Same Degree, Different Returns
October 25, 2012 9:14 am
A new report by the American Association of University Women confirms that the pay gap between men and women is evident even one year after graduation. The report finds that women working full-time one year after receiving a bachelor’s degree make only 82% of the earnings of their male counterparts.
The study goes to great lengths to break down explained and unexplained reasons for the pay gap. Titled Graduating to a Pay Gap, the study attributes two-thirds of the pay gap to gender discrimination, cultural norms dictating one’s choice of occupation, total hours worked and economic sector. After accounting for all of these factors, female graduates still made seven percent less than men in the same position.
For example, among men and women pursuing business (the most popular major for both men and women), the study finds, “Women earned just over $38,000, while men earned just over $45,000.”
The research cites an earlier study that suggests a level of subconscious discrimination may factor. From the study:
In a recent experiment, science faculty members from research-intensive universities selected a higher starting salary for male applicants than they did for identically qualiﬁed female applicants for a laboratory manager position. Female and male faculty members were equally likely to exhibit bias against female applicants (Moss-Racusin et al., 2012).
The study focuses on graduates working one-year out of college, because most new graduates (in this case, 2007-2008 graduates who began working in 2009) are relatively inexperienced, don’t have children and have never been married. The relatively new graduates also share huge student debt obligations. Graduates with a high student loan debt burden (measured by percentage of debt owed against earnings) are less likely to buy a home, get a car loan or make rent payments. The study finds that men and women borrow similar amounts toward their education, yet experience different yields from their investments:
Among 2007–08 college graduates, women and men typically borrowed similar amounts to ﬁnance their educations, about $20,000. Because women earn less than men do
after college, student loan repayments make up a larger part of women’s earnings. In 2009, among full-time workers repaying their loans one year after college graduation, nearly half of women (47 percent) were paying more than 8 percent of their earnings toward student loan debt compared with 39 percent of men.
The report does make tangible recommendations to begin to combat the pay gap. It advises employers to conduct internal pay equity studies and provide more transparency as to salary ranges for certain positions. It also supports the Paycheck Fairness Act, which was voted down by the Senate in 2010, and again by both the House and Senate in 2012. The study states that the Lily Ledbetter Fair Pay Act, which provided longer protection to those seeking to file equal pay lawsuits, was a narrow remedy, but that the Paycheck Fairness Act would:
Create incentives for employers to follow the law, empower women to negotiate for equal pay, and strengthen federal outreach and enforcement efforts.
The study was submitted to both President Obama and candidate Romney.
Image from here