Income Distribution

Lower Payment for Women Women usually receive less in wages than men Women usually receive less in wages than men 1/3 of difference due to less skill and experience 1/3 of difference due to less skill and experience 1/3 of difference due to occupations chosen 1/3 of difference due to occupations chosen 1/3 of difference is discrimination 1/3 of difference is discrimination

Human Capital Difference Women less skilled & experienced than male counterparts Women less skilled & experienced than male counterparts Some women quit work to raise families Some women quit work to raise families Women tend to have lower educational levels Women tend to have lower educational levels

Gender & Occupation There is an uneven distribution of men & women in various occupations There is an uneven distribution of men & women in various occupations Men tend to work in higher-paying construction & engineering trades Men tend to work in higher-paying construction & engineering trades Women tend to work in lower-paying household service & office occupations Women tend to work in lower-paying household service & office occupations

Discrimination Some of the pay differences cannot be explained Some of the pay differences cannot be explained Economists contribute this to discrimination Economists contribute this to discrimination Women & minorities often encounter difficulties getting raises & promotions Women & minorities often encounter difficulties getting raises & promotions

Legal Remedies Equal Pay Act of 1963 – Prohibits wage & salary discrimination for jobs that require equal skills & responsibilities Equal Pay Act of 1963 – Prohibits wage & salary discrimination for jobs that require equal skills & responsibilities Civil Rights Act of 1964 – Prohibits discrimination in all areas of employment based on gender, race, color, religion, or national origin. Civil Rights Act of 1964 – Prohibits discrimination in all areas of employment based on gender, race, color, religion, or national origin. Equal Employment Opportunity Commission – Investigates charges of discrimination Equal Employment Opportunity Commission – Investigates charges of discrimination

Market Remedies Set-Aside Contracts – Government contract reserved for a target group Set-Aside Contracts – Government contract reserved for a target group Government requires certain % of contracts go to minority-owned businesses Government requires certain % of contracts go to minority-owned businesses Removes businesses after they have received contracts for a specified number of years Removes businesses after they have received contracts for a specified number of years

Minimum Wage Debate Debate Supporters – Objectives of equity & security follow U.S. economic goals Supporters – Objectives of equity & security follow U.S. economic goals Opponents – Goes against economic freedom, another U.S. economic goal Opponents – Goes against economic freedom, another U.S. economic goal Some states have their own minimum wage that is higher than the national minimum Some states have their own minimum wage that is higher than the national minimum

Inflation Def. – Rise in general level of prices of goods & services. Def. – Rise in general level of prices of goods & services. Purchasing power describes how much can be bought Purchasing power describes how much can be bought When minimum wage rises faster than inflation purchasing power increases When minimum wage rises faster than inflation purchasing power increases When inflation rises faster than minimum wage purchasing power declines When inflation rises faster than minimum wage purchasing power declines

Manufacturing Wages Refers to average wages received by workers in the labor market Refers to average wages received by workers in the labor market Manufacturing wage has risen over $5 in 10 years Manufacturing wage has risen over $5 in 10 years Minimum wage has risen only $2 in 10 years Minimum wage has risen only $2 in 10 years