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Friday, December 8, 2023
Dec. 8, 2023

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Pay gaps widen in Washington

Racial and gender-based wage inequality grows thanks to technology boom

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Washington State Employment Security Department regional economist Scott Bailey talks about the state of Clark County?s economy on June 1, during an Economic Forecast Breakfast event at Hilton Vancouver Downtown. Bailey is one of the authors of a report looking at wage inequity in Washington.
Washington State Employment Security Department regional economist Scott Bailey talks about the state of Clark County?s economy on June 1, during an Economic Forecast Breakfast event at Hilton Vancouver Downtown. Bailey is one of the authors of a report looking at wage inequity in Washington. (iStock.com) Photo Gallery

As Washington wages increase to keep pace with inflation and retain tech workers, the gaps between the high- and low-wage earners, women and men, and workers of different races are widening.

Despite having the highest statewide minimum wage in the nation, wages of the top 10 percent of Washington households was 12.6 times that of the bottom 10 percent in 2021, according to a report from the state Employment Security Department. That’s a yawning gap compared to 1990, when the gap stood at 7.7 times.

In dollars, the 2021 gap averages more than $350,000 annually between the wages of the highest and lowest paid workers in the state.

The gulf in pay equity is even wider for women, as well as Black, Hispanic and Indigenous workers, in part because the tech industry, dominated by white and Asian workers, accounts for such a large portion of Washington’s economy.

Growing distance

Wage inequalities are reflected in the growing distance between the state’s average and median wages, which has nearly doubled compared to three decades ago. In 2021, the average wage was 56 percent higher than the median wage, compared to 23 percent in 1990.

When the average wage is increasing faster than the median wage, it means that wages for better-paid workers are rising faster than for lower-paid workers, so wage inequality is increasing, regional economist with the Washington Employment Security Department Scott Bailey, one of the authors of the report explained.

“That can mean, for example, that higher-wage workers have more money and can bid up housing prices, making it harder for lower-wage families to be able to buy a house or to find a decent rental,” Bailey said by email.

Ultimately this inequality leads to slower economic growth as economywide spending declines, because it constrains lower-wage workers’ spending on living expenses and raises the saving power of higher-wage workers.

These gaps reinforce gender and racial wage inequities, which have worsened since the 1990s. Women in Washington earned on average about 64.4 percent of what men made in 2021, a decrease from nearly 70 percent in 1992.

For Black, Hispanic and Indigenous people, the gap is even larger.

Black and Indigenous workers saw the slowest wage growth. While the data doesn’t offer more information on how wage inequities play out at the intersection of gender and race, legislative efforts for wage equality regularly acknowledge women of color are impacted most.

Workers of Asian descent earn substantially higher than average wages in Washington.

So, comparing the pay of white and Asian workers to other historically underrepresented communities reveals different levels of inequality from simply comparing communities of color to white workers, said Chris Martin, an economist with Syndio, a Seattle-based pay equity analysis platform.

However, workers of Asian descent are not monolithic. “There is likely a more unequal distribution of wages within this group than any other,” according to the state report.

Workers who are described simply as “Asian” by demographers have vastly different heritages. The group includes members whose families have been in the U.S. for many generations, as well as recent immigrants.

Opportunities for high-paying jobs “are not equally spread based on place of origin,” Martin said, adding that East and South Asian workers tend to have better pay outcomes than workers of Southeast Asian descent. “It’s something that we see especially in the tech sector.”

Industry and location factors

Among all U.S. states, the tech industry wields the greatest economic influence on Washington, shaping 20 percent of the economy. Nearly 1 in 10 residents works in tech, and most of those jobs are concentrated in the Seattle metro area, where the sector influences 30 percent of the economy.

This tech presence leads to geographic disparity in wages across Washington, authors of the state report noted. The median hourly wage in 2021 was $40.80 in King County compared to $19.45 in Okanogan County.

These geographic variations in pay are greatly determined by the main industries in these counties, the occupational pattern of employment in those industries, and the cost of living, with housing costs being the biggest driver, the authors said.

Similarly, a lot of the gender and racial pay gaps in the tech sector are driving the gaps in Washington, Martin said.

“Wages in this sector are so much higher than they are in other industries in Washington,” Martin said. “Even within tech companies, the pay in customer-facing roles tends to be lower than pay in technical roles, and there tend to be demographic differences in terms of who more likely works in these roles as well.”

On a national scale, the tech sector has been dominated by white and Asian American men more so than the rest of the private sector. Black and Hispanic people, and women generally, were substantially underrepresented.

White people occupied over 80 percent of higher-paying executive roles in the industry, more than roles like programmer and engineer. Women held 20 percent of the executive positions compared to men.

In 2021, Washington fared better than the national average. Yet in the private sector, women, people of color and particularly women of color were significantly less likely than white men to be in executive and managerial roles, said Martin, sharing an analysis of the U.S. Equal Employment Opportunity Commission data.

White men were nearly twice as likely to be executives than white women, three times as likely as men of color, and over four times as likely as women of color. In the Seattle area, the gaps are similar and smaller.

For the most part, Seattleites do not want to perceive themselves as discriminating against women or minorities, Seattle civil rights attorney Darryl Parker said.

“But the discrimination is still happening — it’s subtle and almost subconscious,” Parker said.

That’s because it’s a little bit about equal pay for equal work, and a lot about equal access to opportunities, said Christine Hendrickson, vice president of Syndio.

If, for example, two people are in the exact same position, and one person gets paid more than the other, it’s an easy, obvious comparison. But without equal access to advance to higher-level, higher-paying jobs, the pay gap widens in a way that gets around pay-discrimination laws.

“Organizations need to look inward and hold leaders accountable to provide equal opportunities for women and employees of color to advance,” Hendrickson said.

When managers pick one employee over another to do more challenging work, it leads that person to gain more experience and qualifications over others in the same role, said Parker.

“It creates an opportunity gap,” he said, adding that those choices are sometimes driven by subconscious biases.

“It’s not racial in the sense that the person thinks ‘I’m not going to give the promotion to this person because he’s Black,’” Parker said. Instead, it goes like, “I identify with this person, they feel like a better fit.”

This January, an amendment to Washington’s Equal Pay and Opportunities Act went into effect requiring employers to disclose salary and benefit information in job advertisements. The law also added other protections like prohibiting discrimination in career advancement opportunities and retaliation when a complaint is made.

Legislative efforts

In March, U.S. Sen. Patty Murray, D-Wash., and Rep. Rosa DeLauro, D-Conn., reintroduced the Paycheck Fairness Act in Congress, the fifth attempt to pass the act since it was introduced in 1997. Building on the Equal Pay Act of 1963, the bill seeks to eliminate pay discrimination by requiring employers to share wage information and explain why gaps, if any, exist. It also offers employees and job applicants protections if they reveal their salary histories or file complaints against their employers.

“If we’ve had a federal Paycheck Fairness Act that protects women, requires employees to provide proof on pay disparities, and supports equal pay practices, that will back up not just what Washington state does but also offer federal protections,”Murray said. She added that she is working to do everything she can “to get this common-sense bill across the finish line” in Congress.

Pay transparency requirements may very well narrow the pay gap, Hendrickson said. But they’re unlikely to close it without further addressing the need for more transparency in access to opportunities.

“We still need to make sure that we’re (creating) equal access to opportunities,” said Hendrickson, pointing to a new wave of opportunity-transparency laws in Colorado and Illinois. “Those opportunity-transparency laws give you the road map to the ladder to move up within your organization.”

Acknowledging there is more work to do to close the wage gap, state Rep. Tana Senn, D-Mercer Island, prime sponsor of Washington’s Equal Pay Opportunity Act in 2018, said her team is currently collecting data to show bias is still a barrier in Washington.

She added that they are exploring ways to address the intersectionality of gender and race in the wage gap.

“So far, we haven’t come up with any policies yet but that doesn’t mean we’re not continuing to try and to explore because it is definitely an issue,” Senn said.

The gaps have likely worsened since the COVID-19 pandemic dealt a serious blow to women’s economic security, continued Senn.

“Lack of child care meant working fewer hours … or passing up career advancement opportunities, or just not participating in the workforce at all,” she said.

Parker also noted a growing backlash among companies to the initial enthusiasm for diversity, equity and inclusion efforts spurred by the racial reckoning of 2020.

“I’m seeing different departments saying ‘No, your diversity and inclusion setup is unconstitutional or it violates some statutes,’ or arguments like ‘It’s discrimination in and of itself to have a diversity and inclusion department,’” he said.

Murray said if Congress passes the Paycheck Fairness Act, “it would tackle pay discrimination head-on in every state, helping to break harmful patterns of discrimination.”

Wage gaps are not only about potential discrimination at the workplace. They are also a reflection of unequal opportunities prevalent throughout society, said Martin, “like access to education, health care and housing.”

Much of that disparity shows up in employment segregation, or the unequal distribution of women and people of color in lower-paying jobs.

In a 2022 report, Center for American Progress researchers found “occupations that women and people of color tend to be segregated into often offer the lowest compensation, provide less access to benefits, and limit workers’ economic security.” This is often at the heart of gaps in job quality, wage and career development, according to the report.

To address these systemic issues within the workforce, Hendrickson pointed to the European Union’s push for equal pay for equal work of equal value, which comes into effect in 2027. Canada’s Federal Pay Equity Law is another example, similar in its goals.

Under both laws, employers determine the value of female- and male-dominated job classes to identify and remedy any wage gaps for predominantly female jobs. In the EU, the burden of proof shifts to employers, to justify their pay ranges are equitable.

“It’s such a different lens than we take in the U.S.,” Hendrickson said, “And we are many steps from fully adopting equal pay for equal work of equal value.”

Ultimately, there is work that organizations are required to do by law and other work that they should proactively do, said Martin. “And even if they do all that work, some of these pay gaps will remain if the broader macro factors don’t change.”

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