Welcome to my weekly Q&A roundup. (Scroll down to find the Q&A.)
If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions—tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. So each week, I pick one question that I believe others would find most instructive and publish my response to it here.
The purpose of this weekly tradition is transparency and inclusion.
Transparency: a behind-the-scenes look at my day-to-day.
Inclusion: bringing others along on the journey.
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The Gendered Economics of Occupational Segregation
Question:
I heard the term occupational segregation used during a meeting for our women’s ERG. Was too embarrassed to ask, what does it mean?
Answer:
In 1933, President Franklin D. Roosevelt established the National Recovery Administration to usher in an era of equitable labor standards. Think: minimum wages, collective bargaining, maximum working hours, etc.
Of all the wage codes set by the National Recovery Administration, more than 25% of them specified lower wages for women than men.
Moreover, the jobs created by the Works Progress Administration (Roosevelt’s ambitious infrastructure plan) restricted women’s labor market opportunities to lower-paying fields like sewing and nursing.
This conspicuous display of inequity occurred at a time when only 15% of Americans believed women should have full-time jobs outside the home. So in a way, it fit with the cultural climate of the time. Now surely conditions have changed and our economy values the labor of all genders, races, and ethnicities equitably, right?
Not so fast.
Occupational segregation—and the wage inequity that accompanies it, continues to shape economic outcomes for millions of Americans. It’s worth exploring in more detail, so let’s dive in.
What Is Occupational Segregation?
When a certain demographic over- or under-indexes in a specific job field, we call it occupational segregation. Since you asked about the connection between occupational segregation and gender equity, let’s focus on gender as the demographic demarcation. (Note: occupational stratification occurs across racial, ethnic, and intersectional lines too.)
Think about the last time you drove through a construction zone. Perhaps you saw some orange “Men Working” signs. For most people, these signs signal roadwork. For me, they signal occupational segregation, because men represent more than 90% of workers in the construction industry. It’s a male-dominated field. This is occupational segregation in the real world.
Here’s why it’s worth paying attention to.
Compared to employees in female-dominated fields requiring similar levels of education and experience (such as child care), construction workers receive higher wages. In 2019, the average construction worker made $36,860. The average Latina worker in the female-dominated field of child care, however, made only $22,074.
A nearly $15,000 pay gap is nothing to scoff at. And economists don’t. In fact, the wage inequity that accompanies occupational segregation necessitates our intervention. That’s why we care about it.
Why Do Economists Care About Occupational Segregation?
Occupational segregation matters because it limits the supply of labor and impairs everyone’s economic outlook. For example, women are 50% of the world’s population but make up only 14.2% of the cloud computing talent base.
That’s a huge missed opportunity for businesses to tap into the cognitive and creative abilities of half the world’s talent. It’s also a huge missed opportunity for our economy. Offering women equitable access to the labor market can increase our productive capacity.
Occupational segregation also matters because it devalues women’s labor. We call it the “devaluation effect,” and it shows that the average pay within an occupational category is inversely related to the percentage of women in that occupation. This relationship holds even after controlling for factors such as education and experience.
If you want to see the devaluation effect for yourself, take a look at this study of 164 occupations, which analyzed five decades of labor data. TL;DR: Salaries dropped as women increased their representation in male-dominated fields. Conversely, wages increased as more men entered female-dominated fields.
One statistical experiment further punctuated the relationship between wages and gender representation in a given occupation. It found that high-skilled jobs with a 0% female workforce would pay $1,555 per week, whereas high-skilled jobs with a 100% female workforce would pay only $840 per week. That’s a 46% pay gap.
When we devalue women’s labor, we perpetuate pay inequity. And pay inequity’s negative externalities include shrinking the tax base, depressing consumer spending, accentuating poverty, and increasing reliance on social welfare programs.
P.S. Occupational segregation is one reason women make up 64% of the 40 lowest paying jobs in the US despite being 47% of the overall workforce. And women of color represent 27% of the low-paid, front-line workforce despite being only 18% of the overall workforce.
These more precarious jobs offer fewer protections and rely on ad hoc scheduling—making it difficult for women to provide stability for themselves and their families. That’s why women and children experience higher poverty rates. In 2020, more than one in nine women and approximately one in six kids lived in poverty.
How Can We Foster Occupational Diversification?
We can choose to diversify occupations. And in fact, the economics of occupational segregation tell us that it is in our best interest to do so. It will take a multi-pronged approach to infuse the labor market with inclusion, so here are some ideas to get started:
Standardize digital literacy in all K-12 education. The pandemic catapulted digital acceleration by five years. As we move squarely into the 4th Industrial Revolution, it behooves us to address systemic gender gaps early. Children as young as six begin to form gender biases such as which gender is better at STEM. These biases influence educational choices and career trajectories. Mandatory digital literacy in K-12 education can help mitigate occupational stratification.
Remove structural barriers (i.e. systems of inequity) that keep women from thriving in male-dominated fields, especially STEM. Fully 80% of US women working in science, engineering, and technology love their jobs, but 52% of highly-talented women working these jobs leave them. Why? Lack of career growth is the number one reason women gave. Our workplaces desperately need equity of opportunity and equity of pay.
Change the narrative, because role models matter. Childhood exposure to inventors is the largest variable to influence someone’s likelihood of becoming an inventor. If girls were exposed to female inventors at the same rate as boys are exposed to male inventors, female innovation rates would rise by 164%.
Pass an equitable pay law. This means requiring companies with 100+ employees to earn an equal pay certification by proving they pay all genders the same for doing work of the same value. And, it means accounting for intersectional gaps (i.e. gender PLUS race/ethnicity PLUS age).
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© 2021 Katica Roy™, Inc.