The Missing Pieces Of The Gender Wage Gap Puzzle

Why our culture of Working crazy long hours is worsening the gender wage gap.

Bad news: The gender wage gap is still alive and well.

Women across professions from financial specialists to podiatrists to physicians and surgeons to aircraft pilots are earning less than three-quarters of their male counterparts' salaries. There's no question workplace equality has made great strides over the years, still there's something holding men and women back from earning equal pay. What could it be?

There are plenty of speculations for why the disparity persists: Women don't ask for more money. Others believe discrimination is the cause. Still others, that employers have different promotion standards for men and women. There is also the undeniable effects that off-ramping to have kids has on women's careers.

Dissecting the 'Mommy Tax'

Having children is indeed a contributing factor to how much income men and women earn. A study of men and women in New York City published this May found that men with children had significantly higher incomes than women with children and men and women without children. Researchers from City University of New York where the study was done call this the "Mommy Tax" and the "Daddy Bonus."

But it's not a Great Depression era bonus-for-the-family-man mentality that leads to this discrepancy. "Its not that daddies are getting paid more," says Harvard economist Claudia Goldin. "It's that the same exact men receive more because they just get their act together. They say, 'Hey, I'm a father; I have to do something about it.'"

Women adapt better to job market changes.

One area in which men might not be stepping up their game quite as much is in adapting well to changes in the job market, specifically in middle-skill jobs, according to research by David Autor out of the MIT Department of Economics. When the number of men and women in middle-skill jobs dropped from 1979 to 2007, females moved upward into higher-level jobs at a rate much greater than their male counterparts.

While the percentage of women making up traditional female occupations like teaching and nursing has gone down over the years, women have also increasingly taken more steps to get the education and training they need in fields like law and medicine in order to move up in the ranks. "Looking forward, it is clear that females will be the more educated sex for many years to come," writes Autor.

The "last chapter" of the gender wage gap.

But if women are on the whole more educated, why are they still not earning as much, if not, more than men? "Thirty years ago we would have said there are human capital differences," says Goldin. "Today women are very highly educated."

The issue, of course, is multi-faceted. Goldin calls the remaining factors contributing to inequality in wages between men and women "the last chapter" of the gender wage gap. That discrepancy, writes Goldin in a recent paper in American Economic Review, is attributed not to an inequality across industries, but rather by one concentrated in specific professions that emphasize rewarding employees who work long and unpredictable hours.

The main culprits: corporate, financial, and legal professions. "Self employment, face-time, anything that requires that you are in a 24/7 environment on-call, anything that is highly disruptive of balance takes its toll at this point in history on women," she says.

Writing that final chapter of the gender wage gap means finding a way to get rid of systems that reward people based on how long and irregularly their hours are. Just take a look at the technology sector. While women still make up a minority of the tech profession, discrepencies in earnings are not an issue as they are in other professions where long and unpredictable hours are rewarded with pay.

"The impact of hours on the gender gap is large and goes far to explain much of the gender earnings gap," Goldin writes. "Individuals who work long hours in these occupations receive a disproportionate increase in earnings."

Shifting how and why employees are rewarded.

Some might argue that certain professions by nature require such unpredictable and long hours, making closing that wage gap impossible. While fields like technology, science and health have caught on, others like the corporate, financial and legal worlds still have a ways to go. The fact of the matter is: those fundamental changes can be made. Take Goldin's favorite case study: the pharmacy profession.

Over the past 50 years, the pharmacy profession has changed considerably. In the mid-'60s only 8% of licensed pharmacists were women. Today that number has gone up to 55%. Not only did the earnings of pharmacists go up 40% from 1999 to 2010, the ratio of female to male earnings went up from .66 to .92, making it one of the lowest gender wage gaps in the health care industry, Goldin writes in a paper for the National Bureau of Economic Research.

This narrowing of the wage gap didn't come from legislation or new policies. It happened because the demands and reward system of the profession fundamentally changed in that time. The occupation became more family-friendly over the years when it went from being made up mostly of independent pharmacies to national pharmacy chains and hospitals. In the earlier independent model, pharmacists who worked only part-time or part of the year—a group that tended to consist of women with children—were penalized in their earnings. Take away those reward constraints and the earnings gap suddenly shrinks.

Is there a solution?

"The solution does not (necessarily) have to involve government intervention. It does not have to improve women’s bargaining skills and desire to compete. And it does not necessarily have to make men more responsible in the home (although that wouldn’t hurt)," writes Goldin.

"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 who worked particular hours. Such change has already occurred in various sectors, but not in enough."

[Image: Flickr user Joe Goldberg]

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5 Comments

  • This is a great article, but I'd like to clarify one little detail. The article implies that the technology industry doesn't require long hours, when in fact it does...some very long hours, from my experience.

    The difference is, the technology industry doesn't care where you work those hours. So if a highly talented female programmer needs to work from home for a couple of days because her kids are sick (or the school is closed for teacher planning days), she can pound out her code from the home office and all is well.

    Another FastCo. article mentions women who earned 4.0 GPAs in high school are likely to earn the same as men who earned 2.0 GPAs. Tie these two articles together, and what we are likely going to see, if we haven't already, is a brain drain of intelligent and talented women into industries and companies that are flexible and family-centric (which may explain why the finance industry has done some really dumb things in the past few years).

  • Dean J. Seal

    There is another piece missing. Men are raised to be Cannon Fodder. We are expected to suffer on the job, eat the boss's crap, work long hours, eat bad food. We are trained to think of ourselves as "success objects," i.e. not worthy of female companionship without some success in our work. We are what we do. Women are more connected, more civilized, more human. Men will take a better offer and don't care who gets hurt. They will screw their customers, their co-workers, their bosses, and their families. Trained to be mercenaries, the opportunity means more than the reality. Men are simply more heartless, and will always sell out faster than a woman. That's why we get paid more. Just a generalizatiion from a long life of living with guys. Dean J. Seal, Minneapolis

  • There's another piece to the gender gap: RETIREMENT.

    Quoting from a Forbes Feb. 12, 2014 article by Jane Bianch: "A new LearnVest.com survey found that an American woman’s retirement nest egg totals approximately $150,000, on average, while a man’s comes in at roughly $235,000. That’s a 57% difference! There’s also the fact that a recent Merrill Edge Report additionally revealed that men in the U.S. are planning to save $232,000 more than women for retirement overall.

    "And there’s even more to this disparity story: It turns out that attitudes about how to use retirement savings also clash between the genders. According to a Prudential study, the top financial priority for men in retirement is to “maintain their lifestyle,” while for women, it’s to “not become a burden to loved ones.”

    Ken Dychtwald in the June 5 HuffPo labels 28% of working retirees "Earnest Earners" saying they are likely to be women who work no much because they want to -- but because they have to.

  • After the world 'solves' the gender pay gap are we going to focus on the height pay gap? Or maybe the corporate profit gap (some companies make more profit than others after all, and maybe thats 'not fair' either)? Every employee, whether they embrace it or not, is a sole proprietor that sells their available labor hours to another business for an hourly rate and other considerations. Since an employee cannot expand by hiring their own employees to help them on their job, they have to grow their small business by seeking out training and experience that increases their potential pay rate. As they increase their potential pay rate, they have to be willing to negotiate in order to realize that potential or to find another employer (customer) who recognizes their value. In my 25+ year career I've never directly witnessed gender pay discrimination in action at the hiring or promotion/raise decision points; but have seen many instances where employees undervalued themselves.

  • David Olson

    Early in my career, I chose to not work long hours so I could coach my kids. Because of that I missed a few promotion opportunities so don't make as much as my counterparts who chose to work longer hours. For me, the tradeoff was priceless and I would not change a thing.

    I believe a combination of effort/results should get rewarded so I have no problem with the discrepancy. I am male.