Education and Women in the Labor Market

March 11, 2011, 6:00 am
Education and Women in the Labor Market
By LAURA D'ANDREA TYSON
Today's Economist

Laura D’Andrea Tyson is an economics professor at the University of California, Berkeley, and served as chairwoman of the Council of Economic Advisers under President Clinton.

In an American workplace reshaped by recession, globalization and automation, a college education may no longer seem to offer a clear path to economic success. But my experience over 35 years as a full-time worker (with an undergraduate degree from Smith and a Ph.D. in economics from the Massachusetts Institute of Technology) – and the experience of millions of other women in the labor force during the same period – indicate otherwise.

In 1970 (around the time I completed college), only about 22 percent of female workers had attended some college or had a college degree. By 2010, that figure had increased threefold to nearly 67 percent of all women in the work force, while the percentage of women with less than a high-school degree had declined to less than 7 percent from about 34 percent.

The dramatic increase in college education among women is one major reason that the earnings of female workers have increased, that the gap between male and female earnings has fallen and that, in recent recessions, the unemployment rate for women has been lower than the rate for men.

Over the last several decades, the real earnings of the median American male worker have stagnated. Indeed, in a widely cited recent report, scholars at the Hamilton Project found that these earnings may have declined significantly.

But while the real earnings of the median male worker have stagnated, the real earnings of the median female worker have increased considerably. Between 1979 and 2009, median real weekly earnings of full-time female workers increased by 31 percent, compared with an increase of only 2 percent for full-time male workers.

During the same period, reflecting these divergent gains, the gap between the earnings of male and female workers narrowed for all age groups, most noticeably for younger workers who are more likely than older workers to have a college education. Between 1979 and 2009, median real female earnings increased to about 80 percent of median real male earnings from about 62 percent.

In recent years, the narrowing of the earnings gender gap has stalled, and a sizable gap persists in most occupations, regardless of the skill, education or experience required. The remaining gap cannot be explained by economic variables like education, experience, race, industry or unionization and is a subject of intense debate.

There is little doubt, however, that discrimination and implicit biases against women, even in jobs requiring college or postgraduate education, continue to play a role, nearly 50 years after the passage of the Equal Pay Act in 1963.

Despite residual discrimination, women, like men, can significantly improve their earnings through education, particularly college education. The earnings of both male and female college-educated workers have risen relative to those of high school-educated workers for nearly three decades.

Today, women and men with a high school diploma earn little more than half of what college graduates earn and those without a high school diploma do even worse.

College-educated workers also receive a disproportionate share of nonwage fringe benefits, and the gap in such benefits between workers with a high school education or less and those with a college education has been growing.

During the last several decades, the median real earnings of women have outperformed those of men, not just for college-educated workers but for all levels of education. Although both women and men with less than a high school diploma suffered a significant decline in real median earnings between 1979 and 2009, the decline for women was only 9 percent, compared with a decline of 28 percent for men.

Real earnings declined for male workers who were high-school graduates or had an associate degree, while real earnings rose for female workers with the same educational attainment. And the real earnings of women with college degrees rose by 33 percent, compared with a 22 percent rise for their male counterparts, the Bureau of Labor Statistics reported.
Bureau of Labor Statistics

Despite the steep rise in earnings for college graduates relative to nongraduates, college attainment rates for young male adults have surprisingly and inexplicably stagnated, while they have continued to grow for young female adults. Since 1994, the share of 25-to-34-year-olds with at least four years of college has been higher for women than for men, and the gap has been getting bigger. For the last decade, young women have been more likely than young men to graduate from high school and to attend college, and once enrolled in college more likely to graduate.

A college education not only means higher earnings but also means lower levels of unemployment. Regardless of whether the economy is in expansion or recession, the unemployment rate is considerably lower for workers with a college education than for workers with lower educational attainment levels and is the highest for high school dropouts.

Partly as a result of the growing share of female workers with a college degree, during the last four recessions the unemployment rate for women has risen less than the unemployment rate for men. During the most recent recession, the unemployment rate for women rose to 7.7 percent from 4.4 percent, while the rate for men more than doubled to 9.9 percent, from 4.4 percent.
Bureau of Labor Statistics

Unemployment rates also vary significantly across sectors, and male workers face a higher risk of unemployment than their female counterparts at every education level, because male workers are more heavily concentrated in manufacturing, construction, and mining – sectors that are cyclically sensitive and that have been trending down as a share of employment for many decades.

Fewer than 5 percent of female workers are employed in manufacturing and fewer than 1 percent in construction, two cyclical sectors that suffered the largest absolute and percentage declines in employment during the most recent recession.

In contrast, the majority of female workers are employed in sectors like education and health, local government, and professional and business services, sectors that have been growing as a share of total employment since 1972, that are less sensitive to cyclical ups and downs and that are more likely to require a college education.

During the most recent recession, the continued gains in the demand for health care workers and the federal government’s support of state and local education have supported job growth in health and education, the two sectors with the largest female employment.

As Nancy Folbre warned in her Economix post on March 7, many education and health care jobs held by female workers are now at risk as the federal stimulus ends and state and local governments make deep cuts in spending. I share her concerns.

Significant reductions in federal, state and local spending on education at the K-12 level, at the community college level and at the college level threaten to reduce college attendance and completion rates, with deleterious effects on the future earnings and employment prospects of both men and women.

America’s businesses complain of a serious skill gap among American workers, and even with a very high unemployment rate, unfilled vacancies for high-wage jobs that require a college education are increasing. If they cannot find the necessary skills at home, many American companies will be forced to move elsewhere.

A college education will be even more important to getting and keeping a good job in the future than it was over the last 30 years for millions of women.

Rather than advise young people that a college education is no longer a guarantee of success, we should consider making at least some college education mandatory. A high school education is no longer sufficient.