Lilly Ledbetter started work as a supervisor at Goodyear Tire and Rubber plant in Alabama in 1979. She worked there for the next two decades. Towards the end of her time at Goodyear, she began to suspect that she was earning less than her male colleagues. An anonymous note in her mailbox confirmed it. Despite being praised by her bosses, they had given her smaller raises than the men who worked around her.
Over the course of her time at Goodyear, pay discrimination cost Ledbetter more than $200,000 in salary. Worse, because the statute of limitations had passed, she couldn’t recover it. The story led President Barack Obama to sign the Lilly Ledbetter Fair Pay Restoration Act, which guarantees that such a situation cannot recur in the US.
Pay discrimination is often categorised as a ‘women’s issue’, but it goes further than that. Injustice at work undermines the sense of fairness that is fundamental to a healthy workplace. By paying Ledbetter less, Goodyear hurt her financially. But it also failed to live by the principle of equal pay for equal work. Because the Ledbetter family had fewer resources, they all suffered from Lilly’s mistreatment.
Many Australians were left feeling like Lilly Ledbetter a few weeks ago when figures came out that showed the gender pay gap is now at a 20-year high. Among full-time workers, the average male weekly wage is $1559, while the average female wage is $1276. In other words, blokes get an 18.2 percent wage premium every week of the working year.
That premium isn’t simply about the presence of dangly bits. To understand what’s going on, it’s vital to recognise that pay equity for women is interlinked with pay equity across the workforce. The remorseless rise of inequality is the main culprit for the rising gender pay gap.
A bit of background on inequality. Over the past generation, most measures of inequality have worsened. The top 1 percent’s income share has doubled, the top 0.1 percent’s share has tripled, and the richest three Australians now have more wealth than the poorest 1 million.
In terms of earnings, we’ve seen significantly larger pay rises at the top than the bottom. For those in the top tenth of the labour market (think senior managers and anaesthetists), earnings have risen three times as fast as in the bottom tenth of the labour market (think checkout operators and waitstaff). If those in the bottom tenth had enjoyed the same percentage wage rises as those at the top, they would be earning an extra $16,000 per year.
The drivers of inequality include technology, globalisation and the decline in union membership. But a rising gap isn’t inevitable. Across the advanced world, some countries are choosing policies that limit inequality, while others are opting to let it rip. Here in Australia, we face the same decisions: do we want a society that looks like Downton Abbey, or one more in keeping with our great egalitarian traditions?
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If we opt to cut employment conditions, reduce supports for vulnerable families, and limit training opportunities, then economic inequality will likely continue to worsen. Inevitably, the result will be a rise in the gender pay gap. (Which is one reason my colleague Claire Moore has been pushing the government to keep collecting good data through the Workplace Gender Equality Agency.)
Among the lowest-paid occupations in Australia at present are child carers (97 percent female), hairdressers (89 percent female), and cleaners (65 percent female). Among the highest-paid are surgeons (13 percent female), financial dealers (17 percent female) and actuaries (35 percent female). If we let the pay gap between child care workers and surgeons grow, the gender pay gap will grow too.
There is nothing about capitalism that demands more inequality. In the decades after World War II, Australia saw a ‘great compression’, in which wages rose faster for those earning the least than for those earning the most. Today, many people around the globe are asking why it’s fair for CEOs to get a bigger pay rise than those who clean their offices. From the Vatican to the White House, inequality has become one of the signal issues of our age.
For an egalitarian Australia where we pride ourselves on the absence of class distinctions, addressing inequality should also be a top priority. Without a strategy to tackle inequality, our nation will struggle to reduce the gender pay gap. Because of that, inequality is a feminist issue.
Andrew Leigh is the Shadow Assistant Treasurer and author of Battlers and Billionaires: The Story of Inequality in Australia. His website is www.andrewleigh.com.