Shyama Venkateswar Distinguished Lecturer, Hunter College and Director, Public Policy Program, Roosevelt House

Posted on April 11, 2014 · Posted in Frank Friday

In recognition of National Equal Pay Day on April 8, 2014 — a symbolic day to mark how far into the year an average woman must work in order to gain parity with an average man’s income from the previous year — President Obama signed two executive actions to address the pay gap. The first was an Executive Order which prohibits a wage ‘gag rule’, where employees of federal contractors are free to discuss or disclose compensation with their fellow workers without fear of retaliation. The second measure, a Presidential Memorandum, directed the Secretary of Labor to establish regulations whereby federal contractors have to furnish data on compensation to their employees by race and gender.  Both actions are meant to uncover patterns of wage discrimination when it exists and provide opportunities to remediate discriminatory practices in federal contracting. These most recent examples of executive actions of President Obama on the long-standing issue of wage disparities along gender lines are seen as a last resort in the face of the bitter partisanship in Congress.

This week, Senate Democrats also tried to pass the Paycheck Fairness Act that would help not just the approximately 26 million employees of federal contractors now protected by President Obama’s executive actions, but ordinary Americans everywhere from retaliation from their employers for discussing wages and would also provide channels for legal recourse in the case of retaliation. The Act would also require the Equal Employment Opportunity Commission to collect data from federal employers about their employee compensation. A day after President Obama’s signed his executive orders, Senate Republicans blocked the bill on the grounds that anti-discrimination laws already exist, and that the Paycheck Fairness Act was simply a ploy on the part of the Democrats to win women voters in the mid-term election year and deflect attention from the Affordable Care Act, which Republicans consider a deeply flawed piece of legislation.

While the 77 cents earned by women for every dollar earned by a white male is frequently cited from the U.S. Census data, the wage gap is also related to other factors like the number of hours that women work and the nature of their jobs. Women disproportionately hold the bulk of low-paying jobs and are poorly represented in high-wage fields like finance.  In 2013, just 16.9% of Fortune 500 board members were women; in Silicon Valley, 128 companies with $1.2 trillion in shareholder value have just 6.6% of their top executive positions held by women, while only 8.4% of Silicon Valley board members are women.

The gender pay gap has deep implications for women’s cumulative lost earnings over a lifetime and, predictably, their economic security. The Bureau of Labor Statistics shows that as a result of wage differentials, a full-time working woman can lose up to $389,000 by age 65, costing the economy $400 billion in lost productivity. Women of color fare even worse — the White House reports that black women make 64 cents to a dollar while Hispanic women make even less at 56 cents to a dollar earned by a white male. With women as the primary breadwinner in 4 out of 10 U.S. households, these wage differences heavily contribute to inter-generational cycles of poverty that disproportionately impact single mothers.  Half of single mother families have an annual income less than $25,000 and two-fifths of single mother families are “food insecure.” Single women and their children experience triple the poverty rate of the rest of the population.

The very first bill that President Obama signed into law, the Lilly Ledbetter Fair Pay Act in 2009, extended the period of time that women could claim to recover lost wages due to gender discrimination. The Paycheck Fairness Act, blocked by Senate Republicans earlier this week, would have updated the Equal Pay Act of 1963, closed loopholes, and strengthened incentives to prevent discrimination along gender lines.

Any discussion on pay equity has to include the issue of raising the minimum wage to build economic security for millions of American workers. In February 2014,  President Obama signed an executive order that raised the minimum wage to $10.10 for federal contract workers. This must be extended to the rest of the workforce. Women represent 55 percent of non-tipped workers who would benefit from raising the national minimum wage to $10.10. Tipped workers, of whom 72 percent are women, make $2.13 an hour and would hugely benefit from an increase to 70 percent of the minimum wage.

With women today representing at least half of the workforce and surpassing men in college graduation rates, a comprehensive vision to support women and men’s participation in the labor market is urgently required. Affordable child careuniversal preschoolpaid sick leavepaid family leave, and unemployment insurance are just a few critical issues that would allow working parents to be productive in their workplaces and have the flexibility to maintain households of children and aging parents. The future of America’s competitiveness in the world economy depends on investments in the country’s labor. The return on these investments in terms of future productivity, growth and innovations would be well worth the much-needed bipartisan actions that are urgently required now.

The writing and opinions expressed herein are those of the authors and do not necessarily reflect the positions of the Roosevelt House Public Policy Institute or Hunter College.