute for Gender equality, all families can help reduce the gender pay gap by having a better work-life balance. A better work-life balance will help because a lot of women with children often take additional time off work to care for their children, with this happening they might find it more difficult to balance the demands for their job and their family. So most women often end up working in a lower paying job with more flexible hours, only working part time, or some families find it better for one parent (nomaly the mother) to leave the workforce entirely.

Employers that make a commitment to having a better work-life balance can create a welcoming and flexible working environment. Having a friendly environment will help attract and retain working mothers and parents. Workplaces having a better work-life balance can have a positive effect on everyone and not just families with children or mothers.

Fix pay disparities:

The reasons behind the gender pay gap aren’t simple. In some cases it can be difficult to combat unconscious bias and gender differences when it comes to hiring practices and salary negotiations. However employers and HR representatives should take steps to correct the gender pay gap within a workplace regardless of the cause.

One way to do this is for employers to conduct a pay audit in order to determine whether men and women are being paid fairly. Then, employers can take steps to correct the disparity by offering pay increases to employees who they determine are making less than their peers. By regularly examining and adjusting employee pay, individual employers can help to promote an equitable work environment where everyone is paid fairly.

What is the best solution to correct this and end pay inequality for the same jobs?

Because there are so many different factors that influence the gender pay gap there is not just one solution to end income inequality. These solutions will not be an instant fix but over time we can make a significant change to income inequality between all genders and races. There are a variety of strategies and solutions to mitigate gender pay inequality. So, to find the best solution we made a PMI and analyzed every question with different criteria. After analyzing we came up with the best solution: a combination of raising the minimum wage, stop basing employees pay on salary history and implement fair scheduling practices. We think these are the best solutions because for each solution we looked at the efficiency of the solution, and after a bit of critical thinking around the benefits these solutions would have on workers and how long it would take to accomplish the solution. From this analysis we decided the solution.

Conclusion

In conclusion we think that the solution that we chose was best from different points of views, we took in mind the benefits to workers, the time it takes to achieve the solution, the effectiveness of it and lastly how it would affect employers. So after all these different factors in mind we thought that a combination of three solutions would be best to mitigate, and possibly solve this gender income gap. In order to answer our thesis: how should we lower the income gap between different genders in the same job? We thought that the solution combination we chose can solve the problem.

Bibliography

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Meet the Authors

Dionissi

Aliprantis

Senior Research Economist

Dionissi Aliprantis is primarily interested in applied econometrics. “What Is Behind the Persistence of the Racial Wealth Gap?” Website, Federal Reserve Bank of Cleveland, 28 Feb. 2019, www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/2019-economic-commentaries/ec-201903-what-is-behind-the-persistence-of-the-racial-wealth-gap.aspx.

Stebbins, Samuel, and Thomas C. Frohlich. “20 Worst Paying Jobs for Women.” 247 Wall St, 24/7 Wall St., 20 Mar. 2020, 247wallst.com/special-report/2018/11/19/20-worst-paying-jobs-for-women-3/.

Stebbins, Samuel, and Thomas C. Frohlich. “20 Jobs with the Largest Gender Pay Gap for Women.” USA Today, Gannett Satellite Information Network, 5 Dec. 2018, www.usatoday.com/story/money/careers/2018/12/05/gender-pay-gap-2018-worst-paying-jobs-women/38565069/.

“Inequality Is the Main Cause of Persistent Poverty.” Economic Policy Institute, www.epi.org/blog/inequality-main-persistent-poverty/.

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