• Women’s Wages

    Apr 21 • Behavioral Economics, Demand, Supply, and Markets, Gender Issues, Households, Macroeconomic Measurement, Uncategorized • 644 Views

    I just learned that April 17 was Equal Pay Day. Assuming that the average woman earns 22 percent less than the average man, she would have to work until mid-April to equal his pay.

    For women’s pay statistics, I like to look at the Institute for Women’s Policy Research (IWPR). In a recent paper, they say the gap is 17.8 percent because a typical woman’s median weekly earnings are $684 while for men, $832.

    Calling it “occupational segregation,” the IWPR reports that jobs we associate with women pay less than “male occupations.” For example, female secretaries earn $651 a week and even that is $16 less than their male counterparts. Similarly, female cashiers earn $373 weekly and male cashiers, $411. You can see that in lower paying “female” jobs, still men earn more. (All amounts are for median weekly earnings.)

    For the wage gap in occupations dominated by men, the IWPR shows that although the wages are higher, again, women take home less. The median weekly earnings for female drivers/sales workers/truck drivers is $511 a week. A male in the same category? $712. Female janitors/building cleaners? $418. Male janitors/building cleaners? $514. Female CEOs? $1464. Male CEOs? $2122.

    Focusing on the wage gap for professional women, Harvard economists Clauda Goldin and Lawrence Katz cite children as the reason because women take more time off for child rearing and that time off decreases their lifetime earnings. Even women with career continuity tend to select lower paying specialties like general practitioners rather than neurosurgeons or salaried in-house council rather than a high pressure law firm. And, for working mothers with an MBA, 15 years after graduation, the gender pay gap is 25%.

    Super Freakonomics tells us that women are subject to greater pay discrimination for being obese or having bad teeth.

    The Bottom Line: Supply and demand for men and women differ in labor markets.

    If you would enjoy reading more about the gender pay gap, the occupational charts are fascinating in the IWPR report. For a lighter approach,  the Freakonomics blog quotes Goldin and Katz. But, if you prefer seeing their conclusions firsthand, you can look at one of their papers here.

    And finally, an interesting fact: It matters where you live. Washington, D.C. has the smallest wage gap while Wyoming has the largest. This Huffington Post article tells more.

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  • The Surprising Glass Ceiling in Sweden and France

    Female Human Capital

    Apr 20 • Businesses, Demand, Supply, and Markets, Economic History, Gender Issues, Households, Labor, Thinking Economically, Uncategorized • 648 Views

    To one group of economists, oral contraception is all about human capital.

    1970 appears to have been a turning point. 40 years ago, increasingly, women started entering law school, medical school and other professional programs after college. Instead of majoring in education, more women became judges, physicians, dentists, architects, veterinarians. They entered professions that required years of their time.

    As a result, female human capital–a woman’s accumulation of productive knowledge–became more valuable.

    Asking why, some economists are saying one reason is oral contraception. The proliferation of birth control pills among unmarried women that started during the early 1970s helped them to time marriage and children. Once women could plan child birth, they could better determine when and how to develop their professional skills-their human capital. They could enter and complete longer educational programs, decide the duration of employment, and have control over professional goals. As a result, women entering labor markets could earn more. Earning more, their value climbed in marriage markets. And, because more women were marrying later, postponing finding a spouse was a less costly decision since, as economists Goldin and Katz express it, marriage markets for older women “thickened.”

    Our bottom line: A recent economic study suggests that the pill helped to narrow the gender wage gap, to “upgrade” women’s career choices and to encourage later marriages and child birth. I wonder also whether it materially contributed to U.S. economic growth (but could not find data to confirm it.) Yes, oral contraception is a major social issue but its economic significance is probably considerable.

    I started researching the economic impact of oral contraception after reading NY Times financial journalist, Annie Lowrey’s economix blog. That took me to papers by Goldin and Katz from 2002 and a group from the University of Michigan. I also looked at an interesting discussion of “The Efficiency of Gender Equity.”

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  • In NYC and China, developers are building smaller apartments.

    Living Solo

    Apr 18 • Behavioral Economics, Economic History, Gender Issues, Households, Labor, Macroeconomic Measurement, Uncategorized • 730 Views

    I’ve just started to count the people I know who live alone. School friends, relatives, neighbors. Some are in their twenties and early thirties, unmarried. Others are divorced. Several are widowed.

    31 million of us live alone. Almost one-third of all households in the U.S. are composed of one person. Five million adults, younger than 35, live alone.

    In 1950, living alone was the exception. Not any more. Why?

    Maybe because of affluence, feminism, and technology. An increasingly affluent society has increased our life spans. With one spouse outliving the other, a woman (more typically) or a man is left to live alone. Women working outside the home have less dependence on a spouse. Women can marry later (age 26.5 average) and leave a marriage more easily. Fifty percent of all mariages will probably end in divorce.

    And with pets becoming family members and the proliferation of social media, are we really alone when living solo?

    The bottom line? Ups, downs, and long term economic trends have touched the very essence of how we live. When the economy dipped, more college grads moved in with their parents. More people postponed marriage. More postponed divorce.  On the other hand, with the upward trajectory of the economy between 1940 and 2000, we became more of a live alone society.

    This New Yorker article started me thinking about living alone and is the source of my statistics. In “The Boomerang Generation,” you might look at research from Pew for insight about multigenerational living and here is the census data that confirms the increase in single person households. Finally, for more about the impact of economic growth on our lives, I always love to return to Pursuing Happiness by Stanley Lebergott.

    An interesting single household fact: In 2000, Utah had the fewest single person households and Washington D.C the most.

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    Coke’s “‘Delicious! Refreshing! Exhilarating!’” Marketing Strategy

    Apr 18 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Households, Innovation, Thinking Economically • 2621 Views

    By Mira Korber, guest blogger.

    Imagine Coca-Cola for a moment. Polar Bears, Santa Claus, a time when soda still came in refillable glass bottles…perhaps, for the health-conscious, high fructose corn syrup? And if you live in Singapore, you might even think of a “Hug Me” Coke vending machine.

    As part of Coke’s new marketing campaign, it overnight-installed a unique vending machine at the University of Singapore. It gladly dispenses Coca-Cola — but only after the “customer” hugs the machine in a specific way does the drink pop out.  Therefore, Coke has sympathized with (and definitely capitalized on) Singaporean youth and its growing propensity towards public displays of affection, which have been traditionally repressed in Asia. Fuzzy feelings + soda = positive and pleasurable psychological association between the two…well, that’s Coke’s hope for future sales, anyway.

    Engaging customers through the “Hug Me” machine is a perfect example of  Coke’s static advertising strategy morphing into interactive cultural experience. And this speaks volumes about a new marketing strategy; two fascinating videos the company produced explain a new “liquid linked” advertising plan and how consumers will largely shape how the Coca-Cola brand evolves. Traditional 30-second TV adverts are phasing out. Social collaboration with customers is moving in.

    In the 1930s, the company invented the now iconic image of Santa Claus as rotund, bearded, jolly, and sporting a red and white suit. (Incidentally, he was chugging red-and-white clad soda bottles in every ad.) Now, Coke isn’t presenting its consumers with cheery content, but seeking their help, or hugs, to revamp its image.

    The Bottom Line? Through unconventional marketing, such as the “Hug Me” machine or Coke “Happiness” truck and vending machines, Coca-Cola subliminally sparks positive feelings towards its product. By shifting its focus to popular culture infiltration and stimulation of “happy” feelings, Coke has linked a positive consumer reaction with its beverage.

    Notes: The “Hug Me” Machine in action. How hugs are “gesture-based” marketing. A failed marketing trope. Coke’s sales are indeed up. Coke’s advertising strategy through the years – interesting.

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    Panamá’s Economic Puzzle

    Apr 17 • Businesses, Demand, Supply, and Markets, Developing Economies, Financial Markets, International Trade and Finance, Labor, Regulation • 596 Views

    By Mira Korber, guest blogger.

    Just two days ago I bought a plane ticket to Panamá City International Airport in Tocumen. I will be participating in a classical music festival there, somewhat ironically studying music from centuries past as brand-new skyscrapers are erupting all around. Panamá is booming, and not just with music.

    Panamá is among the fastest growing economies in all of Latin America; the 2011 GDP surged at 10.6%, up from 9.2% in 2010. A new, glittering skyline boasts the 70-story Trump tower. Central America’s first subway system project broke ground in 2011.  And a $5.25 billion construction project promises a third channel to the Panamá Canal.

    As international trade has blossomed, the canal has connected the Americas and linked East with West for the past 100 years. Just since December 1999, when the US relinquished control of the canal to Panamá, it generated $6.6 billion in revenue.

    Now, workers feverishly construct a larger, deeper channel to accommodate massive tankers and cargo ships coming from Asia –primarily China — heading to the United States consumer market. The project (if it doesn’t delay) is slated for completion in 2014, a century after the canal’s inaugural year. Once open for passage, the new channel will support 50% more traffic each day, and may encourage ships to travel east to Panamá from Asia, instead of traversing the Suez Canal in Egypt.

    Amidst massive development projects and increasing foreign investment (+33% in 2011) lurk other concerns. Panamá’s history is blighted by crimes, perhaps most notably by ex-military dictator Manuel Noriega, whose 1983-1989 rule was marked by drug trafficking, money laundering, and murder of political opposition.

    As this stigma looms, 40% of the population in Panamá lives in poverty, with an ever-growing divide between the wealthy and the poor. Even the development comes with concerns about an economic bubble – remember all those new skyscrapers? Most are dark — empty — at nighttime.

    The Bottom Line? Panamá’s rapid growth is remarkable. The Economist likens its economic expansion to Singapore, although it’s not even 1/5 as wealthy (“on a per-person basis”).  However quickly Panamá may develop, the risk of corruption and interference with markets rises just as ominously. Case in point: Singapore ranks 2nd on the Index of Economic Freedom; Panamá ranks 55th.

    PS. You’ll get a from-the-ground perspective on the Panamanian economic explosion when I see it in person this June.

    Read about Panamá directly from El País, a Latin American newspaper (in English). NPR podcast on the subject. Delays in the construction of the new Panamá Canal channel?  NY Times offers insights on growth and Panamá’s military history.

     

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