Poorly Paid Care Workers
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Poorly Paid Care Workers

IN MOST COUNTRIES, IT IS PRECISELY THE WORKERS IN THE CARE PROFESSIONS WHO ARE PENALIZED IN TERMS OF REMUNERATION, THUS INCREASING THE GENDER GAP. LACK OF STRONG TRADE UNIONS AND A LOW LEVEL OF SOCIAL STATUS ARE THE MAIN CAUSES OF THIS PENALIZATION

Workers in care occupations play a critical role in modern economies. Childcare workers, for example, play a strong role in influencing a child’s development, as well as allowing parents of children to balance their family lives with their own employment demands. Despite the importance of care work, however, care workers are, in most countries, paid less relative to workers in other occupations.
 
The disparities in pay for care work matter for several reasons. To start: care work is heavily gendered, with women working around two-thirds of care jobs, on average. Ensuring fairer wages for care workers is this closely tied to promoting greater gender equality in the labour market. Additionally, demand for care work is also rising across most European countries, increasing the importance of ensuring stronger relative wages for worker in care occupations.
 
In a recent study, Emanuele Ferragina and I used data from 25 different countries to investigate the primary factors behind why care work is paid less than other types of jobs. In nearly all the countries we investigated, care workers are paid far less than workers in other jobs but, notably, there was large variation in this ‘care penalty’ across countries. In the United States, for example, the care penalty is much larger than in countries such as Finland or Denmark. Italy performs about average, but the data exclude informal care workers, which are likely a large segment of the Italian care economy.
 
What factors can explain differences in care penalties across countries? The size of the care penalty is not about how many women versus men work in the jobs, we find. Moreover, we find that differences in the care penalty are not primarily due to relative supply or demand for care work in the country, or the demographic composition (such as the age profile or share of immigrants) within the country. Instead, the most important factors driving the size of the care penalty were labor market institutions, such as collective bargaining coverage, and the size of the welfare state.
 
More inclusive labor market institutions not only offer more voice and security for workers in formal care occupations, but also contribute to more equal wages across the rest of a country’s distribution. As a result, stronger unions and higher collective bargaining coverage are an important factor in shaping the care penalty. More generous welfare state benefits, meanwhile, increases the wage that care workers demand when entering employment. Where out-of-work protections are stronger, care workers can wait to receive a stronger wage and better working conditions before agreeing to enter such a job. These patterns also contribute to fairer wages for care workers relative to other jobs.
 
The importance of stronger labor market and welfare state institutions becomes all the clearer when we estimate what the care penalty in the United States could look like if it had the collective bargaining coverage and social spending of the average country in the European Union. Rather than having one of the largest care penalties, the United States would have a care penalty that is essentially no different from its European peers. This would contribute to notable gains in improving gender differences in wages in the American labor market.
 
As the need for care occupations continues to rise, it becomes all the more important that workers in such jobs are paid according to their social and economic value. Care work is of critical importance to a well-functioning economy, yet the heavily-female jobs are often poorly paid. Stronger labor market institutions and out-of-work income support are two factors that can contribute to smaller care penalties across wealthy countries.
                                                                    
 

by Zachary Parolin, assistant professor at Department of social and political sciences

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