We hear a lot about how women are paid less than men in the American workplace. The most recent statistics available suggest that women earn 80 cents for every dollar earned by men.
It would seem easy to characterize this problem as one of gender discrimination—and easy to fix it as well: just pay women more. But this statistic comes from a very broad calculation: it’s the median income of all full-time working women compared to the median income of all full-time working men. The actual “pay gap” is far more complex than that math suggests.
Economic historian and a labor economist Claudia Goldin knows a thing or two about these complexities. Goldin is the Henry Lee Professor of Economics at Harvard University, director of the National Bureau of Economic Research’s Development of the American Economy program, and the former president of the American Economic Association (2013/14). She’s also the author and editor of several books, among them Understanding the Gender Gap: An Economic History of American Women.
In her work, Goldin has found that the gender pay gap varies widely across occupations as well as within occupations, and also changes over the course of a woman’s career. Close examination of nuances like these suggests that the gap stems not from gender discrimination, but from work design.
Essentially, Goldin has found that people who work the longest and least flexible hours make the highest salaries per unit time—and those people tend to be men, because women are more likely to be juggling caregiving responsibilities.
Eliminating the gap, then, isn’t about paying women more. Rather, we need to expand access to flexibility, and—crucially—ensure that flexibility doesn’t come at the price that it does now. Goldin puts it: “The gender gap in pay would be considerably reduced and might even vanish if firms did not have an incentive to disproportionately reward individuals who worked long hours and worked particular hours.”
With this solution in mind, we recently spoke with Goldin about her research. Read excerpts from our conversation below:
1MFWF: Historically, when more women have moved into certain occupations, average salaries have dropped. Could there be a danger, then, that if some occupations adopt flexibility particularly rapidly, they might see the pay gap shrink but overall salaries shrink as well, in a different form of gender bias?
Claudia: First of all the premise of what you said isn’t necessarily true. Number one, the occupations weren’t necessarily the same over time. Number two, I can list a lot of occupations that have increased the portion of females by a lot, and salaries in these occupations have not decreased, and some of them have even increased. One has to be careful about asking why there’s an increase in the supply of certain individuals to an occupation and whether that’s because of technological changes in the occupation.
A very interesting example is secretary. We think of the word secretary as meaning one thing, but secretary doesn’t mean just one thing historically. The secretary in the late 19th century was an individual who was very high-ranked and was the keeper of the company secrets, and that’s why it’s called the secretary. And later a secretary was someone who was a typist and who typed on an electric typewriter and who took shorthand—it’s a very very different occupation and it became a female occupation. Are we to say that it’s the same occupation and income, salaries, wages went down because women entered—we can’t necessarily say that.
1MFWF: Pharmacy is one occupation you cite where flexibility has closed the pay gap. Has there been a decrease in salaries now that the majority of pharmacists are women?
Claudia: Just the opposite, and that’s one of the examples. There’s been a very large increase in salary. One might trace that to a bunch of other factors having to do with the healthcare sector. One can separate what one sees as a change of the sex composition from all these other things that are going on. But it’s a lot more complicated then say, something turned red, and therefore something else happened. The causal mechanism has to be thought through a lot more carefully.
In addition, you know, simply increasing supply would reduce the relative wages of that occupation. Let’s say that women were absolutely excluded from some occupation and then that exclusion was taken out and we increased the supply. Well just simple supply/demand would say that the relative wages in that occupation would go down.
1MFWF: Your research highlights the fact that it’s women who tend to need flexibility more than men, because they tend to be the caregivers. Do you think, then, that in addition to advocating for flexibility, we need to push the message that men can and should be caregivers too?
Claudia: I’ll not only agree with that but it’s sort of the last line of my presidential address to the American Economic Association. It specifically says these are not just the issues having to do with women, they are subjects that if addressed right they could help everyone. So I couldn’t agree with that more.
1MFWF: Flexibility doesn’t seem to have been embraced yet as the go-to solution in the public conversation about the pay gap. Instead, the focus tends to be on items like pay transparency, training women to negotiate, and affordable childcare. Why do you think flexibility hasn’t yet taken hold as the key?
Claudia: A couple of things. Number one, what we mean by flexibility isn’t necessarily the same thing. So I would be rather opposed to having mandates for lower hours, for example, because it isn’t really about lower hours it’s about which hours. So mandates aren’t going to work here.
We can have examples from other countries: The Netherlands, for example, about 20 years ago put into effect a mandate that if an individual was working five days a week and she wanted to work four days, she not only could work four days, but her wage would go down pro-rated so therefore this would be a case in which the hourly wage would be the same, there would be no part-time penalty.
Well this sounds really good, this is really going to win the day, because individuals who want to take out small amounts of time or even large amounts of time during certain parts of their lifetime aren’t going to get penalized.
But what it means is that if there are jobs for which working longer hours—and this isn’t necessarily particular hours–working longer hours means that you’re valued more, because you can see the client who wants to see you on Friday for example—if that’s the case, then women are going to be excluded from many of those occupations.
So what happened in the Netherlands—I can’t say that women were excluded from various occupations, but the average woman who works is working a very very small number of hours, and the fraction of that female population who are working managerial positions is trivial.
So in arguing for flexibility, it’s a complicated word. It’s like arguing for equity. What do we mean by that? It’s much easier to say, let’s train women to bargain more effectively or let’s make all pay transparent, or let’s protect individuals who want to come onto a job and not say what salary they were working before. These are all much easier to craft. They’re not necessarily good ideas.
Take the last one for example, which went into effect in my state. So an individual coming onto a job isn’t going to be asked, “What did you make in your previous job?” But that doesn’t prevent an individual from saying what he made in that previous job. So in fact it could have very negative consequences for female versus male employees on average. So once again, policies that seem noble and seem well directed can backfire. Also, it’s easier to craft policies in some areas than it is in others. Crafting a policy or statement with regard to flexibility is very difficult.
1MFWF: What might be a better option for pushing flex forward, if not through policy?
I had a conversation with a high-up person in a major consulting company in the U.S., and these issues are very very clear, because if their associates and their consultants (their non-partners, the group just below partner), if those individuals feel constrained by the excessive demands on their hours and their time during holidays or weekends or family days, there are a lot of other games in this town—in all towns. And they will leave and go elsewhere. Sometimes the best talent will do that.
So how does an individual high up in one of these firms protect those workers? There are what we call “principal/agent problems” all over the place. So the principal is the CEO of the company, the stockholders, those are the principals who want to protect the value of the company. And protecting the value of the company means making certain that the great talent there— since these are service areas, the great talent are their people, are their minds—that that talent is going to be protected somewhat from the clients. So that’s what the principal is saying that they want. But the agents are often a partner who says, ‘Look, I have a case, I have to do something, I need someone on Sunday, I need someone 20 hours on Sunday.’ So the idea is for someone to police the organization and make certain that everyone realizes that if they don’t cooperate with what the principal wants, then the company is going to lose value. And just because they think that it’s going to make them look good to do this consulting job and to do it as perfect as they can do it, and that’s the only thing that matters—then the value of the company could go down.
And so what this company did, was it gave to an individual in the company the ability to go around and police, and go around and ask, ‘What’s going on in your group? How many hours are people working? How many times was someone called on a Sunday? Do your young people in the organization feel too hassled by this?’
So that’s the way it has to work. It has to work because the companies realize that they’re going to lose value. And the reason that they’re going to lose value is because the little people tell them. They tell them they’re going to lose value—and how do they tell them? They leave. That’s the way markets work best.
1MFWF: Did your experience as a woman in a male-dominated field factor into your decision to focus on gender and work in your research?
Claudia: No. Absolutely not (in fact, read my brief autobiographical essay “The Economist as Detective”). The field of labor economics is old, and is dominated by issues having to do with women—not because the individuals studying the subject back in the 1920s, 30s, and 40s were that interested in women (because they were all guys at the time), but because there’s variance in what women do and there was no similar variance in men. Each one of those decades saw enormous change with regard to women’s labor force participation: their hours, the amount of their lifetimes that they worked, their education, their occupations, and so forth. We don’t see the same changes for men. So, like for so many others, my interest in the field had to do with variance.
I’ve been in male dominated fields my whole life. I went to Bronx High School of Science. I knew of only one type of occupation and that was scientist, and at the time it was very male dominated. Then, when I was an undergraduate at Cornell, I was an economics major and it was a very male field. Every department that I’ve ever been in, I’ve been the first woman tenured at that institution in that field.
To learn more about Claudia’s research and the nuances of the gender pay gap, watch the video below:
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