Interview by Barbara Bumatay Picayo
Rachel Inafuku, PhD is a Research Economist at the University of Hawai`i Economic Research Organization (UHERO). She works on public policy research that addresses critical issues in education, housing, and labor within the state of Hawaiʻi. In having a career in economics and analytics, she has made her expertise a useful tool in pursuit of her passion to make positive change in Hawaiʻi. Rachel is a woman to know! We asked her several questions to better explain some of the gender pay gap issues in Hawaiʻi.
Additionally, see Rachel Inafuku’s latest report released in May about the gender pay gap in Hawaii here. (Click on the UHERO Report button).
Hi Rachel, can you start off by telling us a little about you?
Hi! I'm Dr. Rachel Inafuku and I currently work as a research economist at UHERO. I have a PhD in economics from the University of Hawaiʻi at Mānoa and a BA in economics from Loyola Marymount University. My research focuses on Hawai`i's education and labor markets. The goal of my research is to continue to improve Hawaiʻi's education and labor market landscape through research that informs public policy decision making. When I am not Dr. Inafuku at work, I love spending time surfing, going to yoga classes, or having a chill night in with my husband.
We’d love to know your background and experience leading up to now. Also, what is it like to work for UHero?
After graduating from my undergrad in California, I immediately moved back home to Hawaiʻi and thought that I was going to start a career as a financial advisor. I would receive economic forecasts from analysts and realized that I wanted to be doing more of that kind of analytical work instead. That was the turning point that prompted me to apply for the PhD program at UH.
Upon entering the PhD program, I found UHERO who hired me as a research assistant. I realized that working as an economist focused on public policy research in Hawai`i was my ultimate dream job. It was really merging my interest in analytics with my passion to make positive change in Hawaiʻi. After graduating from the PhD program, UHERO offered me a full time economist position. As a UHERO economist, I get to work with the best team. We are an extremely diverse group -- I have colleagues from other US states, Hungary, Canada, New Zealand, and more. Bringing together so many different types of people and perspectives ultimately makes us better researchers.
Other than gender inequity in Hawaiʻi, what other issues and data do you like to follow?
I have a very broad set of research interests within the education and labor economics fields. Something that I am truly passionate about is advocating for more of Hawaiʻi's high school graduates to enter higher education. The need for college educated workers is only increasing and I want to see high skill, high paid jobs filled by our local graduates in the future. I released research earlier this year that estimated the returns to several types of college degrees (certificates, 2-year, and 4-year) and am also going to be studying other higher education related topics in the near future.
Do you have any data on which industries or fields locally are lacking in workers with the appropriate education? In other words, in which fields are there gaps of qualified educated workers?
I have received the same question from many different people, asking about which industries have shortages in Hawaiʻi. That is something we have not looked into yet, mostly because the data isn't sufficient. However, since it's such a high demand question it is something we'll probably have to think further about.
Ok, moving on to the gender gap statistics. What is the pay difference between men and women in Hawaiʻi?
In Hawaiʻi, the median working woman earns 84 cents for every dollar earned by a man.
Which ethnic group of women in Hawai`i experience the biggest difference in pay to men? The Micronesian group sees the largest gender pay gap in the state with women earning 81% of men's earnings.
Why do you think this is? Does this mirror the US on a whole?
There are several potential factors as to why Micronesians experience a larger gender pay gap than other ethnicities, however the data is not sufficient enough to point to a definitive conclusion. Potential factors include culture, career choices prevalent among specific ethnicities, age distributions by ethnic group, among others. Hawaiʻi’s ethnic makeup is very unique and there has not been a study at the national level that identifies gender pay gaps by the ethnic groups I have looked at to my knowledge. US studies looking at the gender pay gap usually look at Asians or even Asians and Pacific Islanders as a whole rather than breaking it down by specific ethnicities, which is not very relevant in the Hawaiʻi context.
Which jobs or industries stand out either in that the pay gap is more extreme or that the pay gap is actually reversed? Why do you think these outliers exist?
My research finds that physicians, surgeons, and chief executives exhibit some of the largest gender pay gaps compared to other occupations in the state. This is perhaps not surprising since these occupations tend to be dominated by men. Something that makes studying the gender pay gap so difficult, is that there is not one "catch all" explanation as to why these large pay gaps exist. In the case of physicians, it could be that women tend to work fewer hours than men and are thus paid less or that they are more likely to work in certain specialties that pay less on average. There are many potential reasons, but narrowing down is the difficult part.
On the other hand, the wage distribution tends to exhibit more equality when looking at lower paying jobs. For example, among tour and travel guides, women earn slightly more than men on average. I find that there is an abundance of women earning low to mid wages, but a lack of women at the top of the earnings spectrum.
What do you think are the biggest factors specific to Hawaiʻi's gender gap?
I actually do not find Hawaiʻi's gender pay gap to be unique or special relative to other states. It is really a reflection of what is happening across the nation. I think what is unique about Hawaiʻi's gender pay gap is that it still exists despite the fact that we have way more wage compression, less economic diversification, higher unionization rates and less overall income inequality compared to the rest of the US.
With that being said, what is likely contributing to Hawai`i's gender pay gap is the same as the national gap. I like to break out these factors that influence the gender pay gap into two groups. First, there are factors that can be addressed through public policy and societal change such as increasing childcare services, offering more flexible work environments, and distributing household and caregiving duties more equally between men and women. On the other hand, there are gender pay gap contributors that are not a result of any gaps or failures, but are instead driven by differences in genders. For example, research has shown that men are more likely to choose their college majors based on financial incentives while women are more likely to choose their major based on their passions and helping others.
How does less economic diversification play into a community's pay gap?
If you think about states with more economic diversification (like California for example), you have all kinds of jobs ranging from hotel housekeepers to NASA aerospace engineers and everything in between. This diversification can bring about some level of inequality. For example, many of the top paying careers (data scientists, CEOs, cardiovascular surgeons, etc) require a higher education. Since wealthier students are more likely to go to college, these are the people who are more likely to enter these high paying jobs than those from lower socioeconomic backgrounds. In Hawaiʻi, we have less economic diversification -- we lack many of the careers with extremely high payouts because these industries simply don't exist here (e.g., tech-related sectors like biotech, fintech, etc). Therefore, the difference (in terms of income) between Hawaiʻi's top paid workers and the lowest paid workers is much smaller than in places like California, where there's much more economic diversification and high paying industries.
Now let's think about this in the context of the gender pay gap. For a long time, workers who were (and are) in high paying occupations were predominantly men. These occupations included careers like CEOs, surgeons, and many positions in STEM. There's tons of reasons why this is, but it will take too long to explain. If men are more likely to work in these high paying careers than women, then we should expect the gender pay gap to be larger in places where there is more diversity (i.e., a large number of both high and low paying jobs/industries). As mentioned above, Hawaiʻi lacks many high paying industries due to its lack of economic diversification, therefore there is more wage compression and less room for pay gaps (whether it be gender pay gaps, ethnic pay gaps, etc.)
What changes or trends have you noticed in the last 20 years?
Something I noticed over the years is that companies started shifting towards more "family-friendly" work environments. This trend was accelerated in recent years because of the pandemic. Now, the ability to telework is a high value asset that can be used in negotiating job offers. Some companies may have to offer work-from-home benefits to stay competitive with competing firms. This could potentially change the landscape of the gender pay gap in the coming years.
We have heard you mention the need for government support for childcare and business' support for work flexibility, but do you have anything more specific in mind and if yes, what are they and why?
I think that the future of office work is no longer going to be a 9 to 5, clock in and clock out work environment. I think that telework and hybrid work exploded during the pandemic and is here to stay. Telework benefits not only will be used as a bargaining tool for companies to stay competitive, but also benefit the employees and contribute to a more "family-friendly" work environment. In Hawaiʻi, increasing the telework environment could really impact our community. For example, many of the high paid, high skill jobs on Oʻahu are predominantly located in Honolulu. A working mom who lives on the westside with an office in Honolulu would gain back at least 2 to 3 hours of her day if she shifted from in-person to remote work. Although the pandemic did increase telework, compared to other states, Hawaiʻi has much lower rates of remote work.
Moreover, on the government side as well as the business side, it is important to ensure that both men and women have sufficient maternity and paternity leave. However, I have to admit I have much less knowledge on this topic to be able to speak more on it.
What are some actions or legislation that is happening statewide to rectify the gender pay gap situation? Nationwide?
The federal government delivered $52 billion in COVID-19 relief funding for states to support the childcare industry during the pandemic. However, this funding ended in September of 2023. Several states are doing things such as extending their relief funding and increasing eligibility limits among others.
In Hawaiʻi, something that has already begun is the Ready Keiki Initiative. The state is aiming to increase access to preschool to 100% of Hawai`i's 3- and 4- year olds by the year 2032. This could be a game changer for Hawaiʻi since there are more than 8,000 underserved children in the state whose parents wish to send them to preschool, but cannot afford it. Without affordable childcare, this can really hinder women's careers. Though these childcare related policies may not have been built with the direct intention of closing the gender pay gap, it is a big piece of the puzzle.
Ah yes, Claudia Goldin has pointed out that allocating more government funding towards child care can help narrow the gender pay gap. But news agencies have recently been reporting that childcare costs for 2 children nationwide on average is more than monthly rent. Additionally, there are less childcare providers in the last few years, driving the price up even more. Can you go more into detail into what Hawaiʻi is doing in regard to childcare?
Hawaiʻi is making strides towards decreasing childcare costs. They are attacking the price issue from both the supply side and the demand side. On the supply side they are working to add an additional 400 classrooms statewide, creating new preschool facilities and further supporting existing ones. Basic economics tells us that when we increase the supply of a good, this should in theory lower the cost. On the demand side they are also expanding their Preschool Open Doors program which subsidized preschool expenses. One hurdle the state will need to overcome is making sure there are enough childcare workers to operate these new and expanded preschool facilities. I will be releasing a UHERO blog on this childcare issue with more details soon.
We know that food and travel can be business expenses that companies can reimburse, tax free. But not childcare. Do you think making child care reimbursable tax free could make a difference in allowing women to work more flexibly with young children?
The short answer is yes -- if you increase affordability and access to childcare services, I believe that this should have a positive effect on flexibility for women with young children. However, I don't know if I would advocate for businesses to take on the childcare expenses because of the negative implications that could spur from it. For example, since women are more likely to be the dominant child care givers, a policy in which companies had to reimburse childcare, tax free may disincentivize them from hiring women with children, especially single mothers. They could also choose to offset childcare costs through lower wages.
Do you know of any countries or communities in which there is no gender gap in pay? What can we learn from them if so?
The World Economic Forum annually ranks 150 countries by their gender equality index. In the 2023 report, the US ranked 43rd, placing it in the top third. However, considering our neighboring countries, Canada and Mexico, ranked 30th and 33rd respectively, there is room for improvement. Northern European countries consistently rank high in gender equality, with Sweden notably never falling below 5th place since the World Economic Forum began these reports in 2006. In 2022, Swedish women earned 90% of what Swedish men earned, highlighting their significant progress in gender equality.
What works in Sweden may not necessarily work in Hawaiʻi. If there's one thing I've learned from public policy research, it's that context is crucial. However, I believe it is even more important to have these discussions and educate others on these issues. Earlier this year, I lectured on the gender pay gap in Hawai‘i, and I was surprised to find that most students were unaware it even existed. This highlights the importance of education in fostering innovation and driving societal change.
Thank you for taking the time to answer our questions. We appreciate all of your knowledge and willingness to share it.
I’m happy to help. Thank you for your support!
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