1. Differences in Occupations & Earnings

2. How do occupations differ by race/ethnicity and gender?
Let’s first look at men.

3. The highest percentages of non-Hispanic White men are in management and professional occupations.
The highest percentages of Black men are in services and transportation.
The highest percentages of Asian men are in professional occupations.
The highest percentages of Hispanic men are in services and construction.

4. What about the women?

5. The women tend to have high percentages in professional occupations, services, and administrative support.
The highest percentages of Non-Hispanic Whites and Asian women are in professional occupations, while the highest percentages of Black and Hispanic women are in services.

6. We can measure the extent of the differences in the occupational distributions of men and women using the index of occupational segregation.

7. Index of Occupational Segregation
This index measures the percentage of females (or males) that must change jobs in order for the occupational distributions to be equal. It is calculated as follows:
½ |Mi – Fi|
Where Mi is the percentage of males in the labor force in occupation i, and Fi is the percentage of females in the labor force in occupation i

8. Example 1: Complete segregation 100% of all men in blue-collar jobs 100% of all women in pink-collar jobs
½ [|100-0| + |0-100|] = 100
This means that 100% of women would have to change to blue-collar jobs or 100% of men would have to change to pink-collar jobs for the occupational distributions to be the same.
Occupation
Men
Women
Blue-Collar
100
Pink-collar
Total

9. Example 2: Complete integration 40% of men in blue-collar jobs, 60% in pink-collar jobs 40% of women in blue-collar jobs, 60% in pink-collar jobs
½ [|40-40| + |60-60|] = 0
This means that no one needs to change jobs to make the occupational distributions the same for the two genders.
Occupation
Men
Women
Blue-Collar 40
Pink-collar 60
Total
100

10. Example 3: High integration 60% of men in blue-collar jobs, 40% in pink-collar jobs 40% of women in blue-collar jobs, 60% in pink-collar jobs
½ [|60-40| + |40-60|] = 20
This means that 20% of men would have to change to pink-collar jobs or 20% of women would have to change to blue-collar jobs to make the occupational distributions the same.
Occupation
Men
Women
Blue-Collar 60 40
Pink-collar
Total
100

11. Example 4: Low integration 80% of men in blue-collar jobs, 20% in pink-collar jobs 20% of women in blue-collar jobs, 80% in pink-collar jobs
½ [|80-20| + |20-80|] = 60
This means that 60% of men would have to change to pink-collar jobs or 60% of women would have to change to blue-collar jobs to make the occupational distributions the same.
Occupation
Men
Women
Blue-Collar 80 20
Pink-collar
Total
100

12. The very broad categories discussed previously do not show the full extent of occupational segregation.
There is also occupational segregation in sub-categories.
Consider, for example, the professional occupations.
Women comprise a high percentage of workers who are dietitians, librarians, nurses, pre-school and kindergarten teachers, and elementary school teachers, while men represent a high percentage of workers who are architects, engineers, clergy, dentists, and computer scientists and systems analysts.

13. Index of Occupational Segregation by Sex, 2009
51.0%
So about half of women (or men) would have to change jobs for the occupational distribution of the two groups to be the same.

14. Even the Index of Occupational Segregation calculations based on the detailed census occupational categories likely underestimates the full extent of employment segregation by sex.
Job categories used by employers are even more detailed and would likely reveal more segregation.
Also, particular firms often employ mostly men or mostly women, such as women in sales are heavily represented in clothing stores but not in electronics stores.

15. Not only do men and women tend to work in different occupations, but they also tend to be employed at different levels of the hierarchy within occupations.

16. Example: University Faculty, 2011-2012
Rank
Percent Female
Full Professors 28
Associate Professors 43
Assistant Professors 50
Instructors 61

17. To the extent that occupational segregation is due to socially imposed restrictions, removal of those barriers would increase efficiency and decrease frustration, since individuals could seek work suited to their particular aptitudes.

18. However, even if social barriers were removed immediately, the rate of change of occupational segregation is limited by the time it takes for new people to be trained.
Past socialization also affects the preferences of people already in the work force. Less gender bias in the socialization of girls and boys would reduce the amount of occupational segregation, but it would take many years for these girls and boys to grow up and enter the labor force.
Occupational integration is a very slow process.

19. Many individuals are part of what is called the Nonstandard Work Force
These are “individuals whose employment is arranged through an employment intermediary such as a temporary help firm, or individuals whose place, time, and quantity of work are potentially unpredictable.” [Bureau of Labor Statistics (BLS) definition]

20. 4 Categories of Alternative Arrangements
temporary help agency workers (“temps”) - employed by agencies & sent out to other businesses as needed
on-call workers - employed as needed, generally for a short time (includes substitute teachers & construction workers supplied by a union hiring hall)
contract workers - employed by a firm that contracts out employees or services to other companies
independent contractors or freelance workers - individuals who obtain customers on their own to whom they provide a product or service

21. Women’s share of employment in nonstandard work is 39% overall (lower than their 48% share in regular employment).
Women are over-represented among temps and under-represented among independent contractors and contract firm workers.

22. Nonstandard Workers: Racial Representation
Blacks and Hispanics are heavily represented among temporary workers and underrepresented among independent contractors.
Hispanics are also underrepresented among contract firm workers.

23. Nonstandard Workers: Occupations
Many independent contractors are employed in executive & managerial positions, as well as professional & sales jobs.
Workers from contract firms are often in professional specialties (such as computer programming), service occupations (such as landscaping & janitorial work), and skilled blue-collar occupations including precision production & craft jobs.

24. Education among Nonstandard Workers
% of Workers with Bachelor’s Degree or more:
Contract firm workers
Independent contractors 34.3
Traditional workers
On-call workers
Temps

25. Nonstandard Workers: Earnings & Benefits
Independent contractors and contract firm workers tend to earn more than workers in traditional arrangements; on-call workers & temps earn less.
While workers in all alternative arrangements are less likely than those in traditional arrangements to be covered by health insurance & pensions, independent contractors & contract firm workers are more likely than on-call workers & temps to to be covered.

26. The category of part-time workers shares some of the same problems as those in nonstandard employment, such as often having limited training and promotion opportunities and receiving few if any benefits.

27. Some Reasons for Nonstandard Work
Small and medium-sized firms may benefit from the use of contracted services in specialized areas like computer support, since it may not be cost effective for them to hire staff whose skills are only used occasionally.
If production is characterized by peak and off-peak periods, firms may find it more cost effective to contract out during peak periods, to avoid keeping excess staff or incur repeated hiring and firing costs.
Nonstandard jobs can be attractive to students, the semi-retired, and homemakers in need of flexibility because of family responsibilities.

28. Possible Reasons for Increase in Nonstandard Workers
The cost of benefits, especially health insurance, has increased, providing additional incentive for firms to use nonstandard workers to avoid these expenses.
There has been an increase in the number of small firms, who are particularly likely to benefit from contracting out for specialized services.
Judicial decisions have imposed increased restrictions on the doctrine of “employment at will,” the concept that allows an employer to fire any employee for any reason at any time.

29. Self-Employment Trends and Patterns

30. A higher percentage of men than women are self-employed.
The gender gap in self-employment has decreased slightly in the last few decades.

31. There are some factors that might make self-employment particularly attractive to women.
It may provide greater flexibility to combine work and family responsibilities. It could be an avenue of escape from the glass ceiling that limits women’s advancement in the wage and salary sector. It could also provide a possible route out of poverty for low-income women; a small amount of financial and technical assistance is available to low-income women for starting their own businesses.

32. Research generally finds that female self-employed workers earn less than wage and salary workers with the same qualifications.
However, this aggregate finding may mask differential effects by occupation. Self-employed women in professional occupations appear to earn more than wage and salary workers. This finding is consistent with the idea that, for these women, self-employment provides an expansion in opportunities. Self-employed women in non-professional occupations, however, earn less than wage and salary workers. For many of these women, self-employment may serve as a means to increase workplace flexibility.

33. For men, the evidence is mixed
For men, the evidence is mixed. Some studies have found higher earnings for the self-employed, but one study reported lower earnings.
Overall, the evidence suggests that many women and some men may forgo some earnings in exchange for greater autonomy. Thus, the lower earnings of some self-employed individuals may represent a compensating differential.

34. Self-employment rates among black men and women are lower than for other racial/ethnic groups, in part due to the fact that they tend to have fewer assets and less access to credit than other groups.

35. Let’s move now from discussing different types of employment to examining earnings differentials.

36. Female/Male Earnings Ratio
Throughout the 1960s and 1970s, the ratio of female-to-male earnings for full-time, year-round workers hovered close to 59%.
Over the last 30 years, it increased to 77% in 2011.
Note that this means that women still earn only slightly over ¾ of what men earn.

37. The gap between men’s and women’s earnings tends to widen with age.
There are several possible explanations, which are not mutually exclusive.
The current younger cohort has choices more similar to those of men than the older cohorts had.
The younger cohort is not facing as much discrimination as the cohorts before them.
Women accumulate less experience than men, on average, as they age.
Women face greater barriers to advancement at higher levels of the job hierarchy.

38. Female-to-Male Earnings Ratios by Education, 2011
F/M (%)
1-3 yrs of high school
66.7
4 yrs of high school
70.0
1-3 yrs of college
71.1
4 or more yrs of college
69.0
Women at each level of education earn less than similarly educated men.

39. Female-to-Male Earnings Ratios for Full-Time, Year-Round Workers by Race/Ethnicity, 2011
Whites
77.1
Blacks
85.4
Asians
74.9
Hispanics
91.1
Hispanic and Black women earn more relative to men of the same race/ethnicity than White and Asian women do relative to White and Asian men. (Keep in mind, however, that the Hispanic and Black men are earning a lot less than the White and Asian men.)

40. Earnings Ratios for Full-Time, Year-Round Workers, 2011
Males
Females
Black-to-White
74.7
82.8
Asian-to-White
104.6
101.7
Hispanic-to-White
60.9
71.9
Relative earnings are lower for Hispanics than for Blacks.
Hispanic and Black women earn more relative to White women than Hispanic and Black men earn relative to White men. (Remember however, that the White women are earning a lot less than the White men.)

41. Sexual Orientation
Statistical analysis has been used to study the effects of sexual orientation on earnings.
This research has generally found that gay men earn less than heterosexual men, while lesbians earn more than heterosexual women.
Same-sex marriage has historically been illegal in most states. Gay men and lesbians may therefore have been less likely to pursue a traditional division of labor with their partners. That behavior may be one factor contributing to the observed earnings differentials.
In addition, the lower earnings of gay men may be due in part to discrimination.

42. The earnings premium of lesbians may mask some discrimination against them.
Lesbians may have characteristics - such as greater career orientation - that lead to greater productivity.
Discrimination may partially offset that effect on wages.
So their wages (though higher than heterosexual women) may not fully reflect their higher productivity.
In addition, gay men and lesbians may trade off higher-wage jobs for positions that are more open to sexual minorities.
There is little research on earnings of bisexuals.

43. An interesting study of transgender individuals sheds light on the consequences of such transitions.
The study examined the labor market outcomes of people who changed their gender, generally with hormone therapy and surgery.
This research found that the average earnings of individuals who changed their gender from female to male increased slightly, while the average earnings of individuals who changed their gender from male to female fell by one-third.
The authors of the study noted that their findings were consistent with reports that “for many male-to-female workers, becoming a woman often brings a loss of authority, harassment, and termination, but that for many female-to-male workers, becoming a man often brings an increase in respect and authority.”
Kristen Schilt and Matthew Wiswall (2008) “Before and After: Gender Transitions, Human Capital, and Workplace Experiences,” The B.E. Journal of Economic Analysis & Policy, 8, no. 1, Article 39. Available at: .

44. Returning to the gender wage gap …
Gender differences in earnings are due to many forces, including:
differences in the characteristics that men and women bring to their jobs (education, training)
differences in the characteristics of the jobs that men and women do
discrimination