Capitalism, labour and the problem of pay equity


Jeanne McGuire 

There are a number of problems which confront us when we decide to tackle the issue of pay equity. We could, for example, get lost in a debate about the basis of the value of labour power as it applies to the matter of pay equity.  

Should wages reflect the amount of socially necessary labour power required to produce the labour power? If that were the case, then across the board, women should earn more than men as more women (35 percent) have post-secondary degrees than men (29 percent). If you are young, 25 to 34 years of age, the ratio is tilted even more in the direction of women, 70 percent of whom have post-secondary degrees compared to 53 percent of men in that age category. And education is a considerable factor in determining the amount of socially necessary labour power required to produce labour power.  

Should wages reflect the strength of the workers’ movement to demand and receive improvements to their wages? Obviously, no progressive would deny such a positive reflection of the organization and struggle by workers, wherever they may be, to counter the power of the owners to determine the price of labour power as well the conditions within which it must work. In this area, the balance leans towards men, who have had a longer and more militant and, thus, successful history of unionization and struggle to advance their demands for more and better wages, working conditions, benefits, pensions. Women have offset this historical deficit with respect to unionization partly because of the decline in unionization overall, and partly because they are increasingly part of the public sector, which has become one of the largest unionized sectors in society.  

Should wages reflect the amount of surplus value that labour produces for the owner? In this regard, women suffer because so much of the work they do has been confined to the service sector. If you exclude the category of public administration, the service sector accounts for 89.8 percent of employment for women, compared to 68.3 percent for men. Many parts of the service sector do not produce any surplus but are, in fact, paid out of the social surplus generated by labour that does produce a surplus. Not being part of the surplus producing work force has had serious implications for women’s wages, primarily because it has meant that they have been denied the full power of the strike which threatens the profit of the owner. For the sectors of the workforce dominated by women, too often the strike is not a cost but a potential savings for the employer.  

Not being a part of the surplus producing workforce should not be understood to mean that women’s labour is less valuable. It has less leverage within capitalism, but the work that women do within the public sector and the service sector in general is work which creates (education, childcare) and maintains (health and fitness, food services, personal services) the workforce. It is also important because there are two sides to surplus – its production and its realization. The service sector allows for the realization of the surplus that has been produced (sales, marketing, packaging, transportation). If we were to remove the capitalist class from the equation, a rationally organized social system would obviously value the care of its children, the provision of health services, the sanitation services such as garbage collection and other forms of waste management as highly as – and in some cases more highly than – it valued the production of t-shirts, shoes, blenders, computers and golf-carts. Do we really need another brand of sneaker?  Or do we really need more nurses? The pandemic provides the answer.

For the moment, however, let us deal with calculating the enormous amount of money that is not being paid to women. Calculating the actual amount that is lost is made difficult by the differences in job categories, the number of hours worked, whether the work is paid by the hour or by the month, the length of time in the job, the size of the company, the effect pregnancy/childbirth has on employment and the income that employment provides.    

Here are some of the things we know about the wages which women do not receive. If income is calculated based on hourly income, women in 2020 received 89 cents for every dollar a man earned. That is an increase from 81 cents for every dollar a man earned in 1998. Earning 11 cents less doesn’t sound like so much until apply it to actual wages. In 2018, that meant women were earning $4.13 less per hour than men. Multiply that by the hours worked per week (say 40) and you can see that over the course of a year women were taking home a seriously reduced pay-packet.

If the calculation is based on annual wages earned, the gap is larger – only 71 cents per dollar of men’s wages in 2019, up from 63 cents per dollar in 1998. The reason that hourly wages are a greater percentage than annual wages is because more of the female workforce is part-time – 16 percent of women compared to 4.8 percent of men. Thus, while the hourly wage of women is 89 percent of men’s hourly wage, when you factor in the total number of hours worked, which includes the part-time workers, women’s annual wage packet is only 71 percent of men’s. The other effect of part-time work on wages is the reduction of the ability to unionize. Part-time work also means a lack of benefits like paid sick days and paid family care days, which reduces the number of hours worked when other responsibilities intervene in the work schedule. Lower income also means smaller pensions – a coat which women are forced to wear for the rest of their lives.

Much of the improvement in the wages of women relative to men reflects the increased participation in the work force, specifically moving from part-time to full-time work as well as moving into better paid occupations. So, while there were few women auditors and accountants in the 1950’s, 58 percent were women by 2014.

According to Statistics Canada, the wage gap for women was largest in the trades and in transportation and equipment operators, where women earned only 72 cents for every dollar a man earned. It was smallest in the natural and applied sciences, where women earned 92 cents for every dollar of a man’s wage.  

While it is true that the gap in wages decreases with the amount of education, that only holds for the first two years of work after the degree. In that first two years, a woman with a professional degree will earn 92 percent of what a man would earn. Within 2 to 5 years after earning her degree, she will now be earning only 86 percent of what he would earn. With an undergraduate degree a woman in the first two years after graduation would be earning 86 percent of what a man would earn but from 2 to 5 years after graduation would be earning only 76 percent of a man’s wages.

This trend of the wage gap increasing the longer one works after graduation assumes gargantuan proportions if you look at the earnings of men and women over a 15-year span.  According to StatsCan, as reported in the Globe and Mail in October 2021, a man with a bachelor’s degree would earn $1,292,247 over that period while the woman would earn $816,282. That is a gap of $475,965, almost $32,000 a year less than the man with the same qualifications. The amount of the difference is more than 50 percent of her total wage over the course of the 15 years. 

This increasing gap applies to those with high school education as well. Over the same 15-year span a man who has graduated high school would earn $723,499 while a woman with the same qualification would earn only $344,012, a difference of $379,487. That difference, which works out to just over $25,000 a year, amounts to more than 100 percent of what she did earn over the 15 years. In other words, had she earned the same as her male counterpart, she would have more than doubled her income over that period.  

Two things can be learned from the above figures. First, while education diminishes the percent difference between the wages of men and women, it doesn’t get rid of it by any stretch of the imagination. The second is the clear expression of a process that seems counterintuitive on the face of it – the longer women work the further they drop behind.  

One reason for this is the effect that having children has on the wage gap for women. In a society which apparently glorifies the role of motherhood and claims to assign a high priority to the needs of children, the treatment in the workforce of women who have children stands in stark contrast to these putative “ideals.” Women experience a 48 percent drop in wages in their first year of having a child and an additional 14 percent decrease during the five-year period after having a child. Clearly, having children seriously diminishes women’s ability to work full time and to avail themselves of opportunities for increased responsibilities and promotions at work. Childcare responsibilities – having to be home or at the day care or at the school at a certain time each day – restrict the hours of availability to work. This also erodes, falsely, the perception of their commitment to the workplace, which further impedes their access to improvements in their wages and status at work.  

Employment ghettoization is another feature leading to lower wages. Of the positions in the 10 highest paying fulltime, full year job categories, less than 20 percent of the workers were women. In contrast, 75 percent of the workforce in the ten lowest paid occupations were women. Even within these categories, women earn less than their male counterparts.  

One of StatsCan’s most significant calculations makes clear that the reasons we have listed – family care responsibilities, loss of seniority and advancement opportunities, occupational segregation, lack of unionization, underrepresentation in higher wage categories, part-time work versus fulltime work – account for only 30 percent of the wage gap that exists between men and women. These conditions can be altered. We must work to remove, wherever possible, these sources of the 30 percent wage differential. 

That leaves the other 70 percent of the wage gap. This part of the gap is a result of nothing more than gender-based discrimination. Nothing – neither hours of work nor level of education nor family responsibility – justifies this differential. Now is the time to demand an end to gender-based discrimination. Now is the time to demand than women be paid what present wage conditions specify for the work they do.  

It needs to be noted that all these calculations apply with even more serious consequences for Indigenous women, immigrant women, racialized women and trans women. We need to link our demand for an end to gender-based discrimination to a demand for an end to all wage discrimination, an end to all forms of discrimination in the workplace.  

We know that the wage gap drains millions from the pocketbooks of working women, their families and their communities. In July 2021, People’s Voice calculated that the total amount of the wage gap, when measured across the entire economy, would add up to $148 billion. Each year. Every year. 

As mentioned, this is a loss that women carry with them into their futures. Their children carry it in the form of lost opportunities. Their communities carry it in the form of social problems such as food and housing insecurity. The effects of inequitable pay ripple across society and into the future. It is not just a women’s problem, it is not just a workers’ problem, it is a social problem.  

Photo: Huge pay equity rally on Parliament Hill by Public Service Alliance of Canada [Credit: PSAC] 

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