THE WHITE HOUSE

Office of the Press Secretary

                EXPLAINING TRENDS IN THE GENDER WAGE GAP
              A Report by The Council of Economic Advisers

                             EXECUTIVE SUMMARY

     Although the gap between women and men's wages has narrowed

substantially since the signing of the Equal Pay Act in 1963, there still exists a significant wage gap that cannot be explained by differences between male and female workers in labor market experience and in the characteristics of jobs they hold.

After hovering at about 60 percent since the mid-1950s, the ratio of women's to men's median pay began to rise in the late 1970s and reached about 70 percent by 1990. The gender pay ratio is currently on the rise again, surpassing 75 percent in 1997.

The gender gap has narrowed faster among younger women and among married women with children. The data that permit disaggregation by demographic groups show the overall gender pay ratio rising from 57 percent in 1969 to 68 percent in 1996 (the last year for which these data are available). In contrast, among women under 40, the gender pay ratio rose from 58 percent in 1969 to 74 percent in 1996. Among married women with children, the gender pay ratio (relative to all male workers) rose from 53 percent in 1969 to 68 percent in 1996. Relative to all male workers, wage gains have been faster for non-Hispanic black and non-Hisanic white women than for Hispanic women.

The most recent detailed longitudinal study found that in the late 1980s about one-third of the gender pay gap was explained by differences in the skills and experience that women bring to the labor market and about 28 percent was due to differences in industry, occupation, and union status among men and women. Accounting for these differences raised the female/male pay ratio in the late 1980s from about 72 percent to about 88 percent, leaving around 12 percent as an "unexplained" difference.

      Over the last twenty years, increases in women's accumulated 
     labor market experience and their movement into higher-paying 
     occupations have played a major role in increasing women's wages 
     relative to men's. Changes in family status, in industry structure 
     and in unionization also worked to narrow the gender pay gap, 
     while increasing economic benefits from skills and increasing wage
     inequality would have, by themselves, widened the pay gap. In
     addition, the decrease in the pay gap that remains "unexplained" 
     after controlling for measured differences between men and women 
     has been a large contributor to the narrowing of the pay gap.

      The evidence is that labor market discrimination against women
     persists, although it is difficult to determine precisely how much 
     of the difference in female/male pay is due to discrimination and 
     how much is due to differences in choices or preferences between 
     women and men.  One indirect and rough measure of the extent of 
     discrimination remaining in the labor market is the "unexplained" 
     difference in pay. Some studies have tried to measure 
     discrimination directly by looking at pay differences among men 
     and women in very similar jobs or by comparing pay to specific 
     measures of productivity.  These studies consistently find 
     evidence of ongoing discrimination in the labor market and support 
     the conclusion that women still face differential treatment on the 
     job.