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Preventing another women’s wage lost decade

The Institute for Women’s Policy Research reports that, on average, women are finding it harder to recover from the recession than men.  As of October 2011, the “recovering” economy has added 1.8 million jobs for men but only 465,000 jobs for women.

Both figures fall far short of what’s needed.  The IWPR estimates that men have regained only 30 percent of the jobs they lost during the recession, women just 17 percent.

There has always been a gender gap in jobs and wages, but until recently it was narrowing.  In the 1980s and 1990s, American women’s wages rose rapidly toward  —  but never reaching —  parity with men’s.  Since the year 2000, however, women’s wages have stagnated.

The median wage for full-time employed women over the age of 25 rose from $36,934 in 2000 to $38,294 in 2010, adjusted for inflation.  That’s a total increase of 3.7 percent over ten years, or just 0.4 percent per year.

Less than half a percent per year is very slow growth, but at least it’s growth.  Over the same period the median wage for full-time employed men actually fell.

The median wage is the middle of the total distribution of wages, the wage of the average person.  If you lined up all workers of a particular type — women or men or all workers —  from lowest to highest paid, the median wage would be the wage of the person in the middle of the line, halfway between the lowest and the highest paid.

The median wages of American men have been stagnant since the early 1970s.  Despite a doubling in U.S. labor productivity per hour worked since 1973, men’s wages haven’t increased at all.  Coincidentally, in the early 1970s women’s participation in full-time work started to expand dramatically.  Many pundits — and even a few social scientists — blamed women for the stagnation in men’s wages.

These analysts reasoned that as more and more women entered the labor force and demanded higher and higher wages, less money would be available to pay male workers.  The labor market was struggling to accommodate all the new women who wanted to work for the first time.  Women were pushing men out of the best jobs.  There wasn’t enough money to go around.

That argument was never very fair, but now we know that that wasn’t even true.  Women’s labor force participation peaked in 1999 and has actually been going down for the past 12 years.  Women’s wages at any given level of education are no longer catching up with men’s.  More and more women are now exiting the labor market, and still wages for both men and women are stagnant.

Since 2008 the American economy has been in recession, and a lot of people have been struggling.  Unemployment is way up, and a lot of people who want to work full-time are only able to get part-time jobs.  But the figures reported here on women’s wages cover only people who have full-time jobs.  Include part-time workers and unemployed people and the figures look far worse.

In a recession, people tend to focus on the short-term problems of the economy.  America’s short-term problems are serious enough.  But the stagnation of median wages — the wages paid to ordinary, middle-of-the-line people — is something far more serious.  Long after the recession is over, we’ll still be living with the fact that median wages are still stuck at 2000 levels for women and 1973 levels for men.

In theory, median wages should grow at roughly the same rate as the economy as a whole.  For the century plus from 1860 to 1973 they grew slightly faster than the economy as a whole.  Now they’ve stopped growing entirely.  The economy stopped growing in December, 2007 — for 18 months.  It started growing again in June, 2009.  Wages didn’t.  That’s a problem.

When the economy grows and median wages do not, there are only two possible explanations.  First, it’s possible that more money may be going into investment, leaving less available to pay in wages.  America could certainly use some investment, but that’s not what’s happened in the U.S. economy.

Second, the money may be going to the small number of people at the front of the line, the highest-paid individuals in society.  In American society, these are mostly men, and this is where the extra money is going.  Highly paid men, the few men at the very front of the line, have been taking almost all of the increase in American national income over the past decade.

Over the past decade, women’s and men’s median wages have been growing at roughly the same rate: zero.  To keep even with economic productivity growth, median men’s wages should be growing at a rate of 2 percent per year.  To keep up with productivity and catch up with men’s wages, median women’s wages should be growing at almost 4 percent per year.

To restore the balance between rich and poor that existed in America as recently as 1973, men’s and women’s median wages should be growing even faster, at 7 percent and 9 percent respectively.  Wage growth of 7 percent or 9 percent per year may seem like a fantasy, but the pay of chief executive officers of major U.S. corporations grew on average 8.8 percent per year in the 2000s.  There is some evidence that it’s now growing even faster.

America can afford to restore equity to its wage levels.  If corporations would accept lower profits and male executives lower pay, ordinary women and men could all earn fair wages.  It’s unlikely that corporations and their executives will be willing to make these sacrifices voluntarily, but that’s no excuse for allowing them to grab ever larger shares of America’s national income.

A little corporate austerity might be good for the American economy. It would certainly be good for ordinary Americans.

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Sydney-based globalization expert Salvatore Babones is available to speak on the Chinese economy (demographics, growth, technology), the Belt & Road Initiative, global trade networks, and Australia-China relations. Contact: