What’s keeping wages down and driving inequality up in Washington

The State of Working Washington 2018: Part 3

Several factors are contributing to stagnating wages and growing inequality, including declining unionization, and gaps in pay by gender and race rooted in historic barriers and systemic discrimination.

Declining Unionization

While no single factor is entirely responsible for the growth in inequality, declining unionization has been a contributing influence.[8] Following the passage of the National Labor Relations Act in 1935, the spread of collective bargaining led to decades of faster and fairer economic growth that persisted until the late 1970s.

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Since the 1970s, however, declining unionization has fueled rising inequality and stalled economic progress for the middle class. Nationally from 1972 to 2007, one-third of the rise in wage inequality among men, and one-fifth of the rise in wage inequality among women, is attributable to declining unionization. Among men, the erosion of collective bargaining has been the largest single factor driving a wedge between middle- and high-wage workers.[9]

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Gender Pay Discrimination

Another persistent source of income inequality is the gender pay gap. In Washington, a typical woman (or one earning median wage) is paid 22 cents less per dollar paid to a typical man.[10] While the gender pay gap has declined since 1979, the state has not made any significant or lasting progress in closing the gap since the late 1990’s.

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The gender pay gap is not an education gap – nor is it solely a product of having fewer women in some industries than others. At every level of education, women are paid less than similarly educated men – and the wage gap rises with additional education. The gap also exists in all industries – including those in which more women are employed than men.[11]

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Gap in Average Monthly Wages versus Male Workers, All Industries, Washington

Sector Ratio of Female
to Male Workers
Gender Wage Gap
(Average monthly wage)
Health Care and Social Assistance 3.34 $1,898
Educational Services 2.23 $855
Finance and Insurance 1.67 $3,520
Other Services (except Public Administration) 1.26 $1,221
Accommodation and Food Services 1.16 $279
Management of Companies and Enterprises 1.16 $2,007
Arts, Entertainment, and Recreation 1.04 $843
All NAICS Sectors 0.93 $2,013
Retail Trade 0.92 $1,452
Real Estate and Rental and Leasing 0.91 $914
Professional, Scientific, and Technical Services 0.87 $2,694
Public Administration 0.80 $1,248
Admin. & Support and Waste Mgmt. & Remed. 0.71 $969
Agriculture, Forestry, Fishing and Hunting 0.56 $736
Information 0.48 $4,781
Utilities 0.44 $2,264
Transportation and Warehousing 0.44 $1,203
Wholesale Trade 0.43 $1,680
Manufacturing 0.37 $1,359
Construction 0.22 $1,447

Source: U.S. Census Quarterly Workforce Indicators, Full Quarter Employment (Stable); monthly wage calculated as 3-quarter weighted average for 2017 Q1 to 2017 Q3.

Racial Pay Discrimination

The National Picture

All demographic groups are experiencing growing income inequality and slowing growth in living standards. At the national level, since 1979 median hourly real wage growth has fallen short of productivity growth for all groups of workers, regardless of race or gender. However, these wage trends are markedly different for men than for women, and for blacks relative to whites.

Median hourly wages for both white and black men have fallen, with black men suffering larger losses (7.2 percent, compared a 3.0 percent loss for white men). While median hourly wages of black and white women have increased, white women’s wages grew much more (30.2 percent) than those of black women (12.8 percent).[12]

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The Pacific Region

In the Pacific region of the U.S. (Washington, Oregon, California, Alaska, Hawaii), pay disparities by race and ethnicity have remained unchanged or have expanded relative to 1979 levels. The median wage for White workers increased to $23.95/hour (+$4.69), while for Hispanic workers it increased to just $14.99/hour (+$3.78), and for Black workers it declined slightly to $16.92/hour (-$0.10).[13]

Tableau

Put another way: in 2017 a typical (or median) Black worker was paid 29 cents less, and a Hispanic/Latinx worker 37 cents less, per dollar paid to a typical White worker. For Black workers, that gap has more than doubled since 1979, and for Hispanic/Latinx workers the gap has not narrowed substantially since the late 1980s.

Tableau

Washington State

In Washington, the gap in average monthly wages between White workers and workers who are people of color grew dramatically between 1990 and 2017 (save for workers of Asian descent, a subset of whom are employed in very high-wage information, technology and professional sectors). In 2017 alone, the racial gap cost workers of color an average $12,228 to $20,838/year.[14]

Gap in Average Monthly Wages versus White Workers, All Industries, Washington State

Avg. monthly wage (2017 dollars)

Gap in avg. monthly wage compared to White workers

Equivalent yearly wage gap

Increase in wage gap
Race/Ethnicity

1990 Q2

2017 Q2

1990 Q2

2017 Q2

1990

2017

Amer. Indian/ Alaska Native $2877 $3961 $833 $1448 $9996 $17,376 74%
Asian $3263 $6551 $447 -$1142 $5364 n/a n/a
Black or African American $3112 $3876 $598 $1533 $7176 $18,396 156%
Hisp./Latinx $2614 $3673 $1096 $1737 $13,152 $20,838 58%
Native Hawaiian or Pacific Islander $2816 $3825 $894 $1584 $10,728 $19,008 77%
Two or More Race Groups $3058 $4390 $652 $1019 $7824 $12,228 56%
White (not Hisp./Latinx) $3710 $5409 n/a n/a n/a n/a n/a

Source: U.S. Census Quarterly Workforce Indicators, Full Quarter Employment (Stable), second quarter average monthly wages. Inflation adjusted to 2017 dollars using CPI-U-RS.

As with the gender pay gap, workers of color cannot educate themselves out of pay disparities. Nationally, as of January 2017, average hourly wages for White college graduates are far higher ($31.83) than for Black college graduates ($25.77) – and the national unemployment rate for Black college graduates was 4.0 percent, compared to 2.6 percent for White college graduates.[15],[16]

Footnotes

[8] Economic Policy Institute, “Union decline and rising inequality in two charts”, https://www.epi.org/blog/union-decline-rising-inequality-charts/.

[9] Economic Policy Institute, “How today’s unions help working people”, https://www.epi.org/publication/how-todays-unions-help-working-people-giving-workers-the-power-to-improve-their-jobs-and-unrig-the-economy/.

[10] American Community Survey 2017 1-Year Estimates, Sex by Industry and Median Earnings in the Past 12 Months for the Full-Time, Year-Round Civilian Employed Population 16 Years and Over, Washington State.

[11] Based on EOI analysis of U.S. Census Quarterly Workforce Indicators, Full Quarter Employment (Stable) wages and employment; monthly wage calculated as 3-quarter weighted average for 2017 Q1 to 2017 Q3.

[12] Based on Economic Policy Institute analysis of unpublished Total Economy Productivity data from Bureau of Labor Statistics Labor Productivity and Costs program, and Current Population Survey Outgoing Rotation Group microdata.

[13] Based on Economic Policy Institute analysis of Current Population Survey data.

[14] Based on EOI analysis of U.S. Census Quarterly Workforce Indicators, Full Quarter Employment (Stable), second quarter average monthly wages. Inflation adjusted to 2017 dollars using CPI-U-RS.

[15] Economic Policy Institute, “Racial gaps in wages, wealth and more: a quick recap”, https://www.epi.org/blog/racial-gaps-in-wages-wealth-and-more-a-quick-recap/.

[16] For a deeper review and analysis of the racial pay gap, see “Black-white wage gaps expand with rising wage inequality”, Economic Policy Institute, https://www.epi.org/publication/black-white-wage-gaps-expand-with-rising-wage-inequality/.

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