(Why) Are Women Paid Less?

Approximately 70% of employer’s expenses consist of labor costs. An employer that hires only females can save 20 cent per dollar compared to one that only hires men. Since a female worker saves the company 20 cents per dollar, she is performing equally to a man вЂ" to a lower cost. Since marginal benefit versus marginal cost for women is 20 cents higher than the ratio of men, there should be a clear incentive for hiring women. There has been a major discussion over the passed years about the questions around whether women and minorities are being wage-discriminated on the basis of their sex/ethnicity. This paper will elaborate on the part of women. In the 1950’s one third of the US workforce was made out of women compared to today where two thirds are females. Apparently, this can be seen as a result of more women entering the labor market, whether they are proactively or reactively introduced to the market. According to McDowell & Thom in Principles of Economics (2006), some call this effective competitiveness while others reject it and call it discrimination, so the question arises вЂ" are women despite their market representation earning less than males?

In chapter eleven in The Economic of Public Issues, the author explains that some differences in wage are inescapable due to factors of risk. In occupations such as firefighting were males represent 92 percent of labor there needs to be an incentive to risk one’s life. Safe jobs tend to pay less than “dangerous” jobs simply since is to compensate for the risk workers at dangerous jobs take in dying at work. So when trying to explain some of the gaps that are present among the wages between males and females - one has to consider that - in some occupations such as firefighting were the labor is dominated by males, the salary is higher вЂ" not because they are males but because of the occupational danger. It is to bring the amount of firefighters to the level demanded that the higher wage is offered, without it an insufficient number of firefighters would be available. The graph illustrates how the quantity (of firefighters) demanded can reach equilibrium.

The graph illustrates that in order to increaser the amount of firefighters to the demanded quantity, they employers need to increaser the wage so to the level where it compensates for the risk firefighters take in dying.

Answers to Questions

1. The question does not imply whether employee A or B is female or male, however if we hypothetically could assume that employee A is a female, she might be working less due to a certain fact e.g. having to care for a child. This prevents her from working as hard as employee B (which we assume is a man). So, instead of offering overtime payment, perhaps the employer should offer a higher ordinary wage for all.

Employee A: 36 hours/week * $20 = $720

Employee B: 42 hours/week [(40*$20)+(2*$30)] = $860

%-difference: $140/$860 = 0.14 = 14%

2. The British study is entailing something very interesting. The reason why men with children are earning more than men without children вЂ" on the condition that they have wives that do not work fulltime вЂ" is because the employer then understand that the male employee has an family to support (and thus needs a higher salary) but knows that he will work as usual since the employer assumes that the wife is going to care for the child/children. An interesting point in Economic Principles