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New Economist quotes a New York Times article by David Leonhardt on why in the US the Gender Pay Gap, Once Narrowing, Is Stuck in Place:
Throughout the 1980s and early ’90s, women of all economic levels — poor, middle class and rich — were steadily gaining ground on their male counterparts in the work force. By the mid-’90s, women earned more than 75 cents for every dollar in hourly pay that men did, up from 65 cents just 15 years earlier.
Largely without notice, however, one big group of women has stopped making progress: those with a four-year college degree. The gap between their pay and the pay of male college graduates has actually widened slightly since the mid-’90s.
For women without a college education, the pay gap with men has narrowed only slightly over the same span.
These trends suggest that all the recent high-profile achievements — the first female secretary of state, the first female lead anchor of a nightly newscast, the first female president of Princeton, and, next month, the first female speaker of the House — do not reflect what is happening to most women, researchers say.
A decade ago, it was possible to imagine that men and women with similar qualifications might one day soon be making nearly identical salaries. Today, that is far harder to envision.
Could it be that there are fewer women making choices to maximize their income relative to those in the past? This would certainly lead to a slowdown in the salary growth of women. I can imagine women coming out of college in the 1960s or 1970s (maybe even in the 1980s) intent on taking high-paying jobs explicitly to close the gap. I find it much more difficult to envision young female college graduates doing so in the same numbers today. Could it be that women find their other alternatives actually better, leading to lower salaries on the margin?
Last year, college-educated women between 36 and 45 years old, for example, earned 74.7 cents in hourly pay for every dollar that men in the same group did, according to Labor Department data analyzed by the Economic Policy Institute. A decade earlier, the women earned 75.7 cents.
The reasons for the stagnation are complicated and appear to include both discrimination and women’s own choices.
Is it a complicated story or simply a matter of wages reaching a market-equilibrium? If so and the wages between men and women are truly different (somethink I'm skeptical about and will explain more below), then the biggest question to ask is "why?"
The number of women staying home with young children has risen recently, according to the Labor Department; the increase has been sharpest among highly educated mothers, who might otherwise be earning high salaries. The pace at which women are flowing into highly paid fields also appears to have slowed.
Like so much about gender and the workplace, there are at least two ways to view these trends. One is that women, faced with most of the burden for taking care of families, are forced to choose jobs that pay less — or, in the case of stay-at-home mothers, nothing at all.
The other view is that women consider money a top priority less often than men do. Many may relish the chance to care for children or parents and prefer jobs, like those in the nonprofit sector, that offer more opportunity to influence other people’s lives.
“Is equality of income what we really want?” asked Claudia Goldin, an economist at Harvard who has written about the revolution in women’s work over the last generation. “Do we want everyone to have an equal chance to work 80 hours in their prime reproductive years? Yes, but we don’t expect them to take that chance equally often.”
Whatever role their own preferences may play in the pay gap, many women say they continue to battle subtle forms of lingering prejudice. Indeed, the pay gap between men and women who have similar qualifications and work in the same occupation — which economists say is one of the purest measures of gender equality — has barely budged since 1990.
Women are much more likely than men to drop out of the workforce for several years and then re-enter. (Some men do this as well.) For men and women who do not leave the workforce, they gain greater experience and do not face depreciation of skills. This increases their productivity, enhancing their salaries compared to men and women who take time out to raise children. A better measurement would be to contrast the salaries of men and women with similar occupations, similar qualifications, and similar years of experience. If a pay gap exists here, that would be much more supportive of discrimination. Simply comparing overall salaries of men and women in similar occupations misses a big part of the actual story.
More women than men now graduate from college, and the number of women with decades of work experience is still growing rapidly. Within many demographic groups, though, women are no longer gaining ground.
Ms. Blau and her husband, Lawrence M. Kahn, another Cornell economist, have done some of the most detailed studies of gender and pay, comparing men and women who have the same occupation, education, experience, race and labor-union status. At the end of the late 1970s, women earned about 82 percent as much each hour as men with a similar profile. A decade later, the number had shot up to 91 percent, offering reason to wonder if women would reach parity.
But by the late ’90s, the number remained at 91 percent. Ms. Blau and Mr. Kahn have not yet examined the current decade in detail, but she said other data suggested that there had been little movement.
My intuition is that there is has been little movement in this trend. This is what I would expect if the market had reached an equilibrium. A 9% gap is still significant, but is much lower than what the gender pay gap typically is portrayed to be.
There is no proof that discrimination is the cause of the remaining pay gap, Ms. Blau said. It is possible that the average man, brought up to view himself the main breadwinner, is more committed to his job than the average woman.
What if it's not only that he was brought up to view himself that way, but that many more men than women are in fact the primary bread winner? Wouldn't this create a greater incentive among those primary breadwinners (be they male or female) to perform highly in the workplace? Is this "breadwinner effect" significant enough to explain the remaining 9% gap? If so, the fact that more men than women are primary breadwinners would show up as a gender gap in salary statistics, but reflects choices and incentives people face, not discrimination or lack of opportunity.
[R]esearchers note that government efforts to reduce sex discrimination have ebbed over the period that the pay gap has stagnated. In the 1960s and ’70s, laws like Title VII and Title IX prohibited discrimination at work and in school and may have helped close the pay gap in subsequent years. There have been no similar pushes in the last couple of decades.
Isn't that analysis backwards? Couldn't it just be that there have been no similar pushes in the last couple of decades simply because there is little discrimination now going on? If so, the pay gap didn't stagnate, discrimination did.
New Economist follows up with a second post and graph:
The New York Times piece I posted about earlier today implies that the gender pay gap has stopped narrowing in the United States. In aggregate terms this is not the case - as the accompanying picture shows. The unadjusted median hourly pay gap continued to close through the late 1980s and early 1990s, reaching a low of 20.2% in 2003 compared with 25.0% in 1993. (Although the pay gap did widen a little in 2004 and 2005, to 20.4% and 20.6% respectively).
But when one adjusts the raw numbers for changing employee characteristics, especially education, the picture looks more bleak - suggesting little change in the gender pay gap since the early 1990s.
This chart comes from a very useful website on the End of the Gender Revolution?, maintained by David A. Cotter (Union College), Joan M. Hermsen (University of Missouri) and Reeve Vanneman (University of Maryland). The site also makes available most of the time series data used for the charts in Excel spreadsheets, updated to 2005. Recommended.
This chart seems to suffer from the same problems I commented on earlier. It shows only the average salary of women/average salary of men. It doesn't show any accounting for type of occupations, qualifications (such as education), or years of experience.
As I was reading and writing all of this, I hypothesized four characteristics that would affect income based purely on individual choices and incentives:
- Primary Breadwinner (Typically married male): This individual faces large incentives for high performance and high salary.
- Married to a Breadwinner (Typically married female): This individual faces lower incentives than primary breadwinners or singles to make high salaries or take on high performance jobs. On the margin, this would lead to lower salary levels.
- Married: Married people are able to benefit from specialization of labor (dividing household and workplace responsibilities, splitting chores, helping each other with child raising, etc.). This has the effect of giving a productivity boost to working spouses.
- Children: Having kids has the dual effect of increasing the incentive for making a high salary while incurring productivity losses due to time required for childcare. This productivity loss can be offset if one spouse chooses to specialize in household production and childcare, while the other spouse specializes in working in the workforce.
If this analysis is correct, I would expect the following trends to be true of salary ratios between men and women if occupation, years of experience, and qualifications were all taken into account and assuming there is no discrimination (in other words, assuming all pay gaps are the result of individual choices):
- Single, No Kids: Men and women should have near-parity in salary ratios.
- Married, No Kids: Men are more likely to be the primary breadwinner and women are more likely to be married to a breadwinner. This would lead to effects that would tend to lower the ratio between married female income relative to married male income, showing up as a gender gap.
- Married, With Kids: Demand for both time and money is at its highest. Specialization is most advantageous at this point. Primary breadwinners face the greatest incentives to perform and therefore gain the highest salaries. Since most primary breadwinners are male, men with kids will tend to be the highest earners. Women with kids tend to be married to breadwinners reducing their incentive to earn high incomes relative to men. In turn, they also face high time demands from their children, further reducing their incentive towards high performance (which usually involves high time costs). Married individuals with kids who continue working who are not primary breadwinners face the smallest incentives for high performance behavior. Because of the combination of these effects, I would expect married women with kids to have the lowest income ratio compared to married men with kids. This is where the gender gap will probably be at its most extreme.
- Single, With Kids: These individuals face both high demand for time and for money, but do not benefit from the specialization of labor that married people get. This leads to incentives for high productivity. However, the parent with custody of the children faces some productivity losses due to time required for household duties. Since single moms are more likely to be awarded custody of children, they are more likely to face higher productivity losses than single dads. This leads to a gender gap, but with additional incentive to make money due to supporting the family. I am unclear as to the magnitude of these effects. My hunch is that the gender gap will be significant here, but not as much as for married with kids or the married with no kids. (If people are married, the non-breadwinner can get away with earning lower incomes than if not married.)
If my hypothesis is correct, I would expect to see the gender gap occurring in the following order going from lowest gender gap (i.e. approximate parity) to highest gender gap:
- Single, No Kids (little or no gender gap)
- Single, With Kids (some gender gap)
- Married, No Kids (significant gender gap)
- Married, With Kids (largest gender gap)
Exploring the web pages of the End of the Gender Revolution?, I came across this chart:
It looks like these explanations fit the data fairly well and only rely on individual choices in response to incentives they face. Looking at the salary differentials for singles with no kids, there seems to be little evidence of systematic discriminatory effects on the gender gap in incomes.
Questions:
How much discrimination do you think currently occurs today? Does this limit the ability of women to advance to the highest levels of careers? From my own observations working in an international environment in the power industry (a heavily male-dominated field working with a heavily male-dominated culture), it seemed as if women faced some barriers men did not face. Should this be considered discrimination or is it merely the effects of a path that had not been trodden before?
Does getting married make women worse off than men in terms of income or better off than men in terms of giving them more opportunities to pursue things other than career?
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