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"Women Are Gaining Ground on the Wage Front"
Source: The New York Times, December 31, 2004. "Women Are Gaining Ground on the Wage Front," reports economics correspondent Louis Uchitelle. Good news, right? Well, maybe not as good as we might think at first. The gender wage ratio, calculated by dividing women's median wage by men's median wage, is up to .8 or 80 percent. (This wage ratio is correlated with a wage gap of .2 or 20 percent, since the wage gap is calculated as 100 – wage ratio.) This represents a dramatic improvement from several decades ago. But the gender wage ratio can increase for either of two reasons: (1) women's average wages can increase or (2) men's average wages can decrease. Some of the closing of the gap, unfortunately, has been caused by option #2. The concepts of noncompeting groups and the Theory of the Dual Labor Market introduced in Chapter 28 help explain why this has occurred. Men and women frequently work in different occupations and industries. Some of this difference is due to self-selection, but some is due to a type of discrimination called occupational segregation. This is a different kind of discrimination than the kind of employment discrimination—unequal pay for equal work—demonstrated in Figure 3 on page 672. Traditionally, men were hired in primary markets and women were concentrated in secondary markets. Primary market jobs were great jobs. But some of those great jobs, especially unionized jobs in manufacturing, have been particularly vulnerable to globalization. Job layoffs and wage cuts have reduced the status of these jobs so that the wages of men without college degrees have not kept pace with inflation. At the same time, women with college degrees have gotten greater access to primary markets, especially in the still-expanding service sector. To some extent, women and men with college degrees are no longer classified as noncompeting groups. But they still may be segregated by industry, even when they work in management positions. (In the article, for example, the wife is in management, but supervises nurses, a traditionally female job in the service sector.) While women managers still earn less on average than male managers, they earn more than women stuck in secondary jobs. So men's median wages are declining because those without a college education are losing ground. Women's median wages are declining because those with college degrees are gaining ground. Both trends show up as an improvement in the gender wage ratio. Questions for Discussion
"College Degree Still Pays, but It's Leveling Off"
Source: The New York Times, January 13, 2005. In a box on page 668 of Chapter 28, your text notes that "A College Degree Is the Ticket out of Poverty." One of the reasons you are attending college (but hopefully not the only reason) is that college graduates earn more than high school graduates. The wage premium for college graduates rose during the 1980s. But in recent years, according to this article, it has leveled off at around 45 percent. The reasons for and implications of these trends are described in this article. The author, economics reporter Louis Uchitelle, describes the findings of some research papers presented at the largest annual meeting of economists, sponsored by the American Economic Association. Combining the information in this article with the box in your text, we find that the benefits of a college education are declining at the same time that costs are increasing. Should you conclude that you should not bother going to college? Why or why not? Questions for Discussion
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