While the disparity in wage and salary income between workers with and without disabilities is well documented in the literature, less is known about the gap in total compensation. Health insurance, mandated benefits, and days of leave for vacation or illness are examples of the additional forms of compensation that comprise roughly 30 percent of total hourly compensation costs by firms for workers

Barrington, Linda

Bjelland, Melissa J

Hallock, Kevin

Jin, Xin

English

DigitalCommons@ILR

Sponsored by the Rehabil itation and Research Training Center on 
Employer Practices Related to Employment Outcomes among Individuals 
with Disabil it ies at Cornell  University
Washington,  D.C.
October  22-23 ,  2013
Research presented at  the 
Innovat ive  Research on Employer  Pract ices:
Improving Employment  for  People  wi th  Disabi l i t ies
STATE OF THE SCIENCE CONFERENCE
Research Brief: 
 
Total Compensation Gaps are 
Distinct from Wage Gaps
 1 
 
Overview 
 
While the disparity in wage and salary income between workers with and without disabilities is 
well documented in the literature, less is known about the gap in total compensation. Health 
insurance, mandated benefits, and days of leave for vacation or illness are examples of the 
additional forms of compensation that comprise roughly 30 percent of total hourly compensation 
costs by firms for workers.  
 
Per Hour 
Employer Costs for  
Employee Compensation 
All Workers 
(Civilian) 
Management 
Occupations 
Service 
Occupations 
(occupation avg data)  $ Cost Pct. $ Cost Pct. $ Cost Pct. 
Per Hour  
Total Compensation $31.00 100% $51.52 100% $16.72 100% 
Wages/Salaries $21.44 69.2% $35.75 69.4% $11.88 71.1% 
Benefits $9.56 30.8% $15.77 30.6% $4.84 28.9% 
Source: Table 1 Employer Costs for Employee Compensation (BLS, June 2013, last modified September 11, 2013) 
http://www.bls.gov/news.release/archives/ecec_09112013.pdf  
 
Is there a difference between the wage gap and the total compensation gap between those with 
disabilities and those without? If so, why? And, how big? One plausible explanation could be 
that individuals with disabilities may prefer jobs that offer more generous health insurance 
coverage to jobs with higher wages and salaries. This is because higher wages and salaries are 
not enough to offset the foreseeable needs for health insurance for people with disabilities. If 
people with disabilities seek out employers who offer a larger share of compensation in 
nonmonetary benefits, the total compensation gap could be smaller than a pay gap calculated in a 
manner that excludes such benefits.  
 
A new Cornell University study uses special data on details of compensation mix merged with 
large national household survey data sources and finds that the “total compensation” pay gap is 
narrower than the wage and salary pay gap. This is consistent with the idea that employees may 
make job search decisions based upon total compensation concerns not just wages/salary alone. 
 
Data Sources and Issues 
 
The American Community Survey (ACS), the Current Population Survey (CPS) March 
Supplement, Health and Retirement Survey (HRS), and Survey of Income and Program 
Participation (SIPP) are four population-based surveys that contain rich demographic, income, 
employment, and disability information and where the person is the unit of observation. The 
figure below displays kernel density estimates of the distributions of wages for disabled and 
nondisabled workers in each dataset (for full-time male workers and wages truncated at the five 
top percent). Utilizing a variety of datasets to explore the total compensation gap is important, 
since the results are not identical due in part to differences across the surveys in sampling frame, 
disability definitions, and earnings measures. 
 2 
 
 
 
 
 
These figures display information on wages for fulltime male workers. Examining the “total 
compensation” gap between those with and without disabilities requires knowledge of other 
types of compensation, and detailed data on employee benefits are sparse in the large national 
survey datasets aforementioned. It is possible, however, to explore the total compensation gap by 
integrating into these survey data very specific occupation-level compensation details from a 
comprehensive business establishment survey -- the Employer Costs for Employee 
Compensation (ECEC). We use special, restricted-access ECEC data at the U.S. Bureau of Labor 
Statistics on very detailed occupations, merged with the demographic household surveys 
mentioned above. 
 3 
 
Occupational Sorting by Disability Type 
 
 
The figure immediately above displays the fraction of full-time employed males by disability and 
broad occupation categories in the 2010 Current Population Survey (CPS). It illuminates how 
workers match into occupations by disability type differentially. Fulltime male employees with a 
disability are relatively less likely to work in management, business, finance, and professional 
occupations. They are more likely to find employment in occupations that involve production or 
transportation, which tend to be associated with lower levels of pay. This sorting into jobs may 
be related to the mix of compensation presented to workers with disabilities, as well as to the 
gaps in earnings between those with and without a disability.  
 
Empirical Findings 
 
To explore the gap in pay and total compensation between employees with and without 
disabilities, an empirical model is estimated that includes controls for occupation, labor force 
experience, education, industry, and demographic characteristics. Results from all data sources 
indicate that the estimated percentage total compensation gap is smaller in magnitude than the 
percentage wage gap between people with and without a disability. As an example, for the ACS, 
this means that men who work full-time and report any disability earn about 9.3 percent less than 
their nondisabled peers, whereas their total compensation is only about 6.7 percent lower, as 
illustrated in the first two bars in the chart that follows. (Variation in total compensation and 
wage/salary pay gaps across disability type, as estimated using ACS data, is illustrated in the 
remaining six pairs of bars in the chart – the smallest pay gap estimated for those with a hearing 
impairment.) 
 4 
 
 
Note: Estimates for full-time male workers in 2009 ACS, controlling for schooling, experience, race, marital 
status and occupation, by disability type.  
 
 
Taken cumulatively, these findings are consistent with the idea that employees make tradeoffs 
between wage/salaries and non-wage-and-salary benefits in their decisions to work. For this 
reason, using only wage and salary data is not sufficient to fully understand earnings gaps faced 
by people with disabilities.  
 
Conclusion 
 
Employer policies and practices can enhance labor market outcomes for people with disabilities. 
In order to attract and retain workers, an adequate balance of pay and benefits should be 
considered in the total compensation package. In light of the results of recent research, those 
seeking to place or hire individuals with disabilities may want to reevaluate the importance of 
non-wage-and-salary benefits.  
 
The fact that a gap persists for persons with disabilities relative to those without is noteworthy. 
Additional research is warranted to determine the underlying source of this differential and to 
assess differential reasons for the change in the estimated gap. Probing the roles of employment 
type (e.g., full-time as compared to part-time) and gender are intriguing extensions of this 
research. 
 
 
This brief summarizes the research article “Wage Gaps and Total Compensation Gaps by Disability 
Status” by Kevin F. Hallock, Xin Jin and Linda J. Barrington, 2013, Cornell University Working 
Paper. Hallock, Jin, Barrington, and Melissa Bjelland authored this research brief. 
This state of the science conference and research is funded to Cornell  University by the U.S. 
Department of Education National Institute on Disabil ity and Rehabil itation Research (NIDRR) for a 
Rehabil itation Research and Training Center (RRTC) on Employer Practices Related to Employment 
Outcomes among Individuals with Disabil it ies (grant #H133B100017). The contents of this research brief 
do not necessari ly represent the policy of the Department of Education, and you should not assume 
endorsement by the Federal Government (Edgar, 75.620 (b)) .
 


Research Brief: Total Compensation Gaps are Distinct from Wage Gaps

While the disparity in wage and salary income between workers with and without disabilities is well documented in the literature, less is known about the gap in total compensation. Health insurance, mandated benefits, and days of leave for vacation or illness are examples of the additional forms of compensation that comprise roughly 30 percent of total hourly compensation costs by firms for workers.Pay_Gap_Brief_final.pdf: 329 downloads, before Oct. 1, 2020.0-Pay_Gap_Brief_html.htm: 106 downloads, before Oct. 1, 2020

Bjelland, Melissa J.

eCommons@Cornell

https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1350&amp;context=edicollect

Research Brief: Total Compensation Gaps are Distinct from Wage Gaps

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