The gender gap in wages

Enjoying my linear wage scheduleAbout six weeks ago the Times reported on museum directors’ wages, finding something of a gender gap:

Women run just a quarter of the biggest art museums in the United States and Canada, and they earn about a third less than their male counterparts, according to a report released on Friday by the Association of Art Museum Directors, a professional organization.

The group examined salary data on the 217 members it had last year through the prism of gender, for the first time. The report noted strides made by women at small and midsize museums, with budgets under $15 million, often university or contemporary-art institutions. Here, women have basically achieved parity, holding nearly half of the directorships and earning just about the same as men. But the gap is glaring at big institutions, those with budgets over $15 million: Only 24 percent are led by women, and they make 29 percent less than their male peers.

And just five of the 33 most prominent art museums — those with budgets greater than $20 million — have women at the helm.

In the mail today I received the latest issue of the American Economic Review, and this issue contains the Presidential Address given by labor economist Claudia Goldin, “A Grand Gender Convergence: Its Last Chapter“, that builds upon a significant body of research (this is not a one-off piece), on how women’s wages have converged towards men’s, yet with still a gap to be explained. It’s a fascinating essay, and I will try to do it justice in this post.

Let’s focus on educated men and women in the US. During the twentieth century women’s investments in education rose, catching up or even surpassing men in many professions (as we see in current enrollments in professional and graduate degrees), and also their work experience, which is also a predictor of wages. But wage gaps develop, and widen, as workers age. Why? We know that women tend more than men to reduce their working hours, or temporarily leave the workforce, when having children. Well, if someone works fewer hours we expect them to have lower annual earnings. But Professor Goldin finds that something more is at play – the change in hours does not have a linear effect on earnings. In many high-pressure occupations, those who put in seventy-hour weeks earn more than twice as much as those who put in thirty-five-hour weeks. Furthermore, those whose hours they must spend at the workplace are not flexible tend to earn more than those in professions where hours can easily be varied. Inflexibility tends to come in jobs where (1) the worker needs to be at work when others are there, and (2) where there are fewer easy ways to substitute one employee for another, say because there are certain aspects of the job that only one person is really familiar with.

An interesting case is the profession of pharmacy. There is virtually no gender gap in wages for this highly skilled job. But it is also true that it is a task where one pharmacist can easily substitute for another, more worksharing is possible, and the pharmacist who works sixty hours per week is not more productive, per hour, than the one who works thirty hours per week. The same pattern would be found in, say, a small, general, legal practice. But it would not be the case in a large, corporate law firm, where flexible hours, or lower hours, could be seen as more problematic. She writes, in her conclusion, “A flexible schedule often comes at a high price, particularly in the corporate, financial, and legal worlds.”

Are there reasons to have optimism? She continues:

There are many occupations and sectors that have moved in the direction of less costly flexibility. Firms in many sectors, including healthcare, retail sales, banking, brokerage, and real estate, are making their employees better substitutes for each other and trying to convince clients of that. When clients perceive there is a greater degree of substitutability among workers, a more linear payment schedule emerges.

And that means that the employee with fewer hours per week, or who takes time out of the labor force for a spell, continues to earn the same amount per hour.

If I look at the art world – and this is speculative on my part, I don’t have the data or research at hand – I wonder what parts of the sector tend to have the “linear” pay schedules, where flexibility in hours does not require the worker to pay a price for it, and what parts come with a significant degree of inflexibility, together with a demand for sixty or seventy hours per week, and how this influences patterns of pay between genders. Good thesis topic, yes?

 

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Comments

  1. says

    Do we code professions where the worker cannot be substituted as requiring a man for the job, with notions that men are more dependable, more capable of autonomous work, and more capable of selfless sacrifice for the organization?

    The underlying cause of pay differences might not be the non-substitutability of certain positions, but rather how we code it in terms of gender.

    We can fix the problem by changing attitudes toward substitutes in general (as Goldin suggests.) One employee is just as good as the next. Unfortunately, workers are not always generic.

    Perhaps we can get closer to the cause and change the way we view the autonomy, capability, and reliability of women when filling unique positions.

    • says

      Thank you for your comment. I think there are two things going on. First, some of the highest paying positions in certain types of firms require long hours per week, which must be done at the office and at particular times, and require no temporary leaves from the workplace. Anyone, male or female, who needs flexibility in scheduling or fewer hours per week will not be able to take on these jobs, which offer much higher wages-per-hour than other jobs. So, according to Goldin, this tends to create a gap between men’s and women’s earnings, and is, according to her research, a primary driver of the gender gap in wages.

      Second, which I think is along the lines you are suggesting, is that if an employer makes a prediction that men are more likely to be able to stick with a high-and-inflexible-hours regime, more investments will be made in their careers and promotions.

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