1. Chapter 8
Recent Developments in the Labor
Market: Their Impact on Women & Men

2. What do you think of this recent
development?
 http://www.cnn.com/

3. Chapter Highlights
 Trends in Female and Male Wages
 The Declining Gender Pay Gap
 The Rising Payoff to Education
 Changing labor Market Dynamics
 The Rise of the NonStandard Workforce
 The Growth in Women’s Self Employment
 The Changing Face of Labor Unions

4. Trends in Female and Male Wages
 Males:
 Median earnings for year round full time workers
rose substantially during 60s,
 moderately during the 70s,
 declined over the 80s and
 increased slightly during the 90s and 2000s.

5. Trends in Female and Male Wages
 Females
 Median earnings for year round full time workers
rose substantially during 60s,
 moderately during the 70s,
 During the 80s women’s earnings rose by 11.5%
 During the 90s 2000s rose more than men’s.

6. Differences:
Between groups

7. A Reminder:
 The wage gap is a statistical indicator often
used as an index of the status of women's
earnings relative to men's. It is also used to
compare the earnings of other races and
ethnicities to those of white males, a group
generally not subject to race- or sex-based
discrimination.

8. The Declining Gender Pay Gap
 During the last 30 years, women managed to
narrow the pay gap (the differences in pay
between men and women).
 How did they do this?

9. They Made Strides in Overcoming:
1. Wage Structure
2. Human Capital Investments
3. Labor Market Discrimination

10. 1) Wage Structure
 “Returns that the labor market offers for
various skills and for employment in higher-
paying industries or occupations”.
 How did they overcome this:
 By improving their overall qualifications relative to men.
 They improved their labor market experiences.
 They took less time out of the workforce.

11. 2) Human Capital Investments
 “Resources which are invested in an
individual today in order to increase his or her
future productivity and earnings”
 How did they overcome this:
 Increased their college and professional degrees
 They got training (seminars, workshops)

12. 3) Labor Market Discrimination
 “when two equally qualified individuals are
treated differently solely on the basis of their
gender (race, age, disability)”.
 How did they overcome this:
 Lawsuits!!
 Proving to their bosses that women can be as
aggressive, competent, committed as men.

13. Increased their “Returns to Skill”
 Rewards that the labor market gives for
various worker skills or qualifications.
(wages)
 There has been an increased demand for
“skilled” workers.
 Reasons: technological advances & international
competition.
 Both of these negatively impact unskilled workers.

14. We’re talking about “Real Wages”
 Wages that have been adjusted for changes
in the cost of living or the price of inflation.
 For example: If you earn $100 a day this
year, and inflation is at 4% this year, then
next year, you would have to earn $104 a day
just to break even. If your raise isn’t at or
above the rate of inflation then your wages
are not keeping up with inflation.

15. Another example:
 If you are making $10 per hour and your boss
offers you a 25 cent per hour raise. Your
raise is:
.25
10.00 or 2.5%
Inflation is currently 4.2% so you lose 1.7% in
earning power with this small raise!!!!

16. To calculate how much you need in a raise
to keep up with inflation:
.042 * $12.00 = .50 or 50 cents
.042 * $ 9.00 = .38 or 38 cents
.042 * $8.00 = .34 or 34 cents

17. Wage Inequality
 The widening dispersion in the distribution of
earnings within each group (men and
women)
 Meaning: the gap between those at the bottom of
the group and those at the top of the group
widened considerably.

18. Differences:
Within Groups
African American
White Women
Women
Asian Women

19. Causes of Differences:
 Attractiveness and the Job Market

20. Hammermesh, Biddle, & Crawley
 If you are perceived as being a beautiful
woman you probably earn about 5 percent
more than ordinary-looking women.
 If you are perceived as being an attractive
man, you probably earn about 10 percent
more than ordinary-looking men.
 If men do most of the hiring, why is it important for
a man to hire a good looking man?

21. Their research, not mine 
 Many of the most unattractive women opt out
of the labor force entirely.
 Unattractive women tend to attract the lowest
quality husbands (education & earning
potential); thus, decreasing their household
income potential.

22. Another cause: Your weight

23. Hammermesh, Biddle, & Crawley
 An extra 65 pounds costs a white woman 7
percent of her wages.
 Losing 65 extra pounds is the same as an extra
year of college, or three years of work experience.
 Extra weight had no impact on the salaries of
men or underrepresented populations of
women.

24. A Vicious Cycle
 Being attractive allows you to earn a good
salary which allows you to maintain or
increase your beauty (make up & cosmetic
surgery).
 Higher salaries leads to higher self esteem
which leads to better eating/exercise habits
which result in better weight control.

25. A note:
 Beautiful women do not better on the
marriage market than do average women.
 And, for men, looks don’t seem to affect
marriage prospects at all.

26. What if you were born with brains?

27. The Rising Payoff to Education
 The less educated are increasingly falling
behind.
 For men the disparity is substantial.
 For women, real wages declined or grew more
slowly for the less educated.

28. In 2003
 Women and men with college degrees
earned more than twice as much as high
school graduates.
 Among men, only those with college degrees
saw an increase in real wages.
 Real earnings declined for high school drop
outs but rose for those with college degrees.

29. And for those with beauty and brains….