Earnings Ratio Raises Questions About Economic Outlook

The wage gap, or earnings ratio as it is alternatively known, is a well-established phenomenon that has remained pervasive for many, many years. The 2017 earnings ratio was 80%, meaning that women earned 80% of their male counterparts’ salaries, for those that worked full-time, and full-year. Now, you’re probably thinking “Yeah, yeah, I know, women make less than men,” and it’s an atrocious reality of the job market today, but why would I be bringing this back up?

The New York Times recently published a study that involved thousands of colleges throughout the United States and profiled their economic diversity, including median family income, and economic outcomes for graduates. The University of Puget Sound just happened to be on their list. Going through these profiles, of course I examined the schools typically thought of as being elite such as Stanford and Harvard, which had surprising stats among themselves. However, these schools are clearly quite different than UPS in terms of their sizes, locations, and core focuses. 

Moving on to the UPS profile, the statistic that was perhaps most surprising was the median individual income at age 34 for graduates. For men, this figure stood at $61,100; male graduates of UPS at age 34 fare better than those graduates of other Northwest Conference universities (at the median point). For women, the median individual income at age 34 was just $45,400. This puts the earnings ratio at approximately 74.3% for graduates of UPS, 6 percentage points below the national rate. (The years do not align perfectly for these two rates, however the change in the national rate is not likely to have exceeded 6 percentage points in less than a decade, thus the difference between the two earnings ratios remains significant.)

This result is not to say that female graduates of UPS are guaranteed to do worse than their male counterparts at the level of a school-based cohort, nor the national level. However, it is interesting to consider that such a difference exists, likely as a function of the fields that women tend to enter and how their career paths track relative to men’s, which is not something captured in the study. Labor force participation and experience can have a huge impact on an individual’s earnings profile. And, though the difference in median incomes for men and women is stark, there are a number of factors that would need to be assessed to determine if this difference was more a function of self-selected career paths (though this wouldn’t excuse the earnings ratio, just help explain it), or if it remains more a function of a discriminatory job market. 


One Reply to “Earnings Ratio Raises Questions About Economic Outlook”

  1. Great story here! Very interesting to see some localized (if a bit uncontrolled) data on the pay gap. Regarding the persistence of the gap after controlling for the factors you cite, there’s a great Planet Money Indicator podcast episode on this from Aug. of last year: https://n.pr/2Kk596l

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