Press Briefing by Deputy Secretary of Labor Kathryn Higgins, and Chair of Council of Economic Advisors Janet Yellen

The Briefing Room

1:30 P.M. EDT

MR. TOIV: Good afternoon. As you know, the President will announce this afternoon his strong support for legislation to strengthen the Equal Pay Act. In addition, the administration is releasing two reports -- the President's Council on Economic Advisors is issuing a report and the Labor Department is issuing a report as well -- both reports are on the subject of the gender gap. Here to talk about those reports and about the Equal Pay Act are the Chair of the Council of Economic Advisors Janet Yellen, and the Deputy Secretary of Labor and our former Cabinet Secretary as well, Kitty Higgins.

MS. YELLEN: Today's Council of Economic Advisors released a report titled, "Explaining Trends in the Gender Wage Gap," which summarizes the current evidence on trends and differences in the pay of malE and female workers. And I'd like to particularly thank my colleague, Rebecca Blank, for her leadership and hard work in producing this report.

The bottom line is that while the gap in female-male pay differences has narrowed substantially over the last 25 years, a gap still remains. And the remaining gap can't entirely be explained by differences between male and female workers, skills, and job characteristics.

The good news is that female-male pay differences have decreased substantially. The gap in average female-male pay has declined from about 40 percent in the late '70s to about 25 percent in 1997. Moreover, the unexplained differences in female-male pay, which is the difference that remains after differences between male and female workers in skills and in job characteristics is controlled for, that remaining unexplained gap fell in half -- it declined by half over the 1980s.

This evidence suggests that both women's skills and job choices are becoming more similar to those of men, and also that discrimination may be declining as well. And it's important to note that the convergence in men and women's wages has been particularly rapid for younger women. The bad news, though, is that there remains a significant differential between women's and men's pay. On average, women now earn about 75 percent of what men earn. Even after controlling for differences in skill and job characteristics, women still earn less than men.

While there are a variety of interpretations of this remaining unexplained differential, one plausible interpretation is the gender wage discrimination continues in today's job market. Direct studies of gender pay discrimination provide further evidence that discrimination still persists. These studies show continuing female-male pay differences that are not explained by productivity or job differences.

So, in short, we've come a long way toward greater equality in the pay received by men and women, but there is still too big a gap that remains. So we clearly need to continue our efforts to create equal opportunities for men and women in the labor market.

DEPUTY SECRETARY HIGGINS: Good afternoon. We just released a report which I think you may have just received. This really documents the trends over the last 35 years. Today is the actual 35th anniversary. President Kennedy supported or announced support for the Equal Pay Act 35 years ago today. And it's interesting to look at the pictures that we've been able to pull from the archives. Dorothy Height, who was with him when he announced support for this legislation, will be with us today. It's amazing.

Just to add a little bit to what Janet said, our report does document the history of what's happened. And the good news is that obviously more women are working now than 35 years ago in more diverse occupations with higher salaries than in 1963. And just to give you a couple of examples, in 1963 only 4 percent of women earned professional degrees; now it's over 40 percent. For example, women now represent 40 percent of those graduating from medical school and from law school. There has been 130 percent increase in the number of computer scientists who are women and a 60 percent increase in the number who are engineers.

But there, obviously, is still more that needs to be done because there is still a pay gap. Women only earn 75 percent of what men earn. The things that we believe are most important, the legislation we're going to announce support for today, would stiffen the penalties for violations of the Equal Pay Act, legislation that Senator Daschle and Congresswoman DeLauro have announced and endorsed.

We also want to continue to focus on expanding education opportunities because it really is education that will in the end make the difference. We also want to toughen our enforcement in terms of discrimination laws, both through the Equal Pay Act, but also through the executive order that the Labor Department has responsibility for, for federal contractors. And finally, an important part of this equation is continuing to raise the minimum wage. The women benefit disproportionately from increases in minimum wage.

Thank you very much.

Q: I have a question about what on average means. I mean, I guess if you took all the men and all women who are working, because of a glass ceiling and high salaries for the top where women haven't penetrated yet, you'd have kind of a lopsided average. Yet, if you took a manager at a certain level who is male and a manager at the same level who is female, is that what you're talking about, or is it this big ball of wax?

MS. YELLEN: Well, the first set of numbers that I gave you -- which is that back in 1963, women earned about 58 cents on the dollar for men, and now about 75 cents -- is a broad average. It looks at the median wage of full-time workers age 25 to 54. But when we control, as you just suggested for the characteristics of the jobs and the skills that are needed to do those jobs, we still see that there are significant differences in the pay of men and women -- of course, somewhat smaller.

Q: When you say gender discrimination, are you talking specifically about job for job at a lower level in the pay, or are you also factoring in the fact that women often don't get the -- no one gets to be President of the United States yet -- highest government salary, for instance, here?

MS. YELLEN: Well, when I suggest discrimination in pay, that's controlling for the jobs that women are in, and the skills that they bring and the experience that they bring to those jobs. That's sometimes summarized in what I called the unexplained portion of the pay gap, and that unexplained portion of the pay gap has declined over time; it represents the influence of everything that's difficult to account for in terms of job characteristics, industry mix, characteristics of workers, their experience in the labor force.

It's not -- that unexplained gap isn't proof of discrimination, but there are a variety of other studies that point strongly to discrimination as a factor. For example, studies that carefully look at men and women in similar occupations where productivity can be gauged directly, either through measures of output per hour, or sales. What we see are very small differences in productivity between men and women and much larger pay gaps. And I guess I would add also that audit-type studies that have looked at hiring suggest that there remains discrimination in hiring that's directed toward women. When blind tests are done, for example, hiring of musicians for symphony orchestras, one sees women hired in greater numbers when blind tests are done in audits.

DEPUTY SECRETARY HIGGINS: If I could just add to that a couple points. I think it's both. Women don't have -- continue not to have as much access to the broad range of occupations as men. It's something we need to continue to do. But there is also discrimination. We just, for example, reached a settlement last month with the CoreStates Bank in Philadelphia that resulted in $1.5 million in back pay for women employees. We had a settlement -- a case in March with the Allison Engine Company in Indianapolis -- amounted to about $500,000 in back pay for women workers.

So we need to continue to focus on expanding educational opportunities so that women have more choices, but we also need to make sure that we are combatting discrimination, and when we find it, that the sanctions are tough enough. And that's part of what the legislation were announcing support today.

Q: The discrepancies in those cases that you just mentioned were the result of discrimination?

DEPUTY SECRETARY HIGGINS: These are equal pay cases, essentially wage discrimination cases against women.

Q: Whose fault is it? Is it men trying to put women down? Can you say something definitive here?

Q: Yes. (Laughter.)

DEPUTY SECRETARY HIGGINS: Can we have a show of hands in the news room? Helen, would you like to come up here?

I think our society has changed over time, and if you just look -- again, our report talks about the historical trends. Thirty-five years ago the occupations which women had the opportunity to pursue were very limited. They were traditional female occupations. The opportunities for women are much greater now than they were 35 years ago, as a result not only of the Equal Pay Act, but of other civil rights laws.

So we're making progress, but there is more to be done. I think in cases -- and we can get you the specifics on these two particular cases if you're interested -- the fact patterns vary. And I don't want to generalize about -- make a statement that would suggest that it's one thing or another. There are a number of factors that go into these kind of cases.

Q: Well, that said, how do you address comments made by, for example, the female Metro editor of The New York Times who says, if women have families they're screwed, they're not going to get the best jobs here, they're not going to get the chance to make as much money as those who aren't?

DEPUTY SECRETARY HIGGINS: We think -- this administration has made balancing work and family a top priority. The first piece of legislation the President signed was the Family and Medical Leave Act. That's why this administration has put so much support behind child care, because it is -- we want to make sure that both parents can take care of their children and work. Women have traditionally had more responsibility for managing the children and home responsibilities than men -- it certainly plays a factor. I don't know about the specific case in The New York Times, but that's -- it's part of the real world today. Seventy-five percent of women who are working now have young children, so there's more participation. We need to make sure that the things that make it difficult for parents to work are addressed, like child care, like taking time off to care for your children. And that's why we've supported that. But are we there yet? Absolutely not.

Q: Well, unless we understand the wording correctly, and it's very, sort of, obscure, the Council seems to justify that child-bearing, per se, would also justify this gap in pay. And also, why has all this been tolerated for so long? Why isn't the act more tightly enforced?

ASSISTANT SECRETARY HIGGINS: What we are supporting today is legislation that will toughen penalties. The legislation that Senator Daschle and Congresswomen DeLauro --

Q: There are no penalties now?

ASSISTANT SECRETARY HIGGINS: There are not. We want to increase the penalties that -- so that there would be a tougher sanction. And we need to be more in enforcement, frankly. But again, I want -- we've made a lot of progress. I mean, what the reports show is that the gap has narrowed. There is still a gap, and partly it's discrimination, partly it's the need to broaden opportunities. But we have made progress.

Q: A question about the penalties -- the legislation the President is going to endorse today, according to the White House paper, would allow women to sue for full compensatory and punitive damages if they're subject to discrimination. Are there now caps on those damages, or do they not have the right to sue for those damages?

ASSISTANT SECRETARY HIGGINS: Let me ask Becky Blank because I'm --

MS. BLANK: Right now my understanding is they do not have the right to sue for those damages. The sorts of damages you can sue for under the Equal Pay Act are limited, compared to the damages you can sue for under Title VII, which is the broader coverage which covers race and ethnic background and religion. So that this essentially would put the provisions of the Equal Pay Act on the same footing as the provisions of Title VII and, therefore, put gender pay equality on the same footing as race or ethnic pay equality.

Q: So just to make sure we're clear, right now women do not have the right to sue for punitive or compensatory damages?

MS. YELLEN: Under the Equal Pay Act, yes.

Q: Secretary Higgins, one quick question about -- from the small business community. A lot of small businesses, speaking of lawsuits, are saying that they don't really have much guidance between trying to determine between equal pay and pay equity and, therefore, without any guideline from the government, it's going to be a legal free-for-all. Are you going to be addressing the question of guidelines so businesses can comply and, therefore, avoid lawsuits?

DEPUTY SECRETARY HIGGINS: At the Labor Department and I think also at SBA, we are trying to do everything we can to focus on compliance and not just enforcement. So, for example, we're using the Internet and we have a new -- what we call an e-law system, employment law system, that helps explain to employers what laws apply to them and how they can comply. And we want to provide technical assistance. The issue here is getting people to comply with the law, not just catching them when they don't.

Q: But you're going to be putting this out there --

DEPUTY SECRETARY HIGGINS: Yes.

Q: -- in very big ways.

DEPUTY SECRETARY HIGGINS: Yes. And we're doing this across the board in terms of our employment laws.

Q: Ms. Yellen, while we have you here, I just want to ask you a couple of questions on the economy. One is, do you think the unemployment rate has gotten so low that it poses a threat of inflation, or do you see inflation on the horizon for other reasons? My second question is, the yen has hit a seven-year low against the dollar. Is the downward pressure of the yen in danger of igniting a new bout of problems in Asia in terms of the financial crisis there?

MS. YELLEN: Well, with respect to the unemployment rate, certainly we are enjoying the lowest unemployment rate that we've seen since 1970, and it is a sign of a very strong economy. It's creating tremendous opportunity for those who have been at the sidelines to be absorbed into the labor market and make progress. This is a tight labor market and there is abundant evidence that the labor market is tight. That, of course, poses some inflationary threat and it's appropriate to monitor the economy for signs of that threat.

On the other hand, having said that, I don't see any evidence that inflation is rising. Quite the contrary, inflation has continued to decline strongly. The weakness of the Asian currencies and the strength of the dollar has been bringing import prices down and will continue to do so. So we have low core inflation, declining import prices, oil prices have been weak, and all of that is excellent on the inflationary front. So, of course, it's appropriate to monitor for the threat of rising inflation in these type labor markets, but productivity is strong and I don't see the cost pressures at this stage that would make me fear any imminent uptake in inflation.

With respect to the yen, we are naturally eager to see Japan take the actions that are necessary to restore growth to the Japanese economy. We think it's very important for continued recovery of the Asian region as a whole, and for the world economy.

Q: Speaker Gingrich is criticizing the Congressional Budget Office, saying -- threatening to cut the CBO's budget if it doesn't improve the accuracy of its forecasts. Do you think that's legitimate criticism, and what do you think about his threats?

MS. YELLEN: Well, frankly, I don't think it's a legitimate criticism, and politicizing the process by which -- what should be an impartial process of forecasting for budgetary purposes I consider to be highly inappropriate. I think we've tried very hard to produce forecasts that, for budgetary purposes that are not based on rosy scenarios, the administration continues to do that. And I think it's essential that the forecasts that are produced by ourselves and by CBO be credible and not part of a politicized process.

Q: -- CBO is not presenting forecasts that allow for large tax cuts. I mean, what --

MS. YELLEN: That's what I mean by rosy scenarios.

Q: That's why Gingrich -- oh, well, I'll explain it to you later. (Laughter.)

MS. YELLEN: We've put a lot of hard work into producing credible forecasts that would enable us to face up to the problems we -- to take the tough steps that we've had to take to bring the budget deficit under control. And it's thanks to that process that we can now look forward to surpluses and I would hate to see that changed.

Q: What did you think of Chairman Greenspan's economic assessment today?

Q: Rosy.

MS. YELLEN: He pointed out that we have an economy that is -- I can't remember his exact words, but I think he said something to the effect of healthier than he had seen in a lifetime of daily viewing of the economy. And I certainly agree with that.

It's really -- it has been decades since we have had this combination of low unemployment, low inflation, strong growth, job opportunities. And, as I indicated in answer to the previous question, yes, labor markets are tight and it is appropriate to monitor for inflationary pressures. But I haven't seen them and I think that Chairman Greenspan similarly indicated that he's watching for signs of inflation as well; that it's appropriate to do that, that, at this point there seems to be no imminent danger of an inflationary threat.

Clearly, the crisis in Asia is leading to a drag on our economy, but that comes in the context of very strong, robust domestic investment and consumption spending. And there's a lot of uncertainty about how things will play themselves out going forward. At this point, I think, things look on track for strong growth with continued job creation.

Q: On the earlier question on the yen, do you actually see a risk of depreciating yen leading to a wave of competitive devaluations in Asia? I mean, there's a report today that the rhetoric out of China is -- seems to be changing somewhat. China suffered a decline in exports for the first time in 22 months in May, and it seems to be a knock-on effect from the depreciating yen. The Chinese Central Bank governor refused to reiterate their previously stated policy of not devaluing the yen. Is this a rising concern?

MS. YELLEN: Well, I don't want to comment directly on the value of the yen, but as I indicated, the prospects for growth in Japan and domestic demand-led growth are of concern to us, both for the Asian region and for growth in the world economy as a whole.

The Chinese, I think, have, to date, very helpfully -- taken a very helpful role in indicating that they would not devalue their currency, and I believe that that still remains Chinese policy.

Q: What are the prospects that Congress will pass the equal pay legislation that the President is endorsing today?

DEPUTY SECRETARY HIGGINS: We're very optimistic about what Congress will do this year. It's obviously a short congressional session and there are not many days left, but this is a very powerful issue with people all across this country. And this is a Congress that I think is going to have to go home and face the voters, and they're going to want to have something like this to point to that they've acted on and has broad appeal.

Q: What will the President do after today's announcement that he's endorsing it?

DEPUTY SECRETARY HIGGINS: He will continue to work for it, as the rest of us in the administration will, and talk about it.

Q: Do you suspect this will produce an avalanche of law suits?

DEPUTY SECRETARY HIGGINS: I don't think so. I think -- again, our focus is on compliance. We want to both educate employers and workers about their rights, and employers about their responsibilities. And we want them to understand that there is a consequence for not following the law. But our goal here is not to end up in long, protracted legal fights; it's to get -- to close the pay gap.

Q: Is there a gender pay gap in the federal government? And if there is, why is it there?

DEPUTY SECRETARY HIGGINS: I think the reports we have show that there is a pay gap. It is smaller than in the private sector. The same issues affect women workers I think whether in the public sector or in the private sector. And the same things we need to do in the private sector, we also need to do in the public sector to expand opportunities for women.

Q: How would this law strengthen penalties? I don't understand what would be different. What would the consequences be?

DEPUTY SECRETARY HIGGINS: First of all, as I understand -- and I'm not an expert on the penalties per se, but it would harmonize the penalties that now exist under Title VII so that women would have another avenue for seeking recourse, which is the super-compensatory damages. So it's important, again, in terms of enforcement to have these things be the same, and not essentially to forum shop when you're trying the enforce the law. That's, as I understand, the heart of what the effect of this change would be. This is one total.

Becky, you may want to comment more.

MS. BLANK: There are four provisions in this law that presumably would be important. One is the -- the most important one is the one that Kitty just talked about, that it essentially allows women to receive additional damages that they currently can't receive under the Equal Pay Act.

But secondly, in addition to that, it makes it possible for you to talk about your salaries with your co-workers and not be at risk of being fired by you boss, which is something that has been a problem in some situations in the past. Thirdly, it allows for some additional training for EEOC employees with regard to pay discrimination issues. And, fourthly, it establishes a national award for pay equity in the workplace, which is to recognize and promote the achievement of employers who have made strides to eliminate pay disparities.

Q: Is there any equity here in the White House? Is their some symbolism that Americans can look at here that people -- women make the same that men make in the equal jobs? Since they're so few here, it might be easier to figure out.

SECRETARY DEPUTY HIGGINS: Well, again, I think this administration has a pretty good track record in terms of hiring women in senior jobs.

Q: What about the White House?

DEPUTY SECRETARY HIGGINS: Well, let me talk about the administration. The question is what's the test of this President's commitment on this issue. And we can run down the lists of appointments that are first -- we have the second woman chair of the CEA, but that's a first for this administration. We have the Attorney General, Secretary of State, the U.S. Trade Ambassador, the Secretary of Labor, HHS. We have some one-two combinations for the first time -- in the case of my department, Secretary Herman and I are the first two women to run a major Cabinet agency.

Q: But most women don't have these top level jobs. What about these mid-level --

DEPUTY SECRETARY HIGGINS: I understand, but it's important in terms of how laws get set and enforced that women have these positions. So that sort of sets -- you help establish priorities and set the tone and decide what gets done.

Q: But there are 13 Cabinet positions and four women.

Q: -- makes the same as a male here?

DEPUTY SECRETARY HIGGINS: I think in terms of White House --

Q: You're talking about wages, not positions.

DEPUTY SECRETARY HIGGINS: Right, but the question is whether -- they're two issues we talked about. One is the access of women to jobs, and the other is discrimination. So the question is what's been responsible over 35 years for closing the gap? Women have had more opportunities. This administration has provided women more opportunities in terms of senior positions than have been provided in the past --

Q: Enough?

DEPUTY SECRETARY HIGGINS: Then the question is -- it's never enough, Sam. We can always do better.

Q: There are 13 Cabinet positions. There are four of you women who hold them. And you have 53 percent of the U.S. population. Do you think that's equal?

DEPUTY SECRETARY HIGGINS: We want to continue to improve on that record, and we will.

But in terms of -- then there is the issue of discrimination. And there, again, the White House can give you those numbers, but there are a number of senior women -- women in senior positions here who are paid the same as their male colleagues.

Q: Can I follow on that question, because I have heard informally around here in conversations, not with senior women but with women in lower positions, precisely that complaint -- do you have any sense of whether that's a valid complaint, or is it just griping?

MS. YELLEN: I can give you some figures on political appointments, of which there are a large number. There are almost 3,000 political appointments. Of those in the Clinton administration, 45 percent have been women. And women's pay, averaged over all of those positions, is 85 percent of that of men, which in both -- in terms of hiring percentages and in terms of the pay gap, both things represent improvements from the previous administration.

So clearly there remains some small pay gap. In part it's related to -- I think largely it's related to the different exact positions and their occupational distribution. But that's better than the numbers I cited to you for the economy as a whole by a large margin.

Q: Is that over five years, or is that currently serving?

MS. YELLEN: This is 1997 figures.

Q: You said it was better than the previous administration. What was the previous administration?

MS. YELLEN: In 1992, the percentage of women in the Bush administration, political appointments, was 40 percent, and the average pay of women was 75 percent that of men.

Q: Now it's --

MS. YELLEN: Eighty-five percent.

Q: But 45 versus --

MS. YELLEN: Forty-five percent women in the positions now versus 40 percent in '92; 85 percent of male pay versus 75 percent.

Q: Is there an unexplained pay gap in these positions?

MS. YELLEN: I don't know -- it's an interesting question, and to the best of my knowledge that's a rather complex statistical analysis which, to the best of my knowledge, has not been done.

Q: We're all underpaid except Sam. (Laughter.)

Q: Here, here.

Q: You women submit to us men the Baptist --

Q: That's right. (Laughter.)

Q: Do you have any concerns that the GM strike may have any effect on the economy, and is this symptomatic of the tight labor market that you have talked about?

DEPUTY SECRETARY HIGGINS: We are monitoring the GM strike and we are in touch with both sides. And we are hopeful that it will be resolved. But the number of people who have been laid off -- I think there's something like 16,000 workers are not working because of the strike. But at this point -- Janet could comment more about the overall economic effects. I don't think we see anything quite yet.

Q: And you'll be watching it, monitoring it --

DEPUTY SECRETARY HIGGINS: Oh, yes, we're watching it very closely.

Q: Does it have the potential to be destructive to the economy as a whole?

MS. YELLEN: At this point I think it's premature to make that kind of call.

MR. TOIV: Okay, thank you. Mike will be out in a second.

THE PRESS: Thank you.

END 2:00 P.M. EDT