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Wage Determinant Paper

In: Business and Management

Submitted By randysteven
Words 713
Pages 3
Randy Smith
Professor Baer
Microeconomics 102
30 April 2012
Education and Earnings Among Men and Women Everyone out there in this world would always like to make more money or think they are getting underpaid. From the grunts in the labor line to the stars of the NBA, people are always going to feel they deserve more than what they are getting paid. Growing up and making ways through grade school into high school everyone has told students that education is the key to making more and more money throughout their careers. Not only do women have lower real earnings than men but people with lower education also have lower real earnings than others with the higher education. There is a strong positive relationship between he amount of education one invests into and one who does not and their salary earnings on a year-to-year basis. Men have always made more than women throughout American history. This could partly be based on the fact that women used to be more of the home keeper and raises children for families where father’s worked. Even with men making more than women, the amount of education a person has whether, male or female, raises the amount of income for that particular person. For example, “High school graduates earned almost 50 percent more than their counterparts with less than a high school education. Male college graduates working full-time, year-round earned $75,130, compared with $40,112 for men with only a high school education.” (Gwartney, Stroup, Sobel, & Macpherson 286). The amount of education can greatly affect the amount of intelligence and motivation in the workforce. “In the case of women, college graduates earned $49,326, compared with $28,657 for those who only graduated from high school. The earnings of both men and women continued to increase as they earned master’s and doctoral degrees.” (286). Women’s earnings will continue to rise and eventually close the gap but for now they continue to increase with education increase. “Earnings for women with college degrees have increased by one-third from $605 to $809 [weekly income] since 1979 on an inflation-adjusted basis.” (TED: The Editors Desk). Men with college degrees have risen by one-fifth from $908 to $1,089 (TED: The Editors Desk). The wage difference between men and women will most likely still be there for years to come but the gap between them will continue to become closer as time goes on.
The investment a company puts into a worker can help protect their high wages because of the specific skill they possess at their individual job. Some people develop a special skill performing their job year to year to where it would be too much of an inconvenience and expensive to higher and then train that new employee to perform at the same ability of the employee they are replacing. There are few people out there that can develop a specialized skill like “heart surgeons, trial lawyers, engineers, business entrepreneurs, and many other specialized workers is limited in occupations in which specific skills, knowledge, and human capital investments contribute to job performance.” (287). People with specialized careers don’t have to worry about being paid less for the same work because their work comes with such rarity.
In conclusion, women are getting paid less than men for performing or specializing in the same work. College education helps both men and women earn higher wages at any position compared to others who only have a high school education. When an employee is invested in the company and has special skills they become valuable to the company and too expensive of an asset to try replacing at a lower cost. Therefore, there is a strong positive relationship between he amount of education one invests into and one who does not and their salary earnings on a year-to-year basis.

Gwartney, James D., Richard L. Stroup, Russell S. Sobel, and David A. Macpherson. Microeconomics: Private and Public Choice. 12th ed. Mason: South-Western Cengage Learning, 2009. 285-97. Print.
TED: The Editor's Desk. Bureau of Labor Statistics. United States Department of Labor, 23 Oct. 2003. Web. 23 Apr. 2012. <>.

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