Male-Female Wages (Salary) Discrimination

Male-Female Wages (Salary) Discrimination

Introduction

In recent years, companies have been increasingly at risk of lawsuits stemming out of this documented pay gap between the sexes. Due to an influx of downsizing arising out of the recent recession, women now account for 40 percent of the primary breadwinners in U.S. households. This may account for why more women are frequently seeking equal salaries. In many cases, women co-workers are banding together in large class action lawsuits against their employers. The result is the potential for large damages against employers, including punitive damages that may not be covered by insurance.

For instance, 5,600 female employee plaintiffs in a class action lawsuit against Novartis Pharmaceuticals were awarded $250 million in punitive damages by a federal court jury in New York. The plaintiffs in the case alleged (and the jury agreed) the company favored men when deciding salary and promotions. Experts think Novartis may ultimately be liable for an additional $1 billion in compensatory damages. Other large companies with similar lawsuits filed this year include AIG, Bank of America, Goldman Sachs and Wal-Mart (Valletta 2007).

That women are paid less than men for performing the same job is not new information. In fact, since 1963 with the Equal Pay Act, lawmakers have tried to help women gain equality with regard to equal pay for equal work. Employees' right to nondiscriminatory compensation also is protected by Title VII of the Civil Rights Act of 1964 and other laws. But while laws have been on the books for decades, many companies have not abided by them.

The consequences of lower pay resonate throughout a woman's life. It has been estimated that this pay disparity results in women earning $400,000 to $2 million less than their male counterparts for performing the same job over a lifetime. Additionally, the lower salary that women earn causes life-long repercussions, as it affects retirement pay, 401(k) accounts and Social Security benefits. According to several measures, the difference in wages between men and women, the so-called male-female wage gap (MFWG), has shrunk substantially--by about half--over the past several decades. This phenomenon has been the subject of much research, speculation, and contention. For example, some seek to explain why the gap narrowed so dramatically in the 1980s only to narrow much more slowly in subsequent years. Others have considered the role of new technology, which may have helped level the playing field between the sexes; this view recalls the rise of office work at the turn of the 20th century, which is also thought to have benefited women (Goldin 1990).

While each has strong merit in its own right, none has come to be the dominant explanation. We speculate that it may be fruitful, though challenging, to consider whether these three explanations worked together, occurring simultaneously and reinforcing one another, to result in the sharp narrowing of the MFWG in the 1980s.

Why are women paid less than men?

There are many theories as to why women are paid less than ...