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Copyright 1997 by the Wyoming Department of Employment, Research & Planning


Gender, Tenure and Wages

by: Mary Beth O'Loughlin

Explaining regularly occurring outcomes in the labor market means eliminating competing causal explanations. In past research by Gregg Detweiler and Brett Judd1, we observed that regardless of industry average earnings for females were substantially lower than for males. A competing explanation is that men may have longer continuous spells of employment; we know from previous research by Gayle Edlin2 that such "steady" work is associated with a more lucrative earnings profile. In this article, we attempt to determine whether or not job tenure is the key variable that accounts for earnings differences between males and females.

Using the wage record database3, a file was created containing those employees who began work in the second quarter of 1992, and who worked every quarter for the same employer through the fourth quarter of 1996, (four and one-half years). Therefore, all the employees in the analysis have an equal amount of tenure. This file was matched with the Quarterly Unemployment Insurance (QUI)4 file to obtain the industry information for each employer. The final database contains information to answer the questions: "When males and females have the same amount of tenure, are the wages also the same?" and "Controlling for tenure, age and industry, are increases in pay distributed evenly between males and females?".

There are a few points to note about this study. Due to the criterion that employees began work in the second quarter of 1992 and worked every quarter for the same employer through the fourth quarter of 1996, the study includes a relatively small number of individuals (968). Furthermore, the same criterion may exclude certain occupations from the study, simply because workers in higher-paying occupations would be more likely to stay in their jobs for the requisite 19 consecutive quarters. Therefore, industry average wages may reflect certain occupations more than others, making averages seem higher than what might be anticipated. Also, information on hours worked per week (i.e., part- and full-time) was not available for inclusion in this study. Also excluded were individuals whose demographic information was not available.

Wages

Table 1 displays the average quarterly wages by industry, gender and length of tenure. The starting wage may be very low compared to the "one year" of tenure average quarterly wage category for several reasons. First, some employees may have started late in the quarter and subsequently not earned a full quarter's wage. Second, an employer will often start the employee at a lower wage than normal during a training period and increase it once they have shown proficiency at the position.

Female wages begin at a lower rate and never catch up to the males in their industry (see Table 1). In all of the industries, female wages lagged behind over all four years in the study by an average of 38.5 percent, with a peak difference after three years employment of 39.4 percent behind male wages. Service and Retail Trade industries are dominated by female employees, but the wages do not reflect this. Over all four years, females earn an average of 40.0 percent less than males in the Service industry and 38.3 percent less in the Retail Trade industry.

Again, please note that information on occupations and hours worked per week is not available. Females have historically worked in lower paying occupations than males within the same industry. For example, in the Finance, Insurance, & Real Estate (FIRE) industry after one year of tenure, females only earned 31.2 percent of the wages their male counterparts earned. In this industry, males are more likely involved in the higher paying occupations.

Pay Increase

Based on Gayle Edlin's research, we expect that employees' wages increase with the longevity of employment. As seen in Table 1, that appears to be the case. Do gender, age5 and industry make a difference in the amount of the pay increase or if there is an increase at all? The wage increases are computed by subtracting the average quarterly wage for each group from the corresponding quarter during the base period. The base period is defined as second quarter 1992 through first quarter 1993.

So, "Wage Increases After 1 Year Tenure" (as shown in Tables 2, 3 and 4) is calculated by subtracting "Starting Wage" from "1 Year Tenure" (as shown in Table 1), "Wage Increases After 2 Years Tenure" is calculated by subtracting "Starting Wage" from "2 Years Tenure", and so on. "Average Increase" is calculated by dividing "Wage Increases After 4 Years Tenure" by four. Table 2 shows the wage increases for males according to industry and age, while Table 3 is the information for females.

Comparing Table 2 and Table 3, in only eight of the 54 categories are average female wage increases more than males in the same category. Four of these eight are in the FIRE industry. Table 1 shows that the wages of the males in this industry are irregular, increasing for two years and then dropping during the third year of tenure only to rise again in the fourth year. This instability could be due to a drop in business during the third year of tenure. On the other hand, female wages show a relatively steady increase. Employees in the FIRE industry are often paid by commission which can also be inconsistent.

The differences in average quarterly wage increases for males and females can be seen in Figure 1. Accounting for equal tenure, females' average increases are only about 60 percent those of males. Using this figure in conjunction with Table 1, males start out at higher wages, yet wage increases as a percent of starting wages are roughly equal for both genders in every year of tenure. The largest discrepancy occurs after three years of tenure when males average 44.1 percent higher than their starting wages and females average 40.9 percent higher. Wages grow over all years for both genders, but males start higher and remain ahead of females throughout the study period.

Even in the female-dominated Service industry, males received higher wage increases in every age category. Four of the six age categories in the Service industry have close average wage increases, but males always have the higher average. Figure 2 shows a comparison, industry by industry, of wage increases for males and females. The biggest difference is in the Wholesale Trade industry, males average $922.51 wage increases per year while females average only $38.40. This tremendous discrepancy could be due to the very small number of females (see Table 3); for example, a worker's wages might decrease substantially if she switched from full- to part-time employment. The FIRE industry is the most equal in wage increases between genders with males averaging $939.58 and females $789.93.

Unlike female wage increases, male wage increases appear to be more consistent across all industries. Increases for males range from a low of $676.22 in the Service industry, to a high of $1023.71 in the Manufacturing industry. Females were substantially different with a low of $38.40 in the Wholesale Trade industry and a high of $789.93 in the FIRE industry. Occupational variations may account for some of these differences. Tenure is equal for all employees in this study, but previous experience is not known. Previous experience, educational attainment and self selection could also have an impact on wages and the rate of wage increase. In some industries, as was noted earlier, sample size may also account for some apparent discrepancies.

Table 4 displays average wage increases for males and females broken down by age and tenure. The only age group in which females have an average wage increase close to that of males is the 19-25 years old category. In this group, females averaged $1018.10 and males averaged $1034.70, a difference of only $16.60 per quarter in favor of males. However, within the 19-25 years old category, two tenure groups did show female wage increases surpassing those of males ("After 1 Year Tenure" and "After 2 Years Tenure").

Conclusion

In all industries, for people with the same tenure, starting wages and wage increases for females lag behind males. Accounting for age, females have lower average wage increases than males in all age categories.

Some of the differences may be explained. Since occupations of workers are not known, this study cannot account for occupational variations in wages. For example, a miner earns considerably more money than a secretary working in a mining office, yet both are classified in the Mining industry. Also, it is unknown which employees worked full-time and which worked part-time. Females may work fewer full-time positions than males, causing their wages to appear lower.

As time goes by, we may see a leveling out of the wages and wage increases. The 19-25 years age category may be an indicator of the future where the gaps are smaller or altogether nonexistent.

Mary Beth O'Loughlin, formerly a Statistician specializing in Mass Layoff Statistics (MLS) with Research & Planning, recently left the division.

1 "The Relation of Age and Gender to Employment in Wyoming, Part 1 & Part 2 of a New Analysis Utilizing Wage Records", Wyoming Labor Force TRENDS, May and June 1996.

2 "Steady Work Pays Off: Wyoming Unemployment Insurance Wage Records Revisited", Wyoming Labor Force TRENDS, October 1995.

3 The wage record database is a compilation of each employee's wages as submitted by the employer each quarter on the Unemployment Insurance tax record. Data includes: social security number, employer number, number of jobs held, wages, year and quarter of the report. Research & Planning has wage records dating back to the first quarter of 1992.

4 The Quarterly Unemployment Insurance (QUI) file is a database containing employer information including: employer number, number of employees, wages and industry information.

5 The employee's age was computed by subtracting the date of birth from the first day of the second quarter of 1992 (April 1, 1992).


 
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These pages designed by Gayle C. Edlin.
Last modified on June 7, 2001 by Valerie A. Davis.