Association for Public Policy Analysis & Management

The gender wage gap is persistent in the US labor market. Some sociological and economic accounts of the sources of the gap focus on differences in human capital attainment (Polachek, 2004; 1981; Tam, 1997) or on compensating differentials in job quality (Blau and Kahn, 2016; Budig and England, 2001, Waldfogel 1997). However any such differentials are insufficient to wholly account for the wage penalty (Blau and Kahn, 2016; Levanon, England, and Allison, 2009; Sorensen, 1994). Occupational segregation plays an additional and important role (England 1992; Reskin and Roos, 1990). The residual is often interpreted as evidence of within-job discrimination, in which men and women matched on qualifications doing the same work in the same setting are paid differently (Petersen and Morgan, 1995).

However, empirical analyses are almost entirely either focused at the occupational level (i.e. Levanon, England, and Allison, 2009) or are single-firm case-studies (i.e. Petersen and Saporta, 2004). However, as Reskin et al. (1999) note, “occupations and industries do not employ workers or constitute the settings in which people work,” and nor do they set wages. Employers do and the firm appears likely to play an important role in the gender wage gap (Blau and Kahn, 2016). Recent research in economics has used matched employer-employee data from Portugal (Card, Cardoso, and Kline, 2015) to show that firm-level segregation accounts for a substantial fraction of the gender wage gap and from Canada (Fuller, 2018) to show that firm- segregation is the primary driver of mother-hood wage penalties, though firm-segregation appears to matter less for the motherhood penalty in Norway (Petersen et al., 2014). However, the lack of detailed matched employer-employee data has prevented similar analysis of the wage gap in the contemporary United States.

We draw on a new source of employer-employee matched data to estimate the contribution of firm-level segregation to the gender wage gap in the contemporary United States Service sector. Our data come from The Shift Project, which collected survey data from 39,385 hourly workers employed at 120 of the largest retail and food service firms in the United States (Schneider and Harknett, 2018; 2019). We estimate the gender wage gap and assess the contribution of differences in human capital, compensating differentials, and occupational sorting to the gap. We then use the unique matched structure of the data to assess the degree to which firm-level segregation explains any residual wage gap. We interpret any remaining wage gap as most reflective of within-job discrimination.

We find an unadjusted gender wage gap of $1.24 (equivalent to 11% of the average hourly wage). We find that accounting for human capital accounts for 39% of the gap, but none of the gender wage gap is explained by demographic characteristics, managerial status, or compensating differentials. We then introduce fixed effects for industry subsector, which account for 18% of the gender wage gap, and, finally, employer fixed effects, which account for 34% of the gap. After controlling for firm, the gender wage gap is reduced to $0.58.