Flexible but lower-paying jobs lead to an earnings gap.
- May 15, 2019
- CBR - Economics
Flexible but lower-paying jobs lead to an earnings gap.
In the 1970s, college-educated women in the United States began, as a group, to define success in terms of having a career and a family. By the 2000s, they had entered high-paying, male-dominated fields in large numbers. They are having children at a rate not seen since the late baby boom years.
But women still earn less than men, which we term gender inequality. And they give more hours to their families than men do, which we might call couple inequity. This holds for same-sex couples too—there is, on average, a certain amount of couple inequity between all partners.
Let me emphasize that most of what I have to say has to do with college-educated women and their quest, historically, for identity, meaningful employment, and family. And for this group, the real reason that both gender inequality and couple inequity exist is that the price of equity is so high. The cost of temporal flexibility, or controlling one’s hours, is substantial—and has become even more substantial with rising inequality.
The gender earnings gap widens a lot with time for these women. It widens at the time of marriage and at various joyous events, such as having children. Claims that this gap is primarily due to labor market bias have reached a fever pitch. There is no question that a lot of bad behavior exists in our workplaces, and we should do everything we can to wipe it out, but this isn’t the main cause of gender earnings inequality. Rather, the cause is the same as that which produces couple inequity.
The problem is that many jobs pay far more on an hourly basis when the work is longer, on call, rush, evening, weekend, or unpredictable. The lack of controllability is the crucial part, and the time and energy spent interferes with family commitments. Among the majority of highly educated couples with careers and children, the woman is the professional who is on call at home, while the man is the professional who’s on call in the office. And in consequence, he earns more than she does.
Sometimes, this earnings difference is a lot, maybe $30,000. This gives rise to the gender gap, and it produces couple inequity. If the difference were smaller, or smaller as a percentage of their earnings, they might decide: “Let’s just purchase couple equity. Because family equity is pretty cheap, we’re both going to be on call at home.” But the difference is often much larger.
Some people say, “Oh, you can contract out.” But you can’t contract out everything. There has to be some residual claimant—someone who is taking charge. And if you contract everything out, why have the kids in the first place?
So one member of the couple works the flexible, less-remunerative job. The other one works the less-flexible, more-remunerative job. The problem isn’t that women don’t compete or bargain enough. It isn’t that managers are so biased. It’s that these less-flexible jobs simply pay a lot more. And soaring earnings inequality since the 1980s has meant that these jobs are paying even more per hour. The problem, in many ways, is a combination of how work is structured and the norms that we inherit.
For a woman who graduated from college around the turn of the 20th century, a degree gave her the ability to be independent and not to marry in a world in which wives were supposed to stay at home—and usually did. An educated woman who wanted a job, let alone a career, didn’t get married. Her choice was to have a career or have a family. Few in this group managed both.
Of women who were born in the latter part of the 19th century and graduated from college around 1900 to the end of World War I, about half didn’t have children, and 30 percent didn’t marry. Still, few in this group, which I call cohort one, worked.
Next came a transitional cohort, aspiring to have a job and then a family. And then came a third cohort, born between the 1920s and the early 1940s, going to college from around World War II to the mid-1960s. In this group, married women could have a family first, followed by a pretty good job when their kids were grown. Marriage bars—the prohibitions against married women working in certain occupations such as teaching or clerical work—ended sometime in the 1940s. In addition, part-time work, which was important for women having a fair number of children and going to work when their kids were still in school, expanded greatly in the 1950s. This group had a family and then a job. Only 8 percent in this group never married over their lifetimes, and about 17 percent never had children.
The point is that many occupations have severe penalties for shorter and more-flexible hours. They give large windfalls to those who work hours that are less controllable, and this creates real problems for couples.
Sometime around 1970, the pill allowed single women to delay marriage and to invest more in their careers before having kids—to aim for a career and then a family. The marriage age soared for this cohort, born between 1944 and 1957, as did the fraction of women with high-powered degrees and occupations. This is my cohort, graduating from college in the 1960s to the late 1970s. Many of these women put off family for too long. Although just 10 percent never married, many never had children. The childless rate for all women in this group peaked around 28 percent.
For the most recent cohort, the goal is not just family, not just work, but both together. This is the career-and-family group for whom the birth rate has increased.
The 100-year transition from career or family to career and family is bookended with two women, one who served in Congress and the other who is currently serving there. Jeannette Rankin was the first woman elected to federal office. Typical of those in her cohort who chose a career, she never married or had children. She had only her career, and it was an amazing one at that. She was elected in 1916 as a Republican from her state of Montana, just in time to vote against US entry into WWI. Rankin was also in Congress at the moment when she could vote for the right for women to vote. After we entered the war, she was not reelected, but she was elected again in 1940, in time to be the only vote against entry into WWII.
Senator Tammy Duckworth (Democrat of Illinois), the first senator to have a baby while in office and the first to bring a baby into an active session of Congress, is the other bookend.
I’ve computed the fraction of women in each cohort who achieved career and family. (I define career as having a job in which a person exceeds the 25th percentile of the male distribution of earnings given age and education, and achieves this for three years out of every five. For these purposes, I define family as having at least one child.) My conclusion is that, from the third to fifth cohorts, there’s been considerable improvement. In these three cohorts, women are experiencing more career and family over their life cycles.
But by and large, the achievement of career and family even in the fifth cohort doesn’t exceed 30 percent, about half of the level for the corresponding male cohort. The frustration of women in cohort five is that they’re still not reaching career and family success to a great extent. They’re doing somewhat better later on in their lives, but young women see that they have a battle, causing the recent explosion of concern.
Studies of various occupations suggest that the cost of flexibility is particularly substantial in some careers. In the case of MBA-degree holders, women are taking off somewhat more time than men are. Although women make far less than men in the financial and corporate sectors, most of the difference is due to their hours of work and, to some extent, to the amount of time they take off. When we say that women are working shorter hours, it’s still about 45–50 hours weekly. They’re just not working the jobs that demand super long hours. And the penalty in these sectors from taking any time off is harsh. The ability of individuals to work part-time is limited. And half of the women who claim to be working part-time are self-employed.
The situation is somewhat similar for doctors. In the Community Tracking Survey data set of doctors, 60–70 percent of physicians are in pediatrics, family medicine, and internal medicine. Female MDs are disproportionately in lower on-call specialties and are therefore working fewer hours. Among younger physicians (meaning less than 45 years old), females work almost 10 fewer hours weekly than males in just about every specialty. And for physicians older than 45, the number of hours for men goes down and the number of hours for women goes up, cutting the difference in half. What’s interesting to consider is that when you’re younger, you can work fewer hours and remain a doctor. But when you’re older and working somewhat more, you’re less likely to be in a leadership position, such as the head of your department.
Men being on call at work and women being on call at home is not equitable for couples.
The point is that many occupations have severe penalties for shorter and more-flexible hours. They give large windfalls to those who work hours that are less controllable, and this creates real problems for couples. The cost of couple equity becomes enormously high.
Therefore, one chooses the more flexible job with lower hours while the other chooses the job with less flexibility, more hours, and higher income. You produce gender inequality and couple inequity.
Any solution has to involve lowering the cost of the amenity in question, temporal flexibility. The simplest way of doing this is to create a perfect substitute for yourself. Use technology to pass information to a perfect substitute with little loss of fidelity. Take pharmacists as an example. You may hand in a prescription to Jane, but when you return to the pharmacy, you collect medication from Joe. It doesn’t matter because both pharmacists have information about all the prescriptions you have ever had under your insurance.
We could also create effective teams of substitutes, as has been done in certain health professions in which the cost of the professional has reached such a high level that organizations want there to be groups. Pediatrics is a perfect example. Pediatricians have formed groups so that they don’t have to be on call all the time. Veterinarians and anesthesiologists have done the same thing.
Is this commodifying important professions? Perhaps. But some of the highest-paid, most-well-trained professionals operate this way. When you have surgery, you may talk to your surgeon for months before, but you meet the anesthesiologist responsible for keeping you alive seven minutes before you go under. The anesthesiologist is in a group practice that has contracted with the surgeon or hospital and is available for that surgery.
The long road to the future has to involve a reduction in the cost of flexibility and probably has to involve some restructuring of jobs. And this is not a zero-sum game. Gender equality is not just about women. Men being on call at work and women being on call at home is not equitable for couples. When the cost of flexibility is lowered, we’re going to have solved the problem and achieved both gender equality and couple equity, but it’s going to take men demanding greater temporal flexibility and more control over the hours they work.
When people leave jobs, they often express to companies what prompted them to resign, or they may, in advance of leaving, demand more income for what they’re being asked to do. This can spur companies to think about substitutes and other organizational changes. That’s the way companies will have an incentive to lower the cost of temporal flexibility. And that’s a way to lead us to the road to the future.
Claudia Goldin is the Henry Lee Professor of Economics at Harvard. This essay is adapted from the keynote speech she gave in March at the Becker Friedman Institute for Research in Economics.
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.