Inequalities in the Service Sector

Women and people of color are over-represented in the service sector, occupying a wide array of roles, from retail and hospitality to food service. Many of these positions are understood as “bad jobs”, as defined by job quality measures such as job insecurity, limited benefits, and low wages. One important part of the story of inequality in America is the segregation of women and people of color into this sector of the economy.

As the Shift Project has delved deeper into this sector, we have discovered that inequalities exist not only in the sector as compared to others, but also within the sector and even among co-workers at the very same firms. Dissecting the data to understand the scope and shape of these inequities, we have examined disparities between different groups across scheduling, wages, Paid Sick Leave (PSL), Paid Family and Medical Leave (PFML), and breaks, among other job quality measures.

Examples of Inequality in Shift Data:

Workers of color, and especially women of color, are between 3 and 5 percentage points more likely to face schedule unpredictability across five different measures, including X, Y, and Z.

Paid sick leave provides crucial support for workers who need to stay home to recover from illness or to care for family members. But, despite bearing much of the load on such care work, women hourly workers in the service sector are significantly less likely to have access to paid sick leave than their male co-workers [1].

The Role of Firm Segregation

Inequalities in job quality exist within the service sector and one key driver of these inequalities is that women, mothers, and people of color are segregated into employment at the firms in the service sector that have the most precarious jobs.

Shift researchers found that workers of color, especially women of color, had significantly more precarious work schedules – things like on-call shifts and limited advance notice. While some of these gaps were explained by occupation and education, we discovered that the segregation of workers of color into the specific firms with the most precarious scheduling practices explained an important part of the gap [2].

There is a large gender wage gap in the service sector, about $1.73 per hour (equivalent to 14% of the average hourly wage). Just like with racial/ethnic gaps in scheduling, Shift researchers found that the segregation of women into lower-paying firms explained an important part of that gap. Another way to say that is that hourly wages declined with the percentage of the firm’s workforce who were identified as female, as shown below.

We have found that this between-firm variation also contributes to inequality by gender between men and women [3] and between cisgender and transgender/nonbinary people, the intersection of race and gender [4, 5], and motherhood.

Durable Inequality

Across all papers addressing inequality at the Shift Project, we find that inequality between groups persists across models. It remains after controlling and adjusting for individual differences, demographics, and labor market conditions, and after adjusting for segregation into lower-quality jobs. This unexplained inequality points to discrimination. This is not to say that some of these other factors are not also discrimination. Human capital factors such as educational inequality and sorting and segregation into lower-quality jobs are two clear examples of upstream discrimination that impact service sector workers. However, it is important to know that these upstream inequalities cannot fully explain service sector disparities. Unexplained discrimination in our data often occurs at the managerial level, with items that allow for managerial discretion such as scheduling often seeing larger disparities between groups, as opposed to more standardized items such as wages and benefits.

Policy and Labor Standards

Shift Project research shows public policy has a key role to play. By passing and implementing labor standards that “raise the floor” on job quality, government can also “close the gap.”

Shift researchers’ finding that when the floor was raised for breaks policies, women and people of color disproportionately benefitted overall due to their concentration in affected jobs [6].

Shift researchers found stark gender inequality in access to paid sick leave among service sector workers, with only part of this gap explained by sorting and position type. However, in states and localities with mandatory paid sick leave laws, workers were much more likely to report access to paid sick leave and the gender gap in access disappeared [7].

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